Scorpio Bulkers posts bigger loss in first quarter

Scorpio_Bulkers_

Scorpio Bulkers reported its results for the first quarter of 2016.

Results for the three months ended March 31, 2016 and 2015

For the first quarter of 2016, the Company’s adjusted net loss was $33.4 million, or $1.12 adjusted loss per diluted share, which excludes a loss/write off of vessels and assets held for sale of $12.4 million, the write off of deferred financing costs on credit facilities that will no longer be used of $2.5 million and a charterhire contract termination fee of $10.0 million, or $0.84 loss per diluted share (see Non-GAAP Financial Measures below). For the first quarter of 2016, the Company had a GAAP net loss of $58.3 million, or $1.96 loss per diluted share.

For the first quarter of 2015, the Company’s adjusted net loss was $16.8 million or $1.16 adjusted loss per diluted share, which excludes a write down of assets held for sale of $31.8 million and the write off of deferred financing costs on credit facilities that will no longer be used of $3.5 million, or $2.44 loss per diluted share (see Non-GAAP Financial Measures below). For the first quarter of 2015, the Company had a GAAP net loss of $52.1 million, or $3.60 loss per diluted share.

Recent Significant Events

Below is a summary of the voyages fixed thus far in the second quarter of 2016:

For the Kamsarmax fleet: approximately $4,231 per day for 66% of the days
For the Ultramax fleet: approximately $4,765 per day for 64% of the days

Below is a summary of the TCE revenue earned during the first quarter of 2016:

For the Kamsarmax fleet: approximately $3,331 per day
For the Ultramax fleet: approximately $3,462 per day

Equity Raise

During the first quarter of 2016, the Company raised net proceeds of approximately $60.6 million through the issuance of 21 million shares of common stock at $3.00 per share. Scorpio Services Holding Limited and certain of the Company’s directors purchased an aggregate of 5,030,000 Common Shares at the public offering price.

Cancellation and Modification of Shipbuilding Contracts and the Delay of Vessel Deliveries

During the first quarter of 2016, the Company canceled a shipbuilding contract for a Kamsarmax bulk carrier that was expected to be delivered in April 2016. The Company has been released of any and all obligations and rights arising out of the shipbuilding contract, including the final installment of $19.3 million. As a result of this cancellation, in the first quarter of 2016 the Company recorded a loss of approximately $11.6 million.

Additionally, the Company reached agreements with shipyards to delay the delivery of two Ultramax vessels and six Kamsarmax vessels under construction by approximately six months each. These vessels, previously expected to be delivered between March 2016 and September 2016 are now expected to be delivered between September 2016 and April 2017. As a result, $42.2 million that would have been paid to shipyards during 2016 is now expected to be paid in 2017.

The Company also reached an agreement with a shipyard in China to reduce the price to be paid under the final installments of the construction contracts in respect to two Ultramax vessels to be delivered in Q2 2016 by approximately $0.9 million in aggregate.

Cancellation of Four Time Charter-in Contracts

During the first quarter of 2016, the Company reached agreement with the counterparties of four of its time charter-in agreements to terminate the agreements for a one time payment of $10.0 million in the aggregate.

Vessel Sale Program Update

During the fourth quarter of 2015, the Company, with approval from its board of directors, agreed to sell 11 Capesize vessels. The sales of eight vessels were not completed during 2015 and as such were categorized as held for sale at December 31, 2015. During the first quarter of 2016, the sale of all eight vessels was completed. Upon completion of the sales, the Company recorded additional expenses related to the vessels held for sale at December 31, 2015 amounting to $0.8 million.

