Overseas Shipholding shareholders oppose plan support deal, seek voice

By Caroline Salls

Pittsburgh, Feb. 26 - Some holders of Overseas Shipholding Group, Inc.'s equity objected to approval of the company's plan support agreement, arguing that it "that would prematurely commit the debtors to support a flawed plan that enriches the consenting lenders at the expense of equityholders," according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The equityholders said the plan support agreement with consenting lenders gives the lenders 97% of the reorganized company's equity, "essentially handing them the keys to the company."

In addition, the equityholders said the support agreement validated their view that there is significant equity value in the Overseas debtors.

"Although reinforcing the fact that equity is in the money, the holders contend that the PSA unfairly diverts significant value away from equityholders in favor of the consenting lenders and severely inhibits equity's ability to have a meaningful voice in these cases," the objection said.

The equityholders said approval of the support agreement would preclude the continued participation of other creditor constituencies, ensuring a "plan battle."

According to the objection, the support agreement provides to the consenting lenders substantially greater value than their claims are worth, while keeping the company from pursuing potentially more beneficial avenues for the benefit of all constituents.

The equityholders said they asked the U.S. Trustee for Overseas Shipholding's cases to appoint an official equity committee.

The U.S. Trustee's response to the official committee request is still pending, according to the objection.

Overseas Shipholding, a New York-based tanker company, filed for bankruptcy on Nov. 14, 2012 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 12-20000.

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