Overseas Shipholding existing credit facilities to help fund Stelmar acquisition

By Sara Rosenberg

New York, Dec. 13 - Overseas Shipholding Group Inc. plans to use borrowings under its existing credit facility along with cash on hand to fund the acquisition of Stelmar Shipping Ltd. in a transaction that has an equity market value of $843 million and a total value, including Stelmar's outstanding debt, of $1.3 billion.

As of Sept. 30, Overseas Shipping had a total of $780 million in unsecured long-term revolving credit facilities - comprised of a $350 million revolver due 2006, a $180 million revolver due 2008, a $150 million revolver due 2009 and a $100 million revolver due 2011 - of which about $581 million was unused.

The company also had two unsecured short-term credit facilities totaling $65 million, of which $38.3 million was unused as of Sept. 30, according to the company's 10-Q filed at the end of October.

Presently, Overseas Shipholding has about $500 million of cash on its balance sheet, and "a substantial portion of that will be used towards the acquisition" and has the ability to raise about $200 to $300 million in the first quarter from asset monetization, company officials said in a conference call Monday.

The transaction is subject to approval by a majority of Stelmar's shareholders and satisfaction of customary closing conditions. Overseas Shipholding's shareholders do not need to approve the acquisition and there is no financing condition in the transaction agreement. The transaction is expected to close by the end of January 2005.

UBS Investment Bank is acting as Overseas Shipholding's sole financial adviser. Morgan Stanley & Co. Inc. and Jefferies & Co. are Stelmar's financial advisers.

Overseas Shipholding is a New York-based independent bulk shipping company. Stelmar is an Athens, Greece-based provider of petroleum products and crude oil transportation services.

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