Scorpio Tankers Inc
NYSE:STNG
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
52.74
83.53
|
Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Hello. And welcome to the Scorpio Tankers Inc. Second Quarter 2018 Conference Call.
I would now like to turn the call over to Brian Lee, Chief Financial Officer. Please go ahead, sir.
Thank you, and thank everyone for joining us today. On the call with me are Emanuele Lauro, our Chief Executive Officer; Robert Bugbee, President; Cameron Mackey, Chief Operating Officer; and James Doyle, Senior Financial Analyst.
The information discussed on this call is based on the information as of today July 31, 2018 and may contain forward-looking statements that involve risks and uncertainty. Actual results may differ materially from those set forth in such statements.
For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release that we issued today, as well as Scorpio Tankers’ SEC filings, which are available at scorpiotankers.com and sec.gov.
Call participants are advised that the audio of this conference call is being broadcast live on the Internet and is also being recorded for playback purposes. An archive of the webcast will be made available on the Investors Relations page of our website for approximately 14 days. If you have any specific financial modeling questions, you can contact me later and discuss offline.
Now, I’d like to introduce Emanuele Lauro.
Thank you, Brian. Welcome to the all and thank you for being with us today. Our results this morning bare testament to the ongoing difficult market in product tankers. The market remains soft. All that I can say is that in similarity with many of you, we remain focused on the significant secular shift that the IMO 2020 legislation would provide.
Much remains unclear however, this is undeniably an exciting backdrop for the world’s largest provider of seaborne ton mile to refined product markets. And in the meantime, our chattering group continues to work hard with the fleet to deliver value with our modern tonnage and spot market exposure.
This quarter has also seen important developments in the financing side. We discussed this in depth at our last quarterly earnings call and we have delivered a new bank and sale leaseback financings. This has greatly improved our liquidity and it gives us the confidence we can weather the storm, as well as positive support from important long-term banking partners, we have welcomed new lenders and sale and leaseback providers to our capital structure.
We were also able to swap a significant portion of our 2019 convertible bond into 2022 maturity through a voluntary exchange offer. Taken together, these measures have raised over $0.5 billion in liquidity, extrapolating the current market softness, this provides an ample cushion of liquidity.
Put differently as management, we are most excited about the evolution of the market towards January 2020. The financing initiatives undertaken in this quarter mean that we know we will get there.
My remarks are over. Operator, we can turn the call to questions.
[Operator Instructions] Our first question comes from Jon Chappell of Evercore. Your line is open.
Thank you. Good morning and good afternoon. Brian, first question for you, you have got $329 million in your liquidity, April was $334 million, which all favors the [inaudible] fair amount of the ‘19 converts. So, it’s $320 million bear and done, are you still able to the $334 million or I guess even going further given the success of what’s you have achieved the last three months is it possible [inaudible] $334 very clear?
All right. Thanks, John. Your line is not very clear. But I know you’re asking about the difference between the actual amount we raised so far and the amount we said before, so $334 million versus to $319 million, $320 million that we disclosed today. No, we’re not done. We have other things out there, liquidity is very important to us and we have other means to going forward with that.
Okay. I’ll try to speak louder. I know that it is important and that was the first part of this next question. You’ve done a heck of a lot in the last three months in terms of swaps given the better runway for the next 18 months to 24 months? But you do have that securities repurchase now outstanding. Have you thought about buying back some of the ‘19 converts or given the volatility in the stock, is the stock buyback on the table right now or is it just building the balance there?
We focused obviously on building the balance sheet and that hasn’t -- that’s -- it’s only -- the stock obviously is pretty volatile, it’s only really been in the last I know two weeks, three weeks that the ‘19 come down prior to that, they really -- they were pretty high too close to Part B remotely interesting.
But obviously, we will take that as we go. That’s more a mathematical calculation now. As especially as the money comes in and the liquidity increases, because obviously, we know that’s a commitment going forward anyway.
Okay. And the final one...
But it’s -- it’s achieve -- the borrowing isn’t is -- there isn’t really an intention every day to buy that.
Right.
So if I will look, I wouldn’t look for the company to be propping it or offering you in a fleet way out.
No. I mean, I wouldn’t say it was propping it up, it’s just in any of the opportunity but I get the point.
Sure.
