Subject to the terms and conditions of these agreements, Scorpio will acquire four LR1 tankers prior to the closing of the merger and the remaining 23 tankers upon the closing of the merger in exchange for the issuance of 55 million shares of Scorpio common stock to the Navig8 shareholders.
In connection with the LR1 Vessel Acquisitions, Scorpio will pay cash consideration of $42.2 million, which is net of assumed debt. This cash is expected to remain with Navig8 through closing and will form part of the balance sheet of the combined company, subject to the terms and conditions of the merger agreement.
Scorpio also announced the launch of an underwritten public offering of up to $200.0 million of its shares of common stock. Morgan Stanley is acting as sole bookrunning manager in the Offering. ABN AMRO, Clarksons Platou Securities AS, Evercore ISI, Pareto Securities and Seaport Global Securities are acting as co-managers. Scorpio also intends to grant the underwriters a 30-day option to purchase up to $30.0 million additional shares of its common stock. Scorpio Services Holding Limited, a related party of Scorpio, has indicated an interest in purchasing at least $20.0 million of Scorpio common stock in the Offering.
The net proceeds of the Offering are expected to be used to provide cash to further strengthen Scorpio’s balance sheet and enhance liquidity, for the payment of costs related to the Merger, to fund the purchase price of the LR1 Vessel Acquisitions, and the remainder, if any, for general corporate purposes.
Through the Merger, Scorpio is acquiring an operating fleet of 27 eco-design product tankers, comprised of 15 LR2s and 12 LR1s with a weighted average age of 0.9 years and an aggregate carrying capacity of approximately 2.6 million dwt. Following the completion of the Merger, on a fully delivered basis, Scorpio’s operating fleet will consist of 105 owned or finance leased tankers (38 LR2 tankers, 12 LR1 tankers, 41 MR tankers and 14 Handymax tankers) with a weighted average age of approximately 1.9 years, and 19 time or bareboat chartered-in tankers (one LR2 tanker, nine MR tankers and nine Handymax tankers).
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