Overseas Shipholding Group filed to reorganize under Chapter 11 under federal bankruptcy laws, filing petitions for itself and certain operating subsidiaries in U.S. Bankruptcy Court in Delaware on Wednesday.
The tanker company said it plans to “reduce its debt profile, reorganize other financial obligations and create a strong financial foundation for the company’s future.”
It promised “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. 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.”
Trading of the company's shares had been suspended on the New York Stock Exchange, closing at $1.13, and when they resumed today they were trading between 42 and 79 cents. It was a spectacular fall in valuation for a company whose shares were trading at over $86 in 2008.
Last month OSG said its board had concluded that its previously issued financial statements for at least the three years ended Dec. 31, 2011 and associated interim periods, and for the fiscal quarters ended March 31 and June 30, 2012, should no longer be relied on.
Morten Arntzen, president and chief executive officer of OSG said “the last few years have been difficult for everyone in our industry, but OSG has continued to provide safe, incident-free and reliable shipping services for our global client base. Our Jones Act fleet, in particular, has performed very well the last 18 months and has secured a number of notable contract extensions.
“Over the past two weeks, OSG has continued to fix vessels with our clients. We will use the Chapter 11 process to definitively resolve our financial issues,” he added. “ 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.
“During the reorganization, we have more than enough cash to support our operations, and we expect it to be business as usual for OSG’s customers, employees, partners and suppliers. Thanks to our talented and dedicated employees around the world, we continue to enjoy a great reputation in our markets. I would like to thank them for their continued support and hard work,” Arntzen continued.
OSG filed first-day motions that asked 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.
The company said certain subsidiaries, including those that manage its facilities in Manila, Singapore, Greece, London and Newcastle, have not filed for Chapter 11 reorganization.
The company said a list of the OSG entities which filed, and those which did not file, Chapter 11 petitions, is available at www.kccllc.net/osg
The tanker company said it intends to work with its constituents to emerge from bankruptcy as quickly as possible while maintaining the company’s market position, business model and strategy. - Chris Dupin