MONACO - Scorpio Tankers Inc . (NYSE:STNG), a global provider of marine transportation for petroleum products, has received the green light from its majority lenders to make a substantial unscheduled repayment on its term loan. The company plans to pay $223.6 million in June 2024, a move that will cover eight quarterly principal installments originally due between the third quarter of 2024 and the second quarter of 2026.
This strategic financial maneuver is expected to reduce Scorpio Tankers' daily cash break-even rates by approximately $3,500 in the first year following the prepayment. Importantly, this repayment will not affect the revolving credit portion of the facility, which currently stands at $288.2 million.
Scorpio Tankers has outlined the expected future principal repayments on its outstanding debt as of March 31, 2024, which includes secured credit facilities, lease financing arrangements, and Senior Notes due in 2025. The total anticipated repayments, including the recent and expected unscheduled payments, amount to $1,401.2 million spread across various quarters through 2026.
The company's recent financial activities also include the repurchase of one vessel under the 2021 CMBFL Lease Financing in April 2024 for $15.8 million, and the expected repurchase of four vessels under the 2022 AVIC lease financing in May and June 2024 for a total of $102.4 million.
Scorpio Tankers operates a fleet of 108 product tankers, with an average age of 8.3 years, including 39 LR2 tankers, 55 MR tankers, and 14 Handymax tankers. The company has also entered into an agreement to sell one of its MR tankers, expected to close in the second or third quarter of 2024.
InvestingPro Insights
In light of Scorpio Tankers Inc.'s (NYSE:STNG) recent financial moves, including the substantial unscheduled repayment on its term loan, the company's financial health and stock performance metrics become increasingly relevant for investors. According to InvestingPro data, Scorpio Tankers boasts a robust market capitalization of approximately $4.19 billion and an attractive price-to-earnings (P/E) ratio of 7.26, which is slightly adjusted to 7.35 when considering the last twelve months as of Q1 2024. This is indicative of a potentially undervalued stock, given the company's earnings.
The company's gross profit margin stands at an impressive 75.7% for the same period, reflecting strong operational efficiency. This, coupled with a healthy return on assets of 12.76%, underscores Scorpio Tankers' ability to generate profits from its assets. Additionally, with a dividend yield of 1.96% as of the latest data, the company has maintained its commitment to returning value to shareholders, with dividend payments consistently made over the past 12 years.
Investors should also note that InvestingPro Tips highlight that the management's aggressive share buybacks and six analysts revising their earnings upwards for the upcoming period paint a positive picture for the company's near-term outlook. These factors, along with the company's strong return over the past year, suggest that Scorpio Tankers is navigating the current market environment with strategic acumen.
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