July 30, 2009
OSG to take OSG America private
Overseas Shipholding Group, Inc. (NYSE: OSG),has announced that it intends to initiate a tender offer for all of the outstanding publicly held common units of OSG America L.P. for $8.00 in cash per unit. The offer price represents a premium of approximately 12.7% above the closing price of the units on July 29, 2009, and a premium of approximately 11.1% above the average closing price of the units for the preceding 90 trading days. The tender offer, expected to commence in late August, will be conditioned upon, among other things, more than 4,003,166 common units being tendered such that OSG would thereupon own at least 80% of the outstanding common units of OSG America. Following the completion of the tender offer, OSG expects to acquire any remaining units not tendered through the exercise of a repurchase right contained in OSG America's partnership agreement. OSG and its affiliates currently own approximately 53.3% of the outstanding common units, 100% of the outstanding subordinated units and a 2% general partner interest, representing in the aggregate approximately 77.1% of the outstanding equity of OSG America.
Morten Arntzen, President and CEO said, "While we continue to believe that OSG America can generate attractive long-term returns, recent adverse changes in the outlook for the Jones Act market have created significant near- and medium-term challenges for OSG America's business. As a result of these deteriorating market conditions, we expect OSG America's distributable cash flow generated in the second half of 2009 through 2010 to be materially below that required to fund its minimum quarterly distribution. While the partnership's distribution policy is established by its Board of Directors, we believe that the partnership will be unable to continue its current levels of distributions to common unitholders in this challenging market environment. Furthermore, vessel cancellations, delivery delays and tighter credit and equity market conditions have diminished OSG America's fleet growth and expansion opportunities, which were central to the investment story at its initial public offering. In light of these difficult circumstances, we believe that our offer to acquire the public units of OSG America represents an attractive opportunity for unitholders to realize value for their units at a significant premium to the recent unit price."
The tender offer will not be conditioned on financing. Offering materials will be mailed to OSG America unitholders in late August, and OSG will file all necessary information with the Securities and Exchange Commission. Under applicable law, the partnership will be required to file with the SEC a statement as to its position on the offer as well as other required information within 10 business days after the date on which the offer is commenced.
BofA Merrill Lynch and Evercore Partners are acting as financial advisors to OSG in connection with the offer.
The Evercore team included Senior Managing Director Robert A. Pacha, who is the Houston-based head of Evercore's midstream energy practice, Vice President Mark Whatley and Elizabeth Cheever. Evercore's Transportation & Infrastructure Group was established in June and is led by George Ackert, the former Global Head of Transportation & Infrastructure at Bank of America Merrill Lynch.