Overseas Shipholding, lenders set plan terms under support agreement

By Caroline Salls

Pittsburgh, Feb. 12 - Overseas Shipholding Group, Inc. entered into a plan of reorganization support agreement with lenders holding a total of about 60% of amounts outstanding under its $1.5 billion credit agreement, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

The agreement requires the consenting lenders to vote in favor of a proposed plan that incorporates agreed upon terms.

Under the plan, creditors' allowed claims other than credit agreement claims will be paid in full in cash, including post-bankruptcy interest.

Holders of equity interests and subordinated claims will receive a combination of stock and warrants of reorganized Overseas Shipholding valued at $61.4 million, subject to dilution on account of a management and director incentive program and a rights offering.

Meanwhile, holders of claims arising out of the $1.5 billion credit agreement will receive their share of stock and warrants of the reorganized company.

In addition, Overseas' 7½% unsecured notes due in 2024 and 8 1/8% senior notes due in 2018 will be reinstated following payment of outstanding interest.

According to the 8-K, the company will raise $150 million through a rights offering of stock and warrants to the holders of credit agreement claims.

The rights offering will be back-stopped by the consenting lenders or their designees.

The proposed plan also calls for Overseas Shipholding to raise $625 million in secured exit financing.

The company said the proceeds of the rights offering and exit financing will allow it to satisfy the secured claims of the Export-Import Bank of China in full in cash.

As a result, Overseas said it will withdraw its previous motion for authorization to sell the vessels over which the bank has security interests.

Under the support agreement, the company is required to file a plan and disclosure statement with the U.S. Bankruptcy Court for the District of Delaware by March 7, the disclosure statement must be approved by May 16, and the plan must be confirmed by June 20.

Overseas Shipholding, a New York-based tanker company, filed for bankruptcy on Nov. 14, 2012. The Chapter 11 case number is 12-20000.

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