Hardly a week goes by without news from American Scorpio Group. Either because the shipping company is ordering even more ships in the bulk and tank segment, or because some major shipping banks are joining the large syndicated loans to the rapidly growing shipping group. Most recently on Augsut 28th, where banks approved a USD 429 million loan.
No matter what, Scorpio is in the process of establishing a fleet that most people seem to have an opinion about. A look in the archives shows that Scorpio Tankers had an orderbook of five ships in December 2012. Today that orderbook holds 60 ships, and add to this orders in other segments, such as dry bulk. And everything indicates that the New York-based carrier's last orders have yet to be placed.
Embodiment of the plan
The Italian CEO and Chairman, Emanuele Lauro, has been the embodiment of what many consider to be an aggressive entry on the market.
Backed by major investors such as Wilbur Ross and Dubai-based investment company Legatum, Scopio Tankers has established itself as a company in the process of creating a super modern fleet that's more than 30 percent more efficient than the conventional tanker fleet. And the company is not afraid of grand gestures. Thus, Scorpio did not try to hide the fact that part of the motivation for its massive ordering was to sequester shipyard capacity for a certain amount of time, to keep competitors from taking advantage of the low newbuilding prices.
A majority of the carrier's most recent loan of USD 429 million, namely USD 300 million, came from Export-Import Bank of Korea, but the two Nordic shipping banks Nordea and DNB are also among the banks who believe in Scorpio's massive new fleet venture.
Trust in management
Thus, ShippingWatch asked the two banks explain why they believe in Scorpio. First up is DNB:
"The company has made an early start on ships with new designs that are expected to be more efficient than the current ones. The future will show whether the unit costs and designs will be as competitive as we hope," says DNB head of shipping, offshore & logistics Kristin H. Holth to ShippingWatch.
DNB places a particular emphasis on three factors, "management, strategy, and financials" when the bank enters lending agreements with the shipping industry.
At Nordea, head of shipping Hans Christian Kjelsrud says of the bank's commitment to Scorpio, which includes part of the USD 525 million loan that Scorpio secured earlier this year, that both Emanuele Lauro and Robert Bugbee's roles play a significant part:
"We believe in Scorpio's strategy and management. The new eco ships will be the most efficient in the market, even though we need a bit more time to determine exactly how big the advantages from eco ships will be."
In addition to the loan commitments from the banks, Scorpio has issued bonds twice during the first half of 2013 in order to secure capital for the expansion. A glance at Scorpio's strategy shows that the carrier is confident that what it's doing is absolutely right:
Among other things, the carrier points out that it plans to excel through "smart allocation of capital, good governance and superior vessel management."