Is Overseas Shipholding (OSG) Going Bankrupt?
After dropping 27 percent Tuesday, shares of Overseas Shipholding Group Inc. (NYSE: OSG) are down another 13 percent Wednesday as liquidity fears continue to dominate trade.
As noted yesterday, negotiations with lenders may have hit a stalemate. The company has a $100 million shortfall before a larger $1.5 billion credit facility matures in February 2013.
Weighing in on the situation today, analysts at Wells Fargo said the sell-off follows a report from Debtwire that the company hired Proskauer as restructuring counsel. They also noted the sell-off accelerated once shares broke below $5, which they said was "potentially the result of the execution of a number of stoploss orders."
"Overall, we continue to expect developments (or lack thereof) in OSG's pursuit of incremental liquidity to continue to dominate the conversation around the stock until a solution is reached," analysts at Wells Fargo said. "While we expect OSG to eventually secure the required liquidity, we remain on the sidelines as we continue to expect shares of OSG to remain highly volatile given the uncertainty around what shape a potential restructuring could take (incremental debt, asset sales, equity etc.).
Analysts at Dahlman Rose also commented, saying while shares are acting like a "falling knife" and they would not step in, there is value in its Jones Act business. Specifically, Dahlman said its Jones Act business is worth $500 million in a low case and $650 million in a base case.
"Though the word "bankruptcy" seems to have popped up, we believe OSG would look to monetize its unencumbered Jones Act fleet first, which should give management significant flexibility and avoid a potential bankruptcy route," Dahlman said.
As noted yesterday, negotiations with lenders may have hit a stalemate. The company has a $100 million shortfall before a larger $1.5 billion credit facility matures in February 2013.
Weighing in on the situation today, analysts at Wells Fargo said the sell-off follows a report from Debtwire that the company hired Proskauer as restructuring counsel. They also noted the sell-off accelerated once shares broke below $5, which they said was "potentially the result of the execution of a number of stoploss orders."
"Overall, we continue to expect developments (or lack thereof) in OSG's pursuit of incremental liquidity to continue to dominate the conversation around the stock until a solution is reached," analysts at Wells Fargo said. "While we expect OSG to eventually secure the required liquidity, we remain on the sidelines as we continue to expect shares of OSG to remain highly volatile given the uncertainty around what shape a potential restructuring could take (incremental debt, asset sales, equity etc.).
Analysts at Dahlman Rose also commented, saying while shares are acting like a "falling knife" and they would not step in, there is value in its Jones Act business. Specifically, Dahlman said its Jones Act business is worth $500 million in a low case and $650 million in a base case.
"Though the word "bankruptcy" seems to have popped up, we believe OSG would look to monetize its unencumbered Jones Act fleet first, which should give management significant flexibility and avoid a potential bankruptcy route," Dahlman said.