OSG's next step?

The ink is barely dry on OSG’s Chapter 11 exit papers but speculation has already started as to how the company will develop following its restructuring.

OSG exited court protection this week having signed $1.35bn in fresh financing with Jefferies, with separate agreements for its US flag and international fleets.

“Although it is still early days for the new OSG, we see the fact that the debt facilities is separated into two tranche for US flag ($600m) and international fleet ($600m) individually could be early indications of a US flag spin-out further down the road,” said Erik Nikolai Stavseth of Arctic Securities.

Stavseth says the separation of the Jones Act business has been suggested for some time.

He added: “We see AMSC [American Shipping Company], AKPS [Aker Philadelphia Shipyard] and Philly Tankers as prime candidates for OSG to create a growth story ahead of potentially setting up an MLP containing Jones Act tonnage.”

Stavseth notes the US flag vessels in the OSG fleet have contracts for five to seven years that are likely to be extended.

The owner has a fleet of 32 crude tankers, including two chartered vessels, four gas vessels 27 products tankers and 24 US flag ships.

TradeWinds reported in May,  while OSG was still restructuring, Imperial Capital had suggested the owner’s US flag fleet could have been worth $1.535bn if it were spun off in an MLP offering.