Overseas Shipholding Group - Out Of Bankruptcy
- Emerged from bankruptcy court protection in August 2014.
- Strong earnings recorded in 2015 on sharply lower expenses.
- Q1 2016 Results.
Overseas Shipholding Group (NYSE:OSG) is a publicly traded shipping company providing energy transportation services for crude oil and petroleum products in the U.S. and International Flag markets. Results for the fourth quarter (Q4 2015) and the full year 2015 showed nice improvements over the losses recorded in 2014 when the company emerged from Bankruptcy Court protection. I have read the earnings reports and listened to the conference calls and am impressed by the company's management and actions since emerging from bankruptcy in August 2014.
I have taken large quotes from the company issued press releases and SEC filings and have edited them for brevity and improved readability. For example, in the section below, I have omitted legal language that makes reading the information more difficult. Also I have rounded most numbers to the nearest integer to eliminate the decimal points. Again this is done for ease of reading.
I will show direct quotes when that is necessary, but most information presented in this article is from the company's website located at here. To avoid abbreviations of non-stock symbols being mistaken for stock symbols, I use the convention of inserting dots (.) in between the letters. Example: Earnings per Share (E.P.S.) has dots inserted between the letters to avoid it being shown as a stock symbol.
I attended the State University of New York (S.U.N.Y.) Maritime College from 1976 to 1978 and sailed to Europe on their training ship in 1977. I visited Southhampton, England and Copenhagen, Denmark on that cruise. While at the Maritime College, I studied Economics and Marine Transportation as my major fields of study. I remember receiving one of OSG's Annual Reports in the late 1970s with a large picture of a ship traversing through the Panama Canal on the cover.
I was impressed with the company but don't remember if I ever actually bought shares. I followed the company's progress on and off through the years and was shocked to learn that they had gone into bankruptcy in November 2012. I have always thought the company had good management and was truthful in reporting information to its shareholders. I don't pretend to have any special "inside information" or special insights into the shipping industry aside from what I have explained above, but want to bring the OSG story to a wider audience with this article.
The Company's Emergence from Bankruptcy
During the period from November 14, 2012 through August 4, 2014, the Company conducted its business in the ordinary course as debtors-in-possession under the protection of the United States Bankruptcy Court for the District of Delaware.
Overseas Shipholding Group emerged from bankruptcy on August 5, 2014 (the Effective Date) and cancelled all of the outstanding common stock and authorized the issuance of up to 1,067,926,805 shares of stock comprised of Class A common stock, Class B common stock and preferred stock.
On the Effective Date, the Company issued an aggregate of 528,499,801 shares of post-emergence Class A and Class B common stock and Class A and Class B warrants pursuant to the Equity Plan and received proceeds of $1.5 billion.
The Company's Class B common stock was listed on the NYSE MKT and began "regular way" trading under the symbol (OSGB) on October 9, 2014. The Company's Class A common stock is now listed on the NYSE using stock symbol "OSG."
On August 5th 2014, OSG closed on Exit Financing Facilities with an aggregate borrowing capacity of $1.36 billion and drew down an aggregate of $1.23 billion under such facilities.
On November 14, 2012 (the "Bankruptcy Petition Date"), OSG carried $2.58 billion of debt. As a result of retiring the Company's non-public debt and 8.75% debentures with proceeds from the issuance of reorganized OSG common stock and warrants, and cash on hand, OSG has reduced its pre-petition debt by $2.13 billion to $446 million.
As of December 31, 2014, OSG had approximately $1.67 billion of debt outstanding.
Q4 2015 Earnings Report - March 1st, 2016
CEO Ian T. Blackley comments on 2015 performance:
"We are pleased to report strong results for the 4th quarter and full year 2015, said Captain Ian T. Blackley, OSGs president and CEO. The positive supply and demand fundamentals in the international tanker market, with ton-mile demand expansion in both crude and product sectors, along with the successful execution of our operating strategy drove impressive results in our International business.
In our Domestic business, while Jones Act sentiment may have softened from a year ago, I am pleased to report stronger results for 2015 compared to 2014. The lower oil price has stimulated increased gasoline consumption in the United States and we have also seen increasing Domestic lightering volumes. In both our businesses, we expect that many of the positive tanker fundamentals we saw in 2015 should remain in place this year."
"The strong cash generation from our 79 vessel fleet and the successful execution of several key transactions have strengthened our financial position and provide us with maximum flexibility as we evaluate strategic alternatives. We see a disconnect today between freight rates, asset prices and equity values in our industry this may offer opportunities that we believe we are well-positioned to capitalize on. I remain confident in our ability to increase value and, when appropriate, return value to our shareholders," concluded Blackley.
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