Final question, just on the chartering in, I mean, I get an annual point about the 2020 opportunity. We’re getting very much closer to that. But chartering in an LR2 for six months departs sort of the 2020 opportunity and the federal rates that quite frankly hasn’t been achieved for some time in the spot market though. Can you just explain a little bit of the chartering strategy? I know it’s only one step and so pretty much losing transactions?
I’ll take that Jon and then my colleagues can chip in as they please. The ship got delivered to us in a favorable position, the rate at 14 actually for the second half of the year looks to be below the expectations that we had. When the shipping in a favorable position, we actually had the first Fronto where this -- the vessel particularly has made money.
So we look at opportunities, and then, of course, we cannot be as detailed as we would like to be in terms of showing that the vessel was a good take for the period. But because trading in pooling, you have the good and the bad and sometimes you dilute the good.
But this has contributed to the average of the fleet and looking at the results, actually our LR2 results have been quite promising, given the market situations and benchmarking with other LR2 operators.
Okay. That’s fair enough. Okay.
Yeah. I would also add to that that the -- you’re saying averages that were set with predominantly fixtures that were made in June and early July. They don’t necessarily represent what is out there in the LR2 market at the moment. I know you still don’t have a sufficiently good enough index to see that. But we agree with that -- agree totally with the manual now.
Okay. I appreciate your help. Thanks, guys.
Our next question comes from Noah Parquette of J.P. Morgan. Your line is open.
Hey. Thanks. Good morning. I wanted to ask you about a year ago call we were looking at this year as kind of an improving environment for product tankers given the low fleet growth. That’s been, obviously, a little bit disappointing. Can you talk about if you expect the market to firm before 2020 and what would we potentially get wrong and what’s dragging down rates right now? Thanks.
Well, I think it’s not a question of potentially we got wrong. I mean we -- I think we all of us did not expect, I don’t think this demand side deepening, this -- deepening in terms of the inventory draws and then you had, it’s difficult to say. Maybe you’ve had things flushed in these last six months, seven weeks, because you’ve had such volatility, especially around the Atlantic that the Asian market to suddenly started to -- not suddenly, but it started to improve as you would expect. And the Asian market is East Pacific is much stronger than the West. That sort of shows really the industrial growth, the demand that has to come all the time and that’s happening.
And the West is -- has been still under pressure with tremendous volatility and local differences, whether it’s Brazil strikes or whether it’s simply the pricing volatility around the oil price and products itself in what is a seasonal period and traders don’t seem to be wanting to get ahead and take risks with headlines out there changing every day, regarding economic -- the general picture of economics related to various government potential policies or not. So I think as we turn towards winter, the market will have to stop to adjust, they can’t carry on taking the inventory growth forever.
That said, the Asia is already positive. As you turn to winter, you will have to do something ahead of ‘20, now you’re going to have to get some of this ultra-low sulfur in place that dislocation is going to help, it’s going to be a boon from ‘20 tremendously to the demand for products and it’s reasonable to think that a lot of -- you’re going to have to move product around the world increasingly into ‘20 to build these stores and build the access to that low sulfur when January 1st comes around and that is coming on low inventories.
So it’s very, very reasonable to think that the market is ready poised for recovery. But it’s all -- it’s like never darkest before the dawn, we may have just seen that, we’ve seen Asia start to click up, we’ve seen the big shifts starting to improve on account of seasonal basis. We’ve seen a related market. The LPG market has been getting stronger as and again in account of seasonal move. That is reasonable sign. The VLCC market is it could at least stabilize out. So that’s what I would say at the moment.
Okay. Thanks. And then, I just wanted to ask about the ballast water order last week. Just remind me, is those 55 ships is that complete? Will your fleet be totally covered by then and why was the -- what was the decision to become the minority investor?
The answer to your first question is, yes, that will complete our commitment to outfit our fleet. The second part of your question, the priority for us is to procure a large order on time, on budget with low risk of logistical bottlenecks. The way we felt we could do that given our scale is to be aligned with our supplier and so really it came about as the best way to ensure the execution of our order through alignment of interests.
Okay. That makes sense. That’s all I have. Thank you.
Notwithstanding, I’ll just add that we’re big believers in their product and their technology. So ballast water still has a number of players, number of technologies, which are more or less effective than this was the right choice for us.
Our next question comes from Amit Mehrotra of Deutsche Bank. Your line is open.
