Overseas Shipholding entry into plan support agreement gets court OK

By Kali Hays

New York, April 7 - Overseas Shipholding Group, Inc. obtained approval of its plan support agreement with lenders holding a combined total of 72% of amounts outstanding under its $1.5 billion credit agreement, according to a Monday order with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, 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 $300 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, their designees or their assignees.

The proposed plan also calls for Overseas Shipholding to raise $735 million in secured exit financing.

The company said the proceeds of the financing, together with the additional proceeds from the rights offering, will enable it to satisfy the claims of Danish Ship Finance A/S in full in cash.

As a result, the Overseas debtors will retain, for the benefit of their reorganized business, the 10 vessels over which Danish Ship Finance has security interests.

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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