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Overseas Shipholding (OSG) Files for Bankruptcy

 November 14, 2012 10:04 AM
 


(By Balaseshan) Overseas Shipholding Group Inc. (NYSE: OSG), which engages in ocean transportation of crude oil and petroleum products, has filed for Chapter 11 bankruptcy protection.

The company plans to use the Chapter 11 filing, which was submitted in the U.S. Bankruptcy Court for the District of Delaware, to significantly reduce its debt profile, reorganize other financial obligations and create a strong financial foundation for its future.

OSG said it will continue to serve customers without interruption while it reorganizes its debt. OSG has more than adequate cash to allow the company to continue operating as usual and does not require debtor-in-possession financing.

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In addition, the company expects to generate significant cash flow while in Chapter 11, further ensuring its ability to maintain safe, reliable and high-quality operations throughout the process.

Certain subsidiaries, including those that manage the company's facilities in Manila, Singapore, Greece, London and Newcastle, have not filed for Chapter 11 reorganization. OSG plans to work with its constituencies to emerge from bankruptcy as quickly as possible while maintaining the company's market position, business model and strategy.

OSG has filed first-day motions that ask the Court to approve, among other things, payment of employee wages and benefits that were incurred before the petition was filed, payment of certain pre-filing amounts owed to vendors and suppliers, and continued access to the company's cash collateral and cash management systems. The company is working closely with its vendors to secure their continued support.

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"We will use the Chapter 11 process to definitively resolve our financial issues. An orderly restructuring in Chapter 11 will provide stability both to OSG and to the entire shipping industry. We expect to emerge from our Chapter 11 reorganization with a solid financial base and clear path to future success," said Morten Arntzen, president and CEO of OSG.

On October 22, OSG informed investors that it is in the process of reviewing a tax issue arising from the fact that the company is domiciled in the United States and has substantial international operations, and relating to the interpretation of certain provisions contained in the company's loan agreements.

As a result of this issue, the company informed investors that its financial statements for at least the previous three years should not be relied upon.

OSG closed Tuesday's regular session at $1.13. The stock has been trading between $1.02 and $15.12 for the past 52 weeks.

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