Overseas Shipholding equity committee objects to disclosure statement

By Kali Hays

New York, April 25 - Overseas Shipholding Group, Inc.'s official committee of equity security holders objected to the company's proposed disclosure statement and solicitation procedures, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said that the solicitation procedures improperly prejudice the right of the committee to vote on the plan "through a legally impermissible classification scheme under the plan" and that "the disclosure statement fails to provide adequate information."

Under the proposed disclosure statement, the committee is to receive $61.4 million of new equity, but the committee claims that the disclosure statement "fails to answer the most fundamental question: on what basis did the debtors determine that equity holders should receive only $61.4 million of new equity in an admittedly solvent enterprise?" according to the filing.

"The equity holders are entitled to know the debtors' view on value before they cast their vote on the plan, particularly where the market currently values the equity at over $184 million," the filing stated.

The committee further alleged that the plan's combination of the classification of old equity interests and subordinated claims is a "naked attempt to disenfranchise the vote of equity holders" as the subordinated claims will dilute and "possibly overwhelm" the votes of the equity holders.

The committee asked the court to deny the company approval of its proposed disclosure statement and solicitation procedures, but if the disclosure statement is allowed, the committee requested that a letter outlining its concerns be disseminated with the statement.

A hearing is scheduled for May 7.

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

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