Scorpio Tankers is marketing for sale two five-year-old products carriers in a move it expects will illustrate that the company’s stock is trading well below its net asset value.
Scorpio management today confirmed market chat that it is circulating for sale the 52,000-dwt STI Fontvielle and STI Ville (both built 2013) through brokers Clarksons and Fearnley.
Scorpio president Robert Bugbee tells TradeWinds he would expect any sale to be concluded for cash within the second quarter.
“As we indicated on our recent conference call, we believe our NAV is substantially higher than our stock price,” Bugbee said.
“By selling these two vessels we believe we can not only illustrate and confirm our NAV, but also better place ourselves to capture this arbitrage.”
Bugbee alluded to Scorpio’s 14 February investor call presenting earnings for the fourth quarter of 2017.
During that session, Scorpio for the first time in recent memory gave its own assessment of NAV to be within a range of $3.70 and $4.30.
Bugbee noted at the time that this was higher than figures being used by most equity analysts. In one example, Evercore ISI’s Jonathan Chappell had been using an estimate of $3.35.
Perhaps more important, the stock has been trading well below most NAV projections, especially Scorpio’s. It was at $2.22 this afternoon, down about 3% on the day.
Bugbee acknowledged that some will also look at the prospective sales as a liquidity measure in a products market that continues to feature tepid rates, even as asset values begin to firm.
“Clearly another benefit of having a huge modern fleet with modern bank debt leverage — one has lots of levers to press to obtain liquidity without having much negative impact to operations,” Bugbee said.
Online platform VesselsValue gives a current valuation just over $28m for each of the two Hyundai Mipo-built tankers amid a trend of recovering price levels.
Scorpio has a fully delivered fleet of 109 tankers on the water.
