S&P: OMI on negative watch

Standard & Poor's said it placed its ratings, including the BB corporate credit rating and B+ senior unsecured debt, on OMI Corp. on CreditWatch with negative implications.

The CreditWatch placement follows OMI's May 17 proposal to merge with Stelmar Shipping Ltd. OMI has offered Stelmar shareholders about 3.1 shares of OMI stock for each share of Stelmar stock, valuing the transaction at about $560 million. The offer would give the current Stelmar shareholders 40.5% of the combined company, to be named OMI-Stelmar Corp., based on an all-stock transaction. However, Stelmar's shareholders may have the option to receive up to 25% of the offer price in cash, limited to $175 million.

No definitive agreement has yet been reached on the potential transaction, and the proposed terms could change.

S&P said ratings on OMI reflect the company's significant, but carefully managed, exposure to the volatile tanker spot markets, an active new vessel construction program, and participation in the competitive, volatile, highly fragmented, and fixed-capital-intensive bulk ocean shipping industry.

These negative factors are partly offset by OMI's favorable business position as a leading Suezmax and Product tanker operator with strong market share in the Caribbean, Black Sea, and Mediterranean Sea. In addition, the company's average vessel age is young compared to the world fleet.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.