Newbuilding Vessels Deliveries

During the first quarter of 2016, the Company took delivery from shipyards of the following newbuilding vessels:

SBI Sousta, a Kamsarmax vessel, was delivered from Hudong-Zhonghua (Group) Co., Ltd.
SBI Behike, a Capesize vessel, was delivered from Daehan Shipbuilding Co., Ltd. (1)
SBI Rock, a Kamsarmax vessel, was delivered from Jiangsu Yangzijiang Shipbuilding Co., Ltd.
SBI Monterrey, a Capesize vessel, was delivered from Daehan Shipbuilding Co., Ltd. (1)
SBI Achilles, an Ultramax vessel, was delivered from Imabari Shipbuilding Co., Ltd.
SBI Montecristo, a Capesize vessel, was delivered from Sungdong Shipbuilding & Marine Engineering Co., Ltd. (1)
SBI Lambada, a Kamsarmax vessel, was delivered from Hudong-Zhonghua (Group) Co., Ltd.
SBI Hercules, an Ultramax vessel, was delivered from Imabari Shipbuilding Co., Ltd.
SBI Reggae, a Kamsarmax vessel, was delivered from Hudong-Zhonghua (Group) Co., Ltd.
SBI Aroma, a Capesize vessel, was delivered from Sungdong Shipbuilding & Marine Engineering Co., Ltd. (1)
SBI Hermes, an Ultramax vessel, was delivered from Imabari Shipbuilding Co., Ltd.
SBI Perseus, an Ultramax vessel, was delivered from Chengxi Shipyard Co., Ltd.
SBI Cohiba, a Capesize vessel, was delivered from Sungdong Shipbuilding & Marine Engineering Co., Ltd. (1)

Between April 1, 2016 and April 29, 2016, the Company took delivery from shipyards of the following newbuilding vessels:

SBI Zeus an Ultramax vessel, was delivered from Mitsui Engineering & Shipbuilding Co., Ltd.

(1) Vessel sold subsequent to delivery.

Liquidity and Debt

Fleet Financing Update

During the first quarter of 2016, the Company amended all of its credit facilities to reduce the minimum cash liquidity covenant to the greater of $25.0 million or $0.7 million per owned vessel. In accordance with the amendments and adjusting for the recent cancellation of a shipbuilding contract as announced on April 3, 2016, the Company agreed to prepay approximately $40.1 million in aggregate of principal installments on outstanding borrowings and certain expected future borrowings under our credit agreements, representing the next 12 months of installments on those borrowings, and will not be required to make the installment payments on certain of our borrowings that would have been due during the 12 subsequent months approximating $25.6 million. This $25.6 million will be due upon final maturity of each borrowing.

Of the $40.1 million in agreed upon prepayments, $27.6 million was paid in the first quarter of 2016.

$27.3 Million Credit Facility

During the first quarter of 2016, $23.3 million was drawn down on this facility to finance the delivery of two Ultramax vessels delivered from Imabari Shipbuilding Co. Ltd. This facility will mature in February 2021. The terms and conditions of this facility, including covenants, are similar to those in the Company’s existing credit facilities and customary for facilities of this type.

In February 2016, the Company reached an agreement in principle with the lender to add four quarterly installment payments to the balloon payment in exchange for an advance principal repayment of approximately $1.6 million. As a result of this agreement, the Company will not have to make the next eight quarterly installment payments totaling $3.1 million. The agreement was executed in April 2016 at which time we made the prepayment.

$411.3 Million Credit Facility

As of December 31, 2015, the three Capesize vessels collateralizing this facility were classified as held for sale. Upon completion of the sale of these vessels in January 2016, the loan was fully repaid and the remaining total commitments have been canceled.

$42 Million Credit Facility

On February 15, 2016, the Company signed an amendment with a leading European financial institution for a $10.9 million upsize to its original $42 million senior secured credit facility. The proceeds of the upsized commitment financed a portion of the purchase price of one Ultramax vessel that was delivered to the Company in Q3 2015 from Imabari Shipbuilding Co. Ltd. On February 17, 2016, the Company drew down $10.9 million on this facility. Upon draw down we simultaneously prepaid the first four quarterly repayments and will not have to make the next eight quarterly repayments as mentioned below. This facility will mature in September 2021. The terms and conditions of this facility, including covenants, are similar to those in the Company’s existing credit facilities and customary for facilities of this type.

