06-24-14 Scorpio Tankers (STNG)

$250m (+50m) sen unsec CB coming tonight from UBS/BAML. Terms:5y 2⅛-⅝% up 27½-32½%, S/C at 130% 3y, full pctns (ratio adj>0).

UOP=$150m stk buy back/gcp. $1.7bn product tanking biz (owns 21 tankers as of 03/31/14). Co founded in ’09, IPO’d @ $13 in 03/10 & is now -26% from 11/13 high. Solid b/sheet; As of 1Q14, $200m cash+$1.3bn liq(which can be used 2 finance up 2 60% of contract px). 6y $35m retail note (issued 05/14) ~L+475. CB is pari & s/ dated HOWEVER retail mkt will skew pricing. We’d assume L+500.

ADV= 1.2m, no leaps, 1y 100/200d=35/31vol. We’d assume 30% & -1% brw. Theo=98.7/100.5/102.4. JEF has a $12 target post robust Q1 no’s & focus on returning capital 2 stk holders over expanding its fleet. Good story BUT CB eval leaves a STiNG in its tail.

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