WHAT NOW FOR OSPREY?

By Nicolai Heidenreich

On March 24th this year, it finally looked like debt-laden Osprey Maritime would be given much-needed financial lift under its wings until the tanker markets would create sufficient cash flow to service and pay down debt. Schroder Venture Partners Asia Pacific Fund (Schroder) had offered to invest as much as $54 million as part of a major recapitalisation process which potentially could have raised $70 million. In the same breath, Osprey