In February 2016, the Company reached an agreement with the lender to add four quarterly installment payments to the balloon payment in exchange for an advance principal repayment of approximately $3.2 million. As a result of this agreement, the Company will not have to make the next eight quarterly installment payments totaling $6.5 million.

$39.6 Million Credit Facility

In March 2016, the Company reached an agreement with the lender to add four quarterly installment payments to the balloon payment in exchange for an advance principal repayment of approximately $2.8 million. As a result of this agreement, the Company will not have to make the next eight quarterly installment payments totaling $4.7 million.

$409.0 Million Credit Facility

During the first quarter of 2016, $33.3 million was drawn down on this facility to finance the delivery of two Kamsarmax vessels delivered from Jiangsu Yangzijiang Shipbuilding Co., Ltd. and Hudong-Zhonghua (Group) Co., Ltd. Upon draw down we simultaneously prepaid the first four quarterly repayments and will not have to make the next eight quarterly repayments as mentioned below. This facility will mature in December 2020. The terms and conditions of this facility, including covenants, are similar to those in the Company’s existing credit facilities and customary for facilities of this type.

In February 2016, the Company reached an agreement in principle with the lender to add four quarterly installment payments to the balloon payment in exchange for an advance principal repayment of approximately $14.5 million (calculated on the basis of loan amounts available for undelivered ships and adjusted for the recent cancellation of a shipbuilding contract as announced on April 3, 2016). As a result of this agreement, the Company will not have to make the next eight quarterly installment payments totaling $29.1 million (calculated on the basis of loan amounts available for the undelivered ships and adjusted for the recent cancellation of a shipbuilding contract as announced on April 3, 2016). $7.9 million of the prepayment was made in the first quarter of 2016. The agreement was executed in April 2016.

In April 2016, $12.8 million was drawn down on this facility to finance the delivery of an Ultramax vessel delivered from Mitsui Engineering & Shipbuilding Co., Ltd. Upon draw down we simultaneously prepaid the first four quarterly repayments and will not have to make the next eight quarterly repayments as mentioned above.

$330.0 Million Credit Facility

During the first quarter of 2016, $27.1 million was drawn down on this facility to finance the delivery of one Kamsarmax vessel delivered from Hudong-Zhonghua (Group) Co., Ltd. and one Ultramax vessel delivered from Chengxi Shipyard Co. Ltd. This facility will mature in July 2021. The terms and conditions of this facility, including covenants, are similar to those in the Company’s existing credit facilities and customary for facilities of this type.

In March 2016, the Company reached an agreement with the lender to not make $13.8 million of the next four quarterly installment payments in exchange for an advance principal repayment of approximately $13.8 million. In addition, the lenders also agreed to extend the availability period of the credit facility to June 30, 2017 (from December 31, 2016) in order to accommodate delivery delays of certain vessels as described above in this press release.

$67.5 Million Credit Facility

During the first quarter of 2016, $12.3 million was drawn down on this facility to finance the delivery of one Ultramax vessel delivered from Chengxi Shipyard Co. Ltd. Upon draw down we simultaneously prepaid the first three quarterly repayments. This facility will mature the date falling 7 years after the drawdown date applicable to the fourth financed vessel and, if earlier, December 2023. The terms and conditions of this facility, including covenants, are similar to those in the Company’s existing credit facilities and customary for facilities of this type.

In February 2016, the Company reached an agreement in principle with the lender to add four quarterly installment payments to the balloon payment in exchange for an advance principal repayment of approximately $4.3 million (calculated on the basis of loan amount available for the undelivered ship). As a result of this agreement, the Company will not have to make the next eight quarterly installment payments totaling $8.7 million (calculated on the basis of loan amount available for the undelivered ship). The agreement was executed in April 2016 at which time we made a prepayment of $3.2 million.

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