Overseas Shipholding Group's (OSG) shares fell precipitously again yesterday after the company announced that it was contemplating filing for bankruptcy protection. The latest news came amid a dramatic disclosure from the company that a (yet-unexplained) tax issue involving its international operations had rendered its financial statements unreliable.
Until yesterday the main issue affecting the company's stock price appeared to be a funding gap between an expiring credit facility of $1,500 million (in February-2013), and a $900 million forward start credit facility.
Estimates from the company and analysts put the funding gap between $100 million to $300 million. But based on yesterday's news, I believe the funding gap may indeed be substantially higher.
The $900 million forward start credit facility will not be available to the company before February-2013. The facility is subject to an adverse materiality clause and compliance with financial covenants among other terms.
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Until yesterday the main issue affecting the company's stock price appeared to be a funding gap between an expiring credit facility of $1,500 million (in February-2013), and a $900 million forward start credit facility.
Estimates from the company and analysts put the funding gap between $100 million to $300 million. But based on yesterday's news, I believe the funding gap may indeed be substantially higher.
The $900 million forward start credit facility will not be available to the company before February-2013. The facility is subject to an adverse materiality clause and compliance with financial covenants among other terms.
Continue Reading
