Scorpio Bulkers Says it Must "Face the Music" as it Unloads 5 More Newbuilds for $236 Million

Emanuele Lauro, co-founder, chairman, and CEO of Scorpio Bulkers  says Dry cargo was "definitely a big bet."

Scorpio Bulkers Inc. (Scorpio Bulkers) Thursday announced it is unloading a further five vessels for a total of $236 million, and has entered into agreements to sell three Capesize newbuilding dry bulk vessels and two LR2 product tankers that are currently under construction.

The news follows announcements the company made in April that it will sell 10 newbuild vessels for a total of $401 million, and an announcement in December of last year that it was selling four Capesize newbuilds in order to shed around $120 million of financing need.

Scorpio Bulkers has seen its share price plunge 70 percent sine last fall, and recent analysis indicates dry bulk is unlikely to be profitable until 2017 due to a glut of capacity, falling commodity prices, and weakening demand from China.

"We did not know just how bad the market was going to turn, it's a tragic scenario. The market has reached levels we did not expect," Splash earlier this week quoted Emanuele Lauro, co-founder, chairman, and CEO of Scorpio Bulkers as saying.

The Capesize vessels cited in the latest announcement are being constructed in China and are expected to be delivered between the first and second quarters of 2016.

The LR2 tankers are being built in Romania and expected to be delivered sometime between the fourth quarter of 2016 and the first quarter of the following year.

"We have to face the music. Dry cargo was definitely a big bet. Analysis at the time was supporting our ideas," says Lauro.

"We should not blame analysts, we should be blamed. We made mistakes, we read the market wrong. We acquired assets that are worth less than the acquisition price."

Launched in 2013 as a sister company of Scorpio Tankers, the firm started with orders for between 11 and 14 fuel-efficient newbuild bulkers.