Thank you, Operator. Hi, everybody. Thanks for taking my question. So first one is, obviously, there’s been a lot of moving parts with respect to the capital structure. I just want to understand, when you talk about ample cushion, excuse me, for liquidity. I understand it’s obviously a delicate balance in terms of extending the liquidity runway and as well not diluting existing shareholders at current valuations, which are obviously quite low. But it seems like the equity value of the company is pricing in the need of some form of equity offering and I just wanted to get your thought. It doesn’t seem obviously given where your breakeven levels are on your liquidity is today that that is something you would entertain at these prices. But I just wanted to understand your thinking in terms of how you think about that vis-à-vis the runway where the market is today and what point would you entertain a straight equity offering? Thank you.
Well, I think that you’re seeing now two quarters consistent as you pointed out, a consistent effort to find ways to get ourselves to create a bridge to an improving market, without raising equity. We started off back in March, April saying look we would be raising $330 million of liquidity. The market responded very favorably thinking that was great. We then started swapping out bonds, I think, $180 million bonds in addition to that, because we continue to see the market weakness and we want it to, as Brian said just take more liquidity.
Since that time, we know as we said to the previous caller, we didn’t expect this June period to be in and July period to be quite so low. We maintain the liquidity position there, balance that off by swapping out another $20 million worth of bonds. Brian has indicated that what do you see today is not necessarily where we’re going to stop. So the company’s actions are strongly supporting its words and wish to avoid having to dilute shareholders at these distressed prices and…
Yeah.
Right.
I’m sorry to cut you off, Robert, we -- I’ll stop.
Oh! It’s okay. It’s okay. Fine.
Okay. So I just wanted to get into specific details here because we are talking about a big fleet and a relatively large breakeven and some cash breakeven. So I just want to make sure that all our numbers are correct. So if I look at your cash -- your first your breakevens is -- Brian is like $16,100 kind of the right all-in cash breakeven number. I guess you have $40 million a quarter over the next couple of quarters at least of debt amortization, is that the right bogey in terms of how we should gauge the runway relative to the cost on a daily basis?
Amit, yeah, that’s it, you’re right in there in the area there, yes. Of course, the additional $300 million of liquidity, it’s borrowed money, you have to pay that back, so just alone that $600 a day, that you have to pay back, so is the -- it’s the price you pay for borrowing, so it’s a nice insurance policy though.
Right. Okay. And then, but the amortization, I guess, really starts to step up in the second quarter of 2019 related to the unsecured bonds. And so I would imagine that typically the market does seasonally we’ve noticed like this Thanksgiving period that’s really hopefully an inflection point in the market. But if the market stays weak for the next through kind of first quarter of ‘19 or even earlier than that. Is that kind of the bogey that we need to think about from a timing standpoint before you guys make more of a decision on equity?
I -- you could think about where you want, where -- it’s a different dynamic, right. I mean, Brian, has said, he isn’t stopping where he is stopping. So it is the dynamic structure. We were able to raise enough liquidity to in effect to get ahead of the mathematical situation. So we haven’t -- we’re stronger today despite the weakness of the second quarter and the third quarter than we were at the end of the first quarter.
We may well be stronger at the end of this quarter than we were -- and we are -- than we are right now on this conference call and we may be stronger again at the end of December 31 than we are now.
Yeah.
So, the object, we all see the -- this 2020 position and we have -- and as I said to the previous caller, we also think that the market will there is no industry better than the product market that will gain in terms of demand from 2020 that we see not just 2020, but we see that you have to move cargo around even prior to that position in the ‘19 position.
Right.
So, you can well have a weak third quarter, you could have a weak fourth quarter and still the balance sheet itself in terms of liquidity may even be stronger than where it is today.
Great. No. That makes sense. Yeah. And I agree with that. One last one for me if I could, and Brian, I just -- a little bit of a mechanical question, I guess when you’re doing all these sale leasebacks, when the banks look at the leverage or the value of loan ratio for the fleet, do they include the obligations associated with that leases or is that separated out, I just don’t know how it works mechanically?
No. The deck is included in a leverage debt-to-cap ratio.
Got it. Okay. Okay. One last one on the investment in the scrubbers, not scrubbers, but the ballast water treatment, sorry, I have been talking about scrubbers mostly. I just wanted to put some numbers around that given where we’re focused so much on liquidity. By my math, it’s like $40 million over four years, so it looks like $10 million a year. Is that in the ballpark or any other kind of thoughts there in terms of what the actual cash costs associated with those acquisitions are investments rather?
