Omega Navigation files Chapter 11 plan, hopes to emerge in November

By Caroline Salls

Pittsburgh, Aug. 3 - Omega Navigation Enterprises Inc. filed its plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

According to a company news release, the key components of the plan include:

• The continued ownership and management of Omega's fleet;

• A $2.5 million or $2.6 million new value equity investment from an entity affiliated with Omega's founder and chief executive officer;

• Replacement of the company's current senior facilities agreement with a new facilities agreement maturing on Oct. 30, 2017;

• A rights offering entitling Omega's general unsecured creditors to purchase equity of the reorganized Omega on a dollar-for-dollar basis with the new value equity investment;

• A 10% cash distribution to Omega's unsecured creditors over time if they accept the plan, but no distribution if they do not accept the plan; and

• The payment in full of all administrative expenses and other priority claims.

The new facilities agreement would include a new money working capital facility in the maximum amount of $7.5 million to fund some Omega Chapter 11 expenses and to be used for working capital purposes.

Omega said its junior lenders could also participate in the rights offering if they accept the plan.

Nothing for shareholders

Because the plan does not propose to pay unsecured creditors in full, Chapter 11 does not permit a distribution to current shareholders, the company said.

Accordingly, current shareholders will not receive or retain any shares or other distributions on account of their equity interests.

Omega said it would emerge from Chapter 11 as a private company.

Acceptance conditions

The plan is subject to various conditions, including acceptance by senior lenders. While Omega remains in discussions with its senior lenders, the company said there could be no assurance that the lenders would ultimately agree to accept the plan.

If the senior lenders have not agreed to accept the plan by the Sept. 4 disclosure statement hearing date, Omega has reserved the right to withdraw the plan and pursue other options.

If the plan is accepted by the senior lenders and other parties and approved by the bankruptcy court, Omega said it believes it will be able to emerge from Chapter 11 bankruptcy in early November as "a financially stronger business that will be positioned to enjoy future growth based on the strength of its existing modern fleet of product tanker vessels."

Omega Navigation is an Athens, Greece-based provider of marine transportation services. The company filed for bankruptcy on July 8, 2011 under Chapter 11 case number 11-35926.

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