March 2, 2009
OSG trims Bender ATB order
Reporting results for the fourth quarter ended December 31, 2008 that saw a net loss of $53.5 million , OSG America L.P. (NYSE: OSP ) revealed that its ATB newbuild program at Bender is being reduced from six units to two.
"During the fourth quarter of 2008 and in early 2009," says OSG America, "repeated delivery delays caused concerns that Bender Shipbuilding & Repair Co., Inc. (Bender) would not be able to complete six ATBs and two tug boats within contract terms, due to Bender's lack of performance under such agreements, its lack of liquidity and its poor financial condition. The two tug boats are included in OSG America's fleet, and the company has the option to purchase one or more of six ATBs from its sponsor, Overseas Shipholding Group, Inc. (OSG or the sponsor). In early 2009, OSG, which owns a 77.1% interest in OSG America, began negotiations with Bender to end construction agreements covering the eight vessels. The company and its sponsor intend to complete two of the six ATBs and two tug boats at alternative shipyards."
"OSG continues to pursue negotiations with Bender regarding termination of its contracts," says OSG America. "There is no assurance that OSG and Bender will reach an agreement on the termination of their existing contracts and the transfer of the vessels to OSG and OSG America in their current state of completion or that Bender's liquidity and financial condition will not significantly worsen. Should these matters not be resolved to the satisfaction of OSG and OSG America, OSG America may have to take an impairment charge. The book value of the two tug boats was $25 million at December 31, 2008."