Scorpio Bulkers Sell Senior Notes

Scorpio Bulkers (ticker:SALT), a Norwegian dry bulk ship owner (although incorporated in the Marshall Islands), has announced an offering of Senior Notes.  The notes have a 7.50% coupon and have a maturity of 2019.  They are optionally redeemable in 2016.

Scorpio is a new company and has a relatively modest sized fleet–15 ships–that has a HUGE new build program underway.  This new build program is the largest we have ever seen and honestly would make little sense to us.  They have 79 ships ordered (all to be delievered before 2017)for the new build program.  While we haven’t followed the shipping industry closely for a long while we would be shocked if there was enough demand in the next couple of years to easily absorb this number of ships.

Scorpio has had no debt up to this time–but they now have commitments for 100’s of millions of new debt to finance the new build program.

We have our share of shipping securities so we have no interest, but we will watch this company closely.

Details of the offering are here.

Scorpio Tankers (ticker:SBNA) is an affiliated company, also with a wildly huge new build program in the works.