Overseas Shipholding Group (OSG), USA, last week announced that it intends to initiate a tender offer for all of the outstanding publicly held common units of OSG America for US$8 in cash per unit.
The offer price represents a premium of approximately 12.7 percent above the closing price of the units on July 29, 2009, and a premium of approximately 11.1 percent above the average closing price of the units for the preceding 90 trading days.
The tender offer, expected to commence in late August, will be conditioned upon, among other things, more than 4,003,166 common units being tendered such that OSG would thereupon own at least 80 percent of the outstanding common units of OSG America.
Following the completion of the tender offer, OSG expects to acquire any remaining units not tendered through the exercise of a repurchase right contained in OSG America's partnership agreement.
OSG and its affiliates currently own approximately 53.3 percent of the outstanding common units, 100 percent of the outstanding subordinated units and a two-percent general partner interest, representing in the aggregate approximately 77.1 percent of the outstanding equity of OSG America.
"As a result of these deteriorating market conditions, we expect OSG America's distributable cash flow generated in the second half of 2009 through 2010 to be materially below that required to fund its minimum quarterly distribution," said Morten Arntzen, President and CEO of OSG.