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Scorpio Bulkers puts entire fleet up for sale and expects $500m hit as switch from bulk to wind speeds up

Scorpio Bulkers announced on the weekend that following the recent sales of vessels by the company, its Board of Directors has authorised the Company, as part of its transition to a sustainable future, to sell its remaining dry bulk vessels and exit the dry bulk sector during 2021.

As a result of this decision, the company expects to record a write-down ranging from $475.0 million to $500m on vessels sold and classified as held for sale.  This estimated write-down includes non-cash charges of $425m to $440m to reflect the current fair market value of the fleet and $50m to $60m of estimated cash charges, which include $34m to $36m for the termination of various vessel-related agreements, as well as other selling costs.  The company will also write-off approximately $10m of deferred financing costs as outstanding debt is repaid.

Pursuant to the Master Agreement previously filed with the SEC governing the commercial and technical management of its vessels, the Company has submitted a notice of termination to its managers, effectively ending its relationship with Scorpio Commercial Management and Scorpio Ship Management.

To reflect its transition, the Board of Directors has also resolved to seek shareholders’ approval to change the name of the company.  The proposed new name will be announced on or before January 8, 2021.

Scorpio Bulkers had previously announced its intention to exit the dry bulk sector and is investing in the next generation of wind turbine installation vessels. The Company has recently sold eight vessels and has contracted to sell sixteen additional vessels, all of which are expected to close in the first half of 2021. Scorpio Bulkers intends to sell its 25 remaining wholly-owned or finance leased drybulk vessels (including 7 Kamsarmax vessels and 18 Ultramax vessels) during 2021. The Company has signed a letter of intent to enter into a shipbuilding contract with Daewoo Shipbuilding and Marine Engineering to build a wind turbine installation vessel to be delivered in 2023, with options to build three further similar vessels.