| WILMINGTON, Del.
WILMINGTON, Del. May 23 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
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
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