OSG refinances loan facility

Jan 04 2019

Overseas Shipholding Group (OSG) has closed on a five-year $325 mill term loan credit facility with The Prudential Insurance Co of America and other syndicate lenders.

OSG’s subsidiary, Overseas Bulk Ships (OBS) and certain of its subsidiaries obtained the new loan facility to refinance and replace its existing term loan facility with Jefferies Finance, as administrative agent, plus other lenders.

The new term loan refinancing bears interest at an annual rate equal to the prevailing 30-day LIBOR plus a margin of 500 basis points and is secured by the issued and outstanding OBS stock. The borrowers’ obligations requirements under the refinancing are guaranteed by OSG and other assets.

Proceeds of the refinancing were used to refinance the OBS term loan. Upon the closing of the deal, the OBS loan was terminated.

In connection with this transaction, OSG also amended its $75 mill secured asset-based revolving loan facility with Wells Fargo Bank by reducing the maximum credit line available and extending the term through 2nd August, 2019.

The amendment also reduced the number of vessels serving as collateral for the OBS loan facility.

OSG has also announced that it has signed a bareboat charter with the owner of the ‘Oregon Voyager’. OSG will rename the 1999-built US flagged MR ‘Overseas Key West’ and intends to trade the vessel under the Jones Act.

The bareboat charter extends for 10 years, into 2029. OSG will undertake the vessel’s fourth special survey following the vessel’s delivery date and expects the vessel to commence commercial operations during the second quarter of 2019.

Sam Norton, OSG’s President and CEO, said, “Following closely on our decision to extend all of the leases for our AMSC-owned tankers, the addition of the ‘Overseas Key West’ to our fleet of Jones Act tank vessels is an important and visible signal of OSG’s continuing commitment to sustaining our leading position in the markets which we serve.

“The extended duration of this new lease agreement is both an affirmation of our positive outlook for the future as well as a validation of OSG’s reputation as a preferred counterparty in operating Jones Act tank vessels to the high standards demanded by its customers.

“At current market levels, we expect the ‘Overseas Key West’ to contribute more than $18 mill per annum in timecharter equivalent revenue once she enters into service. At this revenue level, we estimate that the ‘Overseas Key West’ would add approximately $5.5 mill in net annual vessel operating contribution, which would be a welcome addition toward building a solid future cash flow profile,” he said.


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May 2019

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