Overseas Shipholding amended plan of reorganization effective Aug. 5

By Caroline Salls

Pittsburgh, Aug. 15 – Overseas Shipholding Group, Inc.’s plan of reorganization took effect on Aug. 5, according to an 8-K filed Friday with the Securities and Exchange Commission.

The plan was confirmed on July 18.

As previously reported, the company amended the plan to reflect a stipulation with holders of its 7½% notes and Wilmington Trust, NA resolving anticipated objections.

Under the stipulation, the plan was amended to provide for the cash payment of a “consent fee” to holders of 7½% notes who elect to receive election 2 notes equal to 3% of the aggregate principal amount of the 7½% notes held by the election 2 noteholders.

Overseas agreed to pay Wilmington Trust the reasonable fees and expenses of the trustee for the 7½% 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 7½% notes indenture.

Under a previous amendment to the plan, each holder of 7½% notes due 2024 will have its notes reinstated and will receive a cash payment equal to the amount of unpaid and overdue interest, unless that holder elects to receive a distribution of new notes and cash instead.

Each holder that elects to receive the alternate distribution will receive notes with a principal amount equal to that of the 2024 notes currently owned, plus the cash payment – which was originally expected to be equal to 1% of the principal amount of the notes held – and a cash payment equal to the amount of interest that would be due on the notes if they were reinstated.

The new notes will be due Feb. 15, 2021.

“Through our financial and operational restructuring, we have focused on creating a competitive structure to allow us considerable flexibility to grow the business while continuing to provide our customers with the high-quality service that they expect,” post-confirmation chairman of the board John Ray said in a company news release.

Plan terms

Specific terms of the amended plan include the following:

• 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 will be reinstated, including payment of any applicable contractual interest;

• The company’s 7½% notes will be reinstated, including payment of any applicable contractual interest, or exchanged for new notes and cash;

• The reorganized debtors entered into exit financing consisting of $1.2 billion of term loans and $150 million of revolving loan facilities. The financing is led by Jefferies Finance LLC;

• 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 $1.51 billion rights offering will be made to all OSG equity interest holders;

• 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 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 12-20000.

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