Overseas Shipholding Group Inc. (OSG), the largest U.S. tanker company, plunged to a record in New York trading after saying it’s evaluating options including filing for Chapter 11 bankruptcy protection.
The shares slumped as much as 63 percent to $1.21 and were at $1.355 as of 10:17 a.m. local time, valuing the company at $41.5 million. Its $300 million of 8.125 percent notes due March 2018 dropped 14.75 cents to 37 cents on the dollar as of 9:19 a.m., according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
The company said Oct. 3 it was reviewing a tax issue arising from its being domiciled in the U.S. and has substantial international operations, and relating to the interpretation of provisions in its loan agreement. It said Oct. 19 the board’s audit committee concluded the company’s financial statements for at least the three years ended Dec. 31, 2011, and associated interim periods, and for the fiscal quarters ended March 31 and June 30, 2012, should no longer be relied upon.
Overseas Shipholding said it’s evaluating if it will need to restate for those periods. Because of those, and other matters, including negotiations with bank creditors, Overseas Shipping said it’s evaluating options including filing for Chapter 11 protection.
Rates for very large crude carriers, each hauling 2 million barrels of oil, plunged 55 percent to $14,320 a day this year, according to Clarkson Plc (CKN), the world’s largest shipbroker.
“I don’t think it will impact the broader tanker market,” said Doug Mavrinac, a shipping companies analyst at Jefferies & Co. in Houston. “Those assets aren’t going anywhere. We saw a filing last year that didn’t have any impact in the market, and I don’t think OSG would either.”
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