OSG stock surges on new plan

Overseas Shipholding Group saw its equities race ahead yesterday after it changed horses on a restructuring effort.

As TradeWinds has reported, OSG has ditched a previously favoured pact with its lenders for a competing proposal from equity holders.

Its shares, which now trade over the counter, climbed over 15% yesterday after the redrawn strategy came to light.

Almost 1.3 million shares were traded in a day which saw the stock open at $6.25 and close at $7.19.

The revised deal sees equity holders back a $1.5bn rights offering for institutional investors.

The lender plan originally backed by OSG, would have seen holders of the company’s senior debt -- now mostly hedge funds -- come away with 97% of the equity in the reorganised company. Equity holders were relegated to a total recovery of $61m, which one analyst calculated to be worth about $2 per share.

The equity-holders plan features a larger commitment from US bank Jefferies: a $600m term loan secured by OSG’s US-flag fleet, a $600m term loan secured by its international fleet, and a $75m revolving loan for each unit designed to provide working capital upon exit from Chapter 11.

Erik Nikolai Stavseth of Arctic Securities, said: “While the battle for OSG may not be done yet, we see the likelihood of a separation of OSGs domestic and international assets as highly likely at a later stage.

“The creation of a 100% Jones Act focused company should attract significant investor interest and also potentially put AMSC in play should OSG wish to acquire the 10 MRs in order to obtain control over the vessels.

“Moreover, we see the international assets (47 vessels ranging from VL to Handysize) as a candidate for either splitting up through sales or creating a separate listed entity offering cross-class exposure to both crude and products.”

Stavseth values the international fleet at $1.4bn, if offshore units are excluded. The Jones Act fleet is priced at a similar level, the researcher says. 

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