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  • bluehorseshoe999 bluehorseshoe999 Nov 15, 2012 5:30 PM Flag

    What is this stock worth

    Book value is about $49/sh but there are issues.

    The three reasons for low price today:

    1. OSG needs to roll over about $1.5 billion (I think) in Feb 2013 and is short about $100M to plug some requriement. Banks are not cooperating due to losses in last couple of years. Strategic first strike by mgmt to ward off creditors early and give company some breathing room to negotiate. Note that OSG has cash to conitnue to operate into Feb of next year and thus voluntary BK filing. Why wait!

    2. Director resigned in last 3 month over tax treament so there is an accounting issue. It has negative impact on eearnings for last couple of years

    3. Institutions and MF must sell and can not hold BK companies in most cases. In fact many don't allow holding stock with PPS below $2 or $5 consdiered penny stock

    4. Panic not a real good one

    If you check news release OSG has aboput $4.2 billion in assets and $2.7 billion in liabilities so with 31 M shares outstanding it works out to $49/sh. There are some issues with assets since you may not get best price for the ships since the market is saturated.

    It's credit crunch. OSG needs to sell some assets to raise cash but market is not great. It's like you bank calls you to pay off your mortgage and you do not have enough cash even though you have assets but that are not immediately available to sell to raise cash.

    GLTA in stock casino

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    • thanks

    • the banks were already offering a deal but OSG refused because of the terms..a liquidation (chapter 7) is likely not happening because of the current market situation and the fact that OSG is able to pay the interests from the EBITDA income of its likely the banks will let it run with loan covenants, additional guarantees and higher interests. The tankers are difficult and expensive to park.

      In any case the restructuring of the debt will have hefty price and the shareholders lose a portion or even all of the $1,47B equity. However the value of profitable US flag business (which did not bk and maybe worth $1B alone) and the charter values may not be fully valued in the balance sheet so IMO there is a good chance of getting a part of the OSG II..but this is a stock casino as said.