Monaco-based dry bulk shipping company Scorpio Bulkers has decided to postpone the installation of exhaust gas cleaning systems on thirteen of its vessels until at least 2021 as part of its cost-cutting measures.
The bulk carrier owner said that the move is expected to delay the payment of between $20 million and $25 million of expenditures until 2021 at the earliest.
The move is being announced amid an anticipated hard impact of the COVID-19 pandemic on the demand for bulk carriers.
“This significant decline in the demand for dry bulk tonnage may materially and adversely impact our ability to profitably charter our vessels,” the company said in its report for the first quarter of this year, adding that it could not predict what would the exact impact of the pandemic be on the company’s future financial performance.
So far the company has completed the installation of scrubbers on 22 ships, including 9 Kamsarmax vessels and 13 Ultramax vessels.
“Our first priority is to ensure the safety of our seafarers and shore staff during the COVID-19 pandemic. Beyond that, we have strengthened our balance sheet by vessel sales and sale leasebacks, we have reduced our capital expenditures by adjusting our scrubber installation schedule, we have reduced our quarterly cash dividend, and we have sold a portion of our shareholding in Scorpio Tankers for net proceeds amounting to $42.7 million,” Emanuele A. Lauro, Chairman and Chief Executive Officer, said.
During March 2020 and April 2020, the company closed the transactions to sell and leaseback two Ultramax vessels (SBI Cronos and SBI Achilles) and one Kamsarmax vessel (SBI Lynx) to Ocean Yield ASA. As part of the transaction, the company agreed to bareboat charter-in the SBI Cronos for a period of nine years, the SBI Achilles for a period of ten years, and the SBI Lynx for a period of 12 years.
Earlier this month, Scorpio Bulkers sold 2.25 million shares of Scorpio Tankers Inc. for a total of approximately $42.7 million, of which the trades of 0.5 million shares are expected to settle on May 12, 2020. Following the completion of these sales, the company will continue to own approximately 2.16 million common shares of Scorpio Tankers.
For the first quarter of 2020, Scorpio Bulkers’ GAAP net loss was $124.7 million, against a GAAP net loss was $3.5 million reported in Q1, 2019.
Total vessel revenues for the first quarter of 2020 were $40.8 million, compared to $50.4 million for the same period in 2019. Earnings before interest, taxes, depreciation and amortization equaled to a loss of $100.1 million.
“At present, we do not expect to sell any more vessels beyond those assets previously announced as held for sale. We expect to retain our remaining holding of 2.16 million shares in Scorpio Tankers. While the dry bulk market is weak at present, we are confident that rates will strengthen over the remainder of the year and have not hedged or time chartered any of our forward days. We are optimistic about the future of our company,” Lauro added.
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