Item 1.01 Entry Into a Material Definitive Agreement.
As previously reported, on November 14, 2012, Overseas Shipholding Group, Inc.
("OSG" or the "Company") and certain of its subsidiaries (together with OSG, the
"Debtors") filed voluntary petitions for reorganization under Title 11 of the
U.S. Code (the "Bankruptcy Code") in the Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court").
On February 12, 2014, the Debtors entered into a plan support agreement (the
"Plan Support Agreement") among the Debtors and certain of the lenders (the
"Consenting Lenders") holding an aggregate of approximately 60% of amounts
outstanding under the Company's $1.5 billion credit agreement, dated as of
February 9, 2006 (as amended, the "Credit Agreement"). The Plan Support
Agreement requires the Consenting Lenders to support and vote in favor of a
proposed plan of reorganization of the Debtors (the "Plan") consistent with the
terms and conditions set forth in the term sheet attached as an exhibit to and
incorporated into the Plan Support Agreement (the "Term Sheet").
The Term Sheet, provides, among other things, that pursuant to the Plan,
creditors' allowed claims against the Debtors other than claims under the Credit
Agreement, will be paid in full, in cash, including post-petition interest, and
holders of equity interests and claims subordinated pursuant to section 510(b)
of the Bankruptcy Code would receive a combination of stock and warrants of
reorganized OSG valued at $61.4 million, subject to dilution on account of a
management and director incentive program and the Rights Offering (as defined
below). Under the Plan reflected in the Term Sheet, holders of claims arising
out of the $1.5 billion Credit Agreement will receive their pro rata share of
stock and warrants of the reorganized OSG. In addition, the Term Sheet provides
that under the Plan, the 7.50% unsecured notes due in 2024, issued by OSG and
the 8.125% senior notes due in 2018, issued by OSG will be reinstated, following
payment of outstanding interest.
The Term Sheet further provides that pursuant to the Plan, the Company will
raise $150 million through a rights offering (the "Rights Offering") of stock
and warrants of reorganized OSG to the holders of claims arising out of the
Credit Agreement, which Rights Offering will be back-stopped by the Consenting
Lenders or their designees. The Plan further contemplates that the Company will
raise $625 million in secured exit financing. The proceeds of the Rights
Offering and such exit financing will enable the Debtors to satisfy the secured
claims of the Export-Import Bank of China ("CEXIM") in full, in cash. As a
result, the Debtors will withdraw their previously-announced motion for
authorization to sell the vessels over which CEXIM has security interests.
The Consenting Lenders may terminate the Plan Support Agreement under certain
circumstances, including, but not limited to, if the Debtors fail to achieve
certain milestones for seeking confirmation and effectiveness of the Plan within
certain time periods specified in the Plan Support Agreement including,
inter alia, filing a Plan and disclosure statement with the Bankruptcy Court by
March 7, 2014, the entry of an order by the Bankruptcy Court approving
the disclosure statement by May 16, 2014 and the entry of an order by the
Bankruptcy Court confirming the Plan by June 20, 2014. The Debtors may terminate
the Plan Support Agreement under certain circumstances, including, but not
limited to, if the Debtors, in the exercise of their fiduciary duty, (i)
reasonably determine that the Plan is not in the best interests of the Debtors'
estates or (ii) receive an unsolicited proposal for an alternative plan that the
Debtors reasonably determine to be more favorable to the Debtors' estates than
On February 12, 2014, the Debtors filed with the Bankruptcy Court a motion to
approve the Plan Support Agreement (the "Motion") which attached a copy of the
Plan Support Agreement, including the incorporated Term Sheet, thereby
disclosing its terms. The Term Sheet is also filed as Exhibit 99.1 hereto.
The Motion is available electronically, on the internet website of the claims
agent Kurtzman Carson Consultants, LLC, at http://www.kccllc.net/osg.
Information set forth on the foregoing web site or filed with the Bankruptcy
Court shall not be deemed to be part of or incorporated by reference into this
Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
In connection with the transaction identified in Item 1.01 above, OSG is hereby
furnishing (i) the Term Sheet, (ii) summary projections of certain sources and
uses of cash of OSG contemplated by the Plan (the "Sources and Uses") and (iii)
a presentation of certain assumptions and projections regarding the Debtors'
business (the "Projections," and together with the Term Sheet and the Sources
and Uses, the "Disclosure"). The Term Sheet, the Sources and Uses and the
Projections are attached hereto as Exhibits 99.1, 99.2 and 99.3, respectively.
The Disclosure includes certain forward-looking information, which is subject to
the risks and uncertainties described in OSG's most recently filed Form 10-K and
its other periodic filings with the SEC. OSG undertakes no obligation to update
the Disclosure or to file or furnish any additional forward-looking information.
The information contained in this Item 7.01 and Exhibits 99.1, 99.2 and 99.3 to
this current report on Form 8-K shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, or the Exchange Act, except as shall be expressly set forth by
specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
99.1 Term sheet setting forth certain terms and
conditions for the Debtors' proposed plan of
99.2 Summary projections of certain sources and uses of
cash of OSG contemplated by the Debtors' proposed
plan of reorganization.
99.3 Presentation of certain assumptions and projections
regarding the Debtors' business.