Overseas Shipholding says near deal to advance bankruptcy plan

WILMINGTON, Delaware Fri May 23, 2014 4:41pm EDT

WILMINGTON, Delaware (Reuters) - An attorney for Overseas Shipholding Group Inc, one of the world's largest publicly traded tanker holding companies, told a U.S. judge on Friday a deal was close with noteholders that would clear the way for creditors to vote on its bankruptcy exit plan.

Noteholders agreed to drop their objection to the company's $1.5 billion rights offering for a chance to participate in the stock sale, said Luke Barefoot, an attorney with Cleary Gottlieb Steen & Hamilton, which represents the company.

The rights offering is a key component to Overseas Shipholding's exit plan and would allow existing stock holders to buy newly issued stock in the company. The plan is also backed with $1.35 billion in financing from Jefferies Finance.

Barefoot told a U.S. Bankruptcy Court hearing in Wilmington, Delaware, that the parties had a few more details to work out. He said they would return to court on Tuesday and ask Judge Peter Walsh to issue orders clearing the way for the rights offering and approving the company's disclosure statement.

The document must be approved so it can be sent to creditors along with ballots to start voting on the bankruptcy exit plan.

Holders of notes due in 2024 were unhappy that the company planned to reinstate their $150 million in securities without making an added "change of control" payment the noteholders said was triggered by the bankruptcy plan.

If creditors approve the plan and Walsh approves it, Overseas Shipholding will emerge from bankruptcy under control of its current stockholders. That group includes affiliates of Cerberus Capital Management, Paulson & Co and Silver Point Capital, according to court filings.

The company's pink sheet shares rose more than 10 percent in Friday trading, to around $5.88 each. Bankruptcy usually renders a company's stock worthless, but Overseas Shipholding has rebounded in Chapter 11 thanks to a key deal with tax authorities.

The company filed for Chapter 11 as its operations were squeezed by new ships coming into the market just as an energy boom in the United States depressed demand for tankers.

In addition, Overseas Shipholding was unable to borrow money because it was investigating the accuracy of its financial statements and the possibility that it faced a large unexpected tax liability.

However, the company resolved its dispute with Internal Revenue Service to cut its tax liability to about $255 million from an original demand for $463 million.

The case is In re Overseas Shipholding Group Inc, U.S. Bankruptcy Court, District of Delaware, No. 12-20000.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Lisa Shumaker)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.