Cameron?
They will be aligned or baked into the dry docking numbers, because all the installation and consequently the lion’s share of the payment for the equipment will be lined up with the dry dockings. So I’d say it’s less 40 times or 10 times for and more backend waited.
Okay. Great. That’s helpful. Thank you, guys. I appreciate your time.
Our next question comes from Magnus Fyhr of Seaport Global. Your line is open.
Yeah. Good morning. Just one question on the IMO 2020, I mean there’s a lot of numbers out there with the new requirements starting January 1, 2020. But would McKenzie I think has incremental demand for the high sulfur or low sulfur fuel by 1.5 million barrels. What’s the implications there, is that just -- is that pure incremental demand on product tankers or I guess the current bunker fuel is carried and some dirty product tankers. What do you see there as the primary beneficiaries within the product tanker fleet?
Hi, Magnus. I’ll take a shot at that. Number one is, that’s a lighter number from Wood Mackenzie that we’ve seen from others, but we’ll take that as it is.
That assume some non-compliance -- I think about $1.4 million of non-compliance.
Okay. That explains it then. As the supply chain starts to switch over from its current ratio of heavy to light, let’s call that 80/20 to the opposite 20/80, you’ll see a fair bit of disruption not just in terms of storage facilities, bunker barges, but also in DC transportation, of course.
We’ve said it in the past in a different context, but vessels which are trading dirty for a long period of time cannot simply switch back to trading clean products and there’s a lot of technical reasons for that.
A lot of the bunkering business in supply chain is very old vessels, which don’t logically have another trade to switch into. So the answer to your question is we see it almost entirely as incremental demand and that’s what makes us so excited.
So I mean you’re saying that $1.4 million, I mean, that’s about 22 million barrels of per day that’s being transported now. I mean that’s a 6% increase and you think that’s on the low side given the high non-compliance number that I just quoted.
Well, we….
It’s on the low side for, well, I would just throw out there and then, maybe Robert can add. I consider on the low side for two reasons. One is the amount of non-compliance that we’re expecting may differ.
But the other reason is just bear in mind that products don’t move simply from A to B from refinery to source of consumption. They move around into net -- in rather networked and trading pattern.
So things can go back and forth. It may seem nonsensical, but that’s our experience as surplus and deficits are balanced. So the effect on ton miles is more than a one-for-one relationship in this regard.
Right. I know we’re in this…
I would concur with Cameron with that. But the thing that you’ve do again, you don’t just turn a lights on or off on January the 20 -- in 2020. You have to get stuff into those positions and some of this dislocation and change will happen earlier than that.
So it’s -- so we can’t find anything that is as low as Wood Mackenzie. But you’re correct, that even if you took Wood Mackenzie locates position, which we really disagree with and everyone else seems to disagree with publishers on this stuff.
You still get 6%. But that 6% is not going to suddenly go up in January 2020. It will start happening beforehand. And as Cameron says, in terms of actual ton miles and utilization that figure will end up being larger.
Right. And when you guys talk to the layers of the world, what’s their position currently, do they think -- I mean there is lot of different types of marine gas holes that’s getting export now. But will the refining industry be ready. I mean what’s their take on that when you talk to your clients?
I can add clear magnitude, it depends I’d say from a marketing standpoint, they’re incredibly exciting -- excited, from a refining standpoint, they’re somewhat worried and from a shipping standpoint, they’re scared.
And the reason they’re scared is because they recognize Robert’s point that they’re very, very short, straight, heading into the end of next year and they themselves are predicting rapid tightening of the market.
From the refining point of view, I say worried, because obviously, there’s adjustments to not only their slate, but also their infrastructure and capital allocations to be required to maximize the opportunity and I think they’re going to take several years to fully adjust to this. But, of course, marketing wise and the expansion of margins looks great to them from the commercial side.
So I mean if you think of the industry or so they think the industry is going to be short shipping, I mean you’ve seen the traffic grew for us and the Glencore’s, I think, they’re out a little bit earlier this year, but you would think that some of the smaller players would come in here and secure tonnage. Have you seen those big trading companies out in the market? I mean it seem like an ideal time here with rates being low that you can lock up some ships here on longer term?
