What triggered the rally: SCORPIO TANKERS ORD (NYSE: STNG) stock rose 6.31% on January 18th, January, 2019 (Source: Google finance) after the company announced one-for-ten reverse stock split of the Company’s common shares, par value $0.01 per share, and a reduction in the total number of authorized common shares to 150,000,000 shares. The company’s shareholders have approved the reverse stock split and change in authorized common shares at the company’s special meeting of shareholders held on January 15, 2019. The reverse stock split will take effect, and the company’s common shares will begin trading on a split-adjusted basis on the New York Stock Exchange as of the opening of trading on January 18, 2019.
Moreover, after the reverse stock split becomes effective, every ten of the Company’s issued common shares will be combined into one issued common share. This will result in the reduction of the number of outstanding common shares from approximately 513.9 million shares to approximately 51.4 million shares. The purpose for getting the shareholder approval to effect the reverse stock split was to increase the market price of the company’s common shares. The company believes that the increased market price for its common shares that is expected as a result of implementing the reverse stock split will improve the marketability and liquidity of the company’s common shares and will increase the interest and trading in STNG’s common shares.
Since November 1, 2018, the Company has repurchased an aggregate of 13,512,650 of its common shares for a total of $23.2 million or at an average price of $1.72 per share. The company has repurchased an aggregate of 4,636,493 of its common shares at an average price of $1.78 per share during the fourth quarter of 2018. The company has the authority to purchase up to an additional $138.8 million of its securities under its Securities Repurchase Program.
Positive milestones: Meanwhile, STNG has seen a significant improvement in the spot market for product tankers during the latter half of the fourth quarter of 2018. While this positive development is beginning to materialize in the company’s fourth-quarter figures, STNG expects to realize the full benefit of these fixtures throughout the remainder of December and into the first quarter of 2019.
On the other hand, STNG has entered into an agreement with third parties to purchase exhaust gas cleanings systems for 42 of its vessels in 2019 and for 10 of its vessels in 2020. The total value of these agreements is estimated to be $79.6 million.