OSG targets $160m from follow-on offer.
Overseas Shipholding Group has revealed plans to raise a potential $160m through a follow-on share offering, at an offer price potentially near the high end of the tanker major"s 52-week price range.
OSG chief executive Morten Arntzen told Lloyd"s List that the company's plan to issue 3.5m shares was not linked with any specific expansion plan but was consistent with its strategy nonetheless.
?There is nothing on the table [by way of avenues to utilise the cash], but this is a very good time to strengthen our balance sheet,? Mr Arntzen said.
OSG's issue, in which Goldman Sachs is acting as sole underwriter, has not yet been priced. The company"s New York-listed shares closed on Thursday at $46.99. The 52-week range is $20.38-$52.13.
OSG's prospectus filed with US regulators said it may utilise a portion of the net proceeds to pay down debt, but the company had not decided what amount, if any, would go towards this purpose.
Otherwise, proceeds of the issue are being earmarked for ?general corporate purposes, including, without limitation, capital expenditure and working capital?.
OSG's issue comes at a time when New York"s capital markets are seen as not quite ripe for entirely new share issues, but providing an ideal environment for follow-on offerings.
It also comes in an environment where companies are taking recourse to New York's capital markets to pay down conventional bank debt. However, whereas OSG"s nearest rivals, Teekay and General Maritime, have recently raised cash through high-yield bonds, which do not reduce net debt, OSG has opted for a share issue.
Since spring 2009 OSG has been proclaiming its strong liquidity position and declaring its intention to augment its fleet with attractively priced additions. To date, however, the company has not finalised any purchases.