Jones Act tanker and ATB operator Overseas Shipholding Group, Inc. (NYSE: OSG), said today that, “following receipt by the company of a non-binding indication of interest to acquire all of the issued and outstanding shares of common stock of the company for a price of $3.00 per share, OSG’s Board of Directors has commenced a strategic process to explore, review and evaluate a range of strategic alternatives available to the Company to enhance shareholder value, including the non-binding indication of interest.”
In its press release OSG did not disclose who the “expression of interest” came from. However, in an SEC filing, OSG says:
“On June 30, 2021, Saltchuk Holdings submitted a preliminary non-binding proposal (the “Proposal”) to the Issuer’s board of directors. In the proposal, Saltchuk Holdings proposed to acquire all of the outstanding shares of the Issuer not already owned by the Reporting Persons for $3.00 per share in cash.
“Any definitive agreement entered into in connection with the transaction contemplated by the Proposal would be subject to customary closing conditions, including approval by Saltchuk Holdings’ board of directors and applicable regulatory authorities. No assurance can be given that any definitive agreement will be entered into, that the transaction contemplated by the Proposal will be consummated, or that the transaction will be consummated on the terms set forth in the Proposal.
“If the transaction contemplated by the Proposal is consummated, the Common Stock of the Issuer would be eligible for termination of registration under the Securities Exchange Act of 1934 and delisting from the New York Stock Exchange.”
“IDEAL LONG TERM HOME”
In its letter to OSG, filed with the SEC, Saltchuk says that, as of June 29 it owned 17.5 percent of OSG’s outstanding shares.
“Based on our knowledge as a stockholder of OSG and our review of publicly available information,” says the letter, which is signed by Saltchuk chairman Mark Tabbut, “we believe Saltchuk would be an ideal long-term home for the company and are therefore proposing to acquire all outstanding shares of OSG that we do not already own for $3.00 per share, on a fully-diluted basis, in cash, which represents a premium of 43% to the closing price per share of $2.10 as of June 29, 2021.
“By its nature, shipping has multi-decade investment cycles and shorter-term economic cycles, both of which are better supported by a privately held family business versus being traded in the public markets. Saltchuk has the benefit of having significant experience and great confidence in the future of the Jones Act and the benefits it serves our country. In fact, over the last 20 years, Saltchuk has invested well over a billion dollars in new Jones Act vessels.
“Saltchuk has a strong culture of employee safety and environmental stewardship. With over 7,000 employees throughout our family of companies, we work hard to create a workplace where we would be proud to have our children work. We believe culturally that OSG is a great fit with Saltchuk, that our values are aligned, and that our reputation can assure you, as the Board, that we will support and welcome OSG’s 715 employees into the Saltchuk organization. Saltchuk has supported major investments at our operating companies to be industry leaders in environmental stewardship – something in which our shareholders take great pride. This would continue with OSG as part of our family.
“We, along with our team of advisors, have followed the Company closely and are familiar with its operations, assets, and, more generally, with Jones Act shipping. We are keenly aware of the challenges of the current operating environment facing OSG. A transition to private ownership at this time with a right-sized capital structure will maximize value for current stockholders and better position the Company and its employees for future success.
“The proposed transaction would be funded through a combination of equity capital from Saltchuk, minority capital provided by third parties, and a refinancing of the Company’s debt obligations, commitments for which would be in hand prior to signing definitive agreements. We are open to discussions with the OSG Board of Directors with respect to a potential rollover by significant existing OSG stockholders, subject to certain sizing and regulatory conditions.”
The privately held Saltchuk Group’s maritime operations notably include TOTE, which includes TOTE Maritime and TOTE Services, and Foss Maritime.
Saltchuk was formed in 1982, when eight investors came together to form a new partnership for the purpose of acquiring Totem Ocean Trailer Express. Over the years, further acquisitions followed.
In the mid-1990s the company transitioned to primary ownership by one of the partners, Mike and Lynn Garvey. In 2009, Saltchuk became a family business when Mike and Lynn’s three daughters, Denise Tabbut, Nicole Engle and Michele Seaver, assumed the family’s majority ownership position. Michele Seaver passed away on April 26, 2019.
OSG: NO SET TIMETABLE
OSG says its “strategic process will be led by a newly formed special transaction committee of independent directors, and is fully supported by the Board of Directors and the Company’s management team. The special transaction committee has engaged Evercore as its financial advisor and Ropes & Gray LLP as its legal advisor to assist the special transaction committee in evaluating strategic alternatives. The strategic alternatives to be explored in connection with the strategic process could include, among other things, a sale of all or part of the Company, a merger or other business combination with another party, or remaining a public company and continuing to execute on management’s long-term business plan.”
OSG says its board “has not set a timetable for the strategic process, nor has it made any decisions related to strategic alternatives, including with respect to the non-binding indication of interest. There can be no assurance that the exploration of strategic alternatives will result in a sale of the Company, or in any other strategic change or outcome. The Company’s current intention is not to disclose developments with respect to the strategic process unless and until the Board has approved a specific course of action, on the recommendation of the special transaction committee, or otherwise determines that disclosure is necessary or appropriate.“