Approximately $1.1 billion of rated debt affected
New York, October 24, 2016 -- Moody's Investors Service, ("Moody's") has
placed the ratings of Overseas Shipholding Group, Inc. ("OSG")
under review for downgrade, including its B2 corporate family and
Caa1 senior unsecured ratings, and the B1 and Ba2 senior secured
debt ratings of its subsidiaries, OSG Bulk Ships, Inc.
("OBS") and OSG International, Inc. ("OIN").
The review follows the company's announcement that its Board of
Directors has approved the plan to separate its business units into two
independent public companies via a spin-off of the international
business, OIN. The spin-off is subject to the satisfaction
of certain conditions, including regulatory requirements.
The current debt at OIN and at OBS will remain with those entities post
separation. Moody's also affirmed the SGL-2 speculative
grade liquidity rating.
RATINGS RATIONALE
The review will consider the more modest scale of each independent entity
after the spin-off, along with the loss of cash flow and
business diversification from two separate businesses. The review
will also consider the pro-forma capital structures, asset
coverage and capital investment profiles, as well as the prospects
for generating earnings and cash flow in the face of a softening freight
rate environment. A ratings downgrade of greater than one notch
could be possible.
On Review for Downgrade:
..Issuer: OSG Bulk Ships, Inc.
....Senior Secured Bank Credit Facility,
Placed on Review for Downgrade, currently B1 (LGD3)
..Issuer: OSG International, Inc.
....Senior Secured Term Loan, Placed
on Review for Downgrade, currently B1 (LGD3)
....Senior Secured Revolving Credit Facility,
Placed on Review for Downgrade, currently Ba2 (LGD1)
..Issuer: Overseas Shipholding Group, Inc.
.... Corporate Family Rating, Placed
on Review for Downgrade, currently B2
.... Probability of Default Rating,
Placed on Review for Downgrade, currently B2-PD
....Senior Unsecured Regular Bond/Debentures,
Placed on Review for Downgrade, currently Caa1 (LGD6)
Affirmations:
..Issuer: Overseas Shipholding Group, Inc.
.... Speculative Grade Liquidity Rating,
Affirmed SGL-2
Outlook Actions:
..Issuer: OSG Bulk Ships, Inc.
....Outlook, Changed to Rating Under
Review from Stable
..Issuer: OSG International, Inc.
....Outlook, Changed to Rating Under
Review from Stable
..Issuer: Overseas Shipholding Group, Inc.
....Outlook, Changed to Rating Under
Review from Stable
The principal methodology used in these ratings was Global Shipping Industry
published in February 2014. Please see the Rating Methodologies
page on www.moodys.com for a copy of this methodology.
Overseas Shipholding Group, Inc. ("OSG"), a Delaware
Corporation, based in in New York, New York, is among
the larger players in the ocean transportation of crude oil and refined
petroleum products. The company operates separate fleets of internationally-flagged
tankers trading in international markets, through its intermediate
holding company subsidiary ,OSG International, Inc.
("OIN"), and US Jones Act qualified vessels, through its intermediate
holding company subsidiary OSG Bulk Ships, Inc. ("OBS").
The Jones Act vessels operating mainly in US coastal markets. These
two subsidiaries are the respective primary obligors of the rated credit
facilities, which are guaranteed by OSG. Consolidated shipping
revenues were $951 million as of the last twelve months ended June
30, 2016.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Yvonne Njogu
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Jankowitz
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653