Moody's may lower OMI

Moody's Investors Service said it placed the debt ratings of OMI Corp. under review for possible downgrade following the announcement by the company of its proposed purchase of vessels from Athenian Carriers Ltd. for about $585 million.

Affected ratings include the company's $200 million 7.625% senior unsecured notes due 2013, rated B1; senior implied rating of Ba3; and unsecured issuer rating of B2.

The company will pay $393 million by August 2004 for four existing Suezmax tankers, built between 2003 and 2004, one Handymax product tanker to be delivered prior to close of the acquisition, and for the rights to Athenian's remaining seven Handymax tankers on order with Hyundai Mipo Shipyard in South Korea. The company will also pay $192 million between November 2004 and June 2006 in progress payments toward the remaining seven vessels on order.

OMI plans to finance the acquisition through use of cash, proceeds from a public offering of common stock and, to the extent necessary, use of the company's available borrowings under its revolving credit facilities. The company intends to assume none of Athenian's existing debt with this transaction.

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