Overseas Shipholding approval hearing adjourned to continue revisions

By Kali Hays

New York, May 23 - Overseas Shipholding Group, Inc.'s hearing to approve the company's amended disclosure statement and equity agreement reflecting its alternate plan of reorganization has been adjourned to May 27, according to an 8-K filed Friday with the Securities and Exchange Commission.

The hearing was originally scheduled to conclude May 23, but the company requested the adjournment to allow for additional amendments and commitment parties and to further revise the alternate plan in order to resolve certain objections to the amended disclosure statement, according to the 8-K.

As previously reported, the company terminated its plan support and equity commitment agreements with certain lenders of its $1.5 billion credit agreement after receiving a "more favorable" proposal for an alternative plan of reorganization from holders of existing equity interests on May 2.

The 8-K also said that given the extra time, the company intends to now seek entry of orders suspending the trading of the company's common stock in the over-the-counter market on June 3 and setting a record date of June 6 for voting on the alternate plan during the May 27 hearing.

The amended plan terms include:

• All administrative claims, priority tax claims, other priority claims, secured vessel debtor-in-possession claims, secured vessel claims, other secured claims, credit agreement claims and "other unsecured" claims will be unimpaired;

• Overseas Shipholding will retain its Cexim vessels and DSF vessels and pay Cexim and DSF claims in full;

• Holders of the company's 8¾% debentures will be paid in full in cash, including any applicable contractual interest;

• The company's 8 1/8% notes and 7½% notes will be reinstated, including payment of any applicable contractual interest;

• The reorganized debtors will enter into exit financing consisting of $1.2 billion in term loans and $150 million in revolving loan facilities;

• Admiralty lien claims and personal injury claims, including numerous asbestos claims, that have not otherwise been disallowed and expunged will be unimpaired and may be asserted against the applicable reorganized debtors, subject to those debtors' rights and defenses;

• A $1.5 billion rights offering will be paid to all OSG equity interestholders;

• Holders of subordinated debt claims and subordinated equity claims will receive a share of the proceeds of any residual director and officer insurance and, to the extent the claims exceed that share, cash equal to the amount of the claim;

• Holders of old OSG equity interests will receive subscription rights for new class A securities. Those who do not participate in the offering or are not eligible to receive rights will receive new class B securities and up to 10% of the net proceeds from any professional liability action;

• Intercompany claims are unimpaired and will be reinstated or discharged and satisfied at the option of the debtors; and

• Intercompany equity interests are unimpaired and will be reinstated.

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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