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OSG’s largest shareholder Saltchuk Resources bids to take company private

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US Jones Act stalwart, Overseas Shipholding Group (NYSE:OSG) has received a takeover offer from largest shareholder privately held Saltchuk Resources.

Prior to the late January regulatory filing, Saltchuk, a West Coast outfit whose marine holdings include Jones Act participants Foss and Tote, had already built up a stake of 15.2 million shares, approximately 21% of shares outstanding, in OSG.  The new development is not totally random; the two companies had been in discussions during mid 2021, but no deal was concluded at that time.

Based on the proposed price, $6.25 per share, and the roughly 72.4 OSG million shares outstanding, OSG’s equity would be valued at around $450 million.

In its proposal sent to NYSE-listed OSG, Saltchuk points to its $6.25 per share offering price representing a premium over recent share pricing. In the first half of 2023, OSG traded between $3.00 and $4.00 per share, with a gradual climb out to present levels - it ended last week at just under $6 per share - beginning in the second half of last year.  In Monday (Jan 29) trading action, its price moved up above the $6.25 on daily traded volume well in excess of the recent average number of shares traded- suggesting stock traders’ views that a deal might be in the offing, albeit with a premium to the end January share pricing on OSG.

Listed companies in the Jones Act space, with “micro-cap” valuations, have not always been the darlings of investors -OSG’s very solid 2023 performance notwithstanding. In recent years, Seabulk, with a diverse fleet, but active in coastwise tankers tug/barge ATB trades, had been taken private. This is not lost on Saltchuk- the potential acquirers here, who state, in their proposal: “By its nature, shipping has multi-decade investment cycles and shorter-term economic cycles, both of which are better supported by a privately held family business versus being traded in the public markets.”

In recent months, Seabulk announced a tie-up, to be named “Fairwater” - where its coastwise tankers and ATBs would be paired with a fleet of similar vessels within Crowley Maritime, a privately held family business, providing a hint at participants’ continuing desires for a tighter market.

In recent months, OSG has been active on multiple fronts. It is a participant in the US Maritime Administration’s (MARAD) newly launched Tanker Security Program (TSP), with three vessels participating in the 10 vessel programme.

Additionally, OSG has re-entered into new bareboat charter deals on seven Jones Act MR tankers, built at the Aker-linked Philly Shipyard. The ships, previously on the books of the Norwegian bareboat owner AMSC ASA (with an Aker involvement), are now in the realm of funds linked to financial owner Maritime Partners, LLC- based in Metarie, Louisiana, following a mid 2023 deal.

Concerning the Saltchuk proposal, OSG said, on its website: “The company does not intend to comment further on the unsolicited indication of interest or any related matters until its Board of Directors has determined that disclosure is necessary or appropriate.” Stay tuned.

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