OSG Noteholders Agree to Role in Share Sale Amid TalksMichael Bathon
Overseas Shipholding Group Inc., the largest owner of tankers authorized to ship between U.S. ports, said some creditors who had opposed its plan to exit bankruptcy will take part in the $1.5 billion share sale supporting the proposal.
A group holding more than half of OSG’s 7.5 percent notes due in 2024 agreed to buy as much as $190 million of any stock that isn’t sold in the equity offering, Luke A. Barefoot, a lawyer for OSG, said today in U.S. Bankruptcy Court in Wilmington, Delaware. The noteholders had planned to object to the plan, which would have left them owning debt in the reorganized company.
OSG changed course this month and decided to pursue a reorganization plan that provides a greater recovery to shareholders than originally proposed. The company was in court today to seek approval of the disclosure statement explaining the new plan. OSG delayed the hearing to May 27 while it negotiates further with creditors and shareholders.
The talks “will pave the way for a largely, if not completely consensual” hearing on the disclosure statement, Barefoot said.
A court-approved committee of shareholders convinced the company that raising about $1.5 billion in the offering and about $1.35 billion in exit financing was a superior plan to one that would have given secured lenders ownership in exchange for debt, according to court filings.
OSG received court permission today to extend trading in its shares. The New York-based shipper had planned to halt trading at the close of business on May 28, to set a record date of June 2 for those entitled to participate in the rights offering. Trading will now be halted on June 3, according to a regulatory filing.
OSG rose 11 percent to $5.88 in over-the-counter trading. The shares touched 42 cents following the bankruptcy filing in November 2012. They have climbed since and peaked at $9.87 on Jan. 29.
Secured lenders owed about $1.5 billion and holders of about $66 million in 8.75 percent debentures would be fully paid in cash under the plan. Holders of about $300 million in 8.125 percent notes would have their debt reinstated.
Holders of the $146 million in 7.5 percent notes would have the option to be reinstated or get an alternative note with a maturity shortened to 2021 from 2024, according to Barefoot.
All of the notes trade for more than 110 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
The company listed assets of $4.15 billion and debt of $2.67 billion when it filed for bankruptcy. At the time, OSG owned or operated 111 vessels that transport oil, refined products and natural gas. It now operates about 90 vessels.
The case is In re Overseas Shipholding Group Inc., 12-bk-20000, U.S. Bankruptcy Court, District of Delaware (Wilmington).