Overseas Shipholding stipulation resolving noteholder concerns OK’d

By Kali Hays

New York, July 15 – Overseas Shipholding Group Inc. obtained court approval of a stipulation with holders of its 7˝% notes and Wilmington Trust, NA resolving anticipated objections to the proposed plan of reorganization, according to a Tuesday order with the U.S. Bankruptcy Court for the District of Delaware.

The stipulation arose after Wilmington Trust served Overseas with a notice outlining an anticipated objection to the plan by the 7˝% noteholders based on claims of a “change of control” and the lack of a provision providing payment of overdue interest owed under the 7˝% notes.

A protective order preventing discovery on the issue of overdue interest was entered by the court June 9 leading to negotiations between the parties and the agreed stipulation.

Under the stipulation, the reorganization plan will be amended to provide for the cash payment of a “consent fee” to holders of 7˝% notes who elect to receive Election 2 notes equal to 3% of the aggregate principle amount of the 7˝% notes held by such Election 2 noteholders.

Overseas agreed to pay Wilmington Trust the reasonable fees and expenses of the trustee for the 7˝% noteholders, not to exceed $1.9 million.

Overseas and Wilmington Trust will also enter into a new supplemental indenture regarding the Election 2 notes on the same terms as the 7˝% notes indenture.

As a result of the stipulation, the holders of 7˝% notes waived any rights to overdue interest, agreed not to object to the proposed plan, to not instruct Wilmington Trust to object to the plan on behalf of the noteholders and agreed to not transfer or dispose of any held notes.

A hearing to confirm the plan of reorganization is scheduled for July 18.

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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