Chuck Burgess says the bankrupt US owner intends to cover ship operating expenses without a bankroll backed by lenders like the Export-Import Bank of China (CEXIM) and Danish Ship Finance, which have blessed the debtor’s request to issue an intercompany loan to various subsidiaries.
“The money OSG International is looking to provide to affiliates is from cash on hand at the time of the [Chapter 11] filing,” he explained. “OSG will not be drawing down money from outside sources. CEXIM and Danish Ship are simply the mechanisms by which it will happen.”
As TradeWinds has reported, prior to the bankruptcy petition the lenders that approved the plan to secure up to $25m worth of DIP financing were owed $578m on loans secured by mortgages on 15 tankers controlled by various OSG subsidiaries.
If the judge overseeing the case approves the plan at a hearing scheduled for 24 January, the DIP funds will be stamped what is called “super-priority administrative expense status”, which would give them a higher ranking than other debts.
OSG says the cash will be used to cover basic vessel operating expenses such as bunkers, insurance, crew wages, repairs and port fees tied to the vessels that were financed with facilities from CEXIM and Danish Ship Finance some years ago.