Again, others can add here Magnus, but I agree entirely with your observation. We continue to see inquiry to charter in tonnage, which is probably why the TC rates haven’t fully declined to the level of the spot market, because there is that contango in the TC curve, expecting rises into next year. So we can continue to see them active in taking in tonnage. But I think part of it is by definition for some of the larger charters going to be reactionary rather than proactive.
Yeah. As Cameron said in recent time, if you see that they’ve taken these ships on charter, the market really is, where that spot market has been in the last two months, you really have got a pretty steep contango now.
So actually there is every sign that not just what they’re talking about in their own conference call, but what Cameron’s view to that position as he said is correct and that’s what’s being shown in the math of the actual forward time charter rates.
Okay. Great. Thanks for taking my question.
It’s also -- I would add being shown by -- we’ve just seen first, what I will call a private industrial player, a person who has great experience in their organization of shipping, has a private commitment in the shipping and the product market, in BW tankers look to acquire and actually acquire a reasonable chunk of half that.
We would expect that they will merge, that is not other people’s money, that is -- that person’s own commitment of their experience going along the market. So that’s a very healthy sign again that you’re seeing disinterested financial seller being bought out by a consolidating very experienced, very good committed industrial plan for consolidation too.
Our next question comes from Randy Giveans of Jefferies. Your line is open.
How are you gentlemen? Two quick questions from me. So first you’ve completed the sale and leaseback transactions for I guess those 32 tankers, you can correct me if I’m off on that. Do you expect this number to grow by the end of this year?
I think that’s the best thing is there are various reasons we’ve whether that commercial otherwise or balance. So with this stage we don’t want to go into any further detail other than restate what Brian this year, while he said earlier is that we continue to find ways to raise rates and increase liquidity and we’ll do that until we see the recovery in the market as it were that we expect.
All right. And one more question, what was the reason for reopening the converts exchange a few weeks ago, where I guess, the new totals now 203 million this year or 2022 there have been exchanged? And then secondly could this reopen again?
Well, those specifics to the original exchange meant that there were group of important bondholders that we were unable to -- they’re important in that they own bonds and some of them being there from the beginning, but we were unable by the rules of the previous exchange to not to reach them.
And when they saw the transaction originally happen, they inquired that if at a future date, they would be happy to look at us doing it again. And we found the opportunity to do that, obviously, we were on the margin slightly to be able to get better positions and I think it worked out well for all parties.
All right. That’s…
Whether you’d be able to do it again -- again it depends on mathematical alignment of the situation.
Okay. Thank you very much. That’s it for me.
Our next question comes from Ken Hoexter of Merrill Lynch. Your line is open.
Great. Good morning. Robert, you mentioned darkest before dawn, yet the third quarter rates so far are well below second quarters with the LR1s down 28% and Handy is down 25%. What are your thoughts on -- you keep mentioning kind of toward 2020, why have you not seen any inflection at this point yet?
Well, I’ll explain what you’ve got particular in terms of the Asia you are -- you have seen steady strengthening. In the Atlantic, it’s more arbitrage and you have to see in the chaotic trading environment with oil moving up and down at crazy proportions. So people are unlikely to sort of dive in and take that risk.
But also you have to remember that the guidance we’ve given is predominantly for fixtures that were done in June and most of the early part of July. The -- that the market now and for the last two weeks has been stronger than that average.
So that’s why I say we may well have seen the darkest side before a dawn, that very often happens in shipping as you just likely saw on a dry cargo, a year and a half, two years ago, and historically, anyway the product market will follow the dry cargo by a year, year and a half, you suddenly sort of woke up three months or four months later to oh! My God, I’m in the middle of a recovery.
And that normally happens anyway in shipping, in my experience, is that none of us can pick this bottom even though we’re living it that the bottom just happens and you wake up and all of a sudden all these worries that you guys are showing on the telephone calls it sort of disappear.
And if you take -- if you take dry bulk you know look at the tenor of the call, it was only nine months ago the dry bulk companies were asked by the analysts quite correctly, well, is it too early for you guys to go back onto normal moratoriums with your lenders. Is it too early for you to reinstate dividends? Why are the private owners -- why the industrials buying ships when rates are so weak?
And all of a sudden, nine months later, it’s only nine months later that companies on conference calls are being asked for why are you buying back more stock, why aren’t you increasing dividends.
So that’s why I say what I in my comments that I make, that this happen -- this can happen pretty fast. The inventories now are low and if the world holds together, you are turning to a stronger season and you are turning to a clear defined increase in incremental demand as a result of 2020 and even if you use the low case scenario of Wood Mackenzie, you get a dramatic shift in utilization.
And you have already seen in the middle of summer a counter seasonal increase in rates in this last two weeks and it is very difficult as I’ve said before for you guys to see this, because you don’t have an index out there for the LR2s. Hopefully, that will come in September.
So just to follow-up on that, Robert, maybe just to follow-up on Noah’s question earlier, if you can just dig into kind of what did happen during the quarter, was it more -- you kept saying inventory draws, was there anything else aside from that, whether it was pushed count…
No. You had a Brazilian strike and you had a total lack of arbitrage trading. People continued to draw, because there was tremendous price uncertainty in the Atlantic Basin, which wasn’t a very good environment to create trading or storage. So, people held on and drew down what they were using themselves, you had a lack of -- you had a reduction in demand into South America as parts of this.
And then let me follow-up with Brian I guess for a question now you got a hit on a lot on the targeted raise versus the $320 million, but seemed like you were confident on the last quarter of such a specific number that you provided?
Wait, wait, wait, wait, wait. Brian didn’t -- wait. We said we were doing $334 million and the positions. So, first of all, we said in March $334 million, then we did an additional $200 million with the convertible exchange and Brian has said and stated we have not yet finished.
Okay. So if I can just finish the question. But -- so I just wanted to understand, at the time it seemed pretty specific right to give such an extent. I understand you’re not done. Yet the pieces arrived in piecemeal fashion over time. I just want to get maybe your thoughts on the process of when you have such an exact number upfront, and then, it obviously happens over time maybe just expand on the process a little bit of was it just working with the different banks that took longer or was it different deals fell through given rates maybe just talk a little bit through that?
That was the number we have at the time, and as Robert said, we’re not done. So we will see when we’re all finished, what the number will turn out to be. But as time goes by something could change in the deal, value, it could go up, it could go down, we’ll see.
Yeah. And more importantly, the total is weighing excess of that, you’ve already done $319 million out of $334 million plus the $200 million. So the way you should look at it against liquidity, which is what the announcement was, you’re already at $519 million against $334 million.
Okay.
With the statements that you’re not finished yet.
Okay. Thank you. Thanks for the time.
Our next question comes from Fotis Giannakoulis of Morgan Stanley. Your line is open.
Yes. Hi, guys, and thank you. It seems that you are positioning your company as you’re trying to create a bridge to 2020, when the new regulations are coming into effect and by building a lot of liquidity upfront. I’m trying to understand how much cash do you need for working capital? How much of this liquidity is truly available? And if you decide to build up additional liquidity, is the sale and leaseback part the main tool that you will continue to use? Would you consider of disposing some of the assets or even refinancing the baby bond with a new baby bond? I’m trying to see what is the priority apart from the sale and leaseback…
Sure.
… and how many sale and leasebacks?
Yeah. I understand that. And as we stated before, we’re not ready to go into details on that for our own reasons other than to say that, okay, we will continue to look to raise that liquidity.
And can you give us an estimate of how much of your liquidity is needed for working capital?
Brian?
It’s -- probably need $50 million, $60 million working capital.
Okay. Thank you. And one more question about IMO 2020. I was wondering if you would also consider putting some scrubbers in some of your fleet. I see some of your peer storm has communicated a plan to install scrubbers and it seems that there is plenty of financing from charter traders to fund the scrubbers in exchange for some time charter, is this something that you would consider?
Thanks, Fotis. We’ve said in the past that we continue to evaluate scrubbers and other alternatives. There are a number of risks and challenges that scrubbers represent that we’re continuing to evaluate, obviously, the larger ship sizes have easier or more compelling case for scrubbers, that’s not to say the smaller ships do not.
But, obviously, you’d see them probably lead the way because it’s a clear path and payback profile. As we’ve shown with ballast water treatment, we shoot when we see the whites of the eyes and scrubbers are no exception. So, we’ll update you and the market as and when we get closer to decisions regarding scrubbers, but we haven’t discounted the possibility at all.
Thank you very much, Cameron.
There are no further questions. I’d like to turn the call back over to Brian Lee for any closing remarks.
I would like to thank everyone for joining us today and we will speak to you soon. Thank you. Bye.
Ladies and gentlemen, thank you for participating in today’s program. This does conclude the conference and you may all disconnect. Everyone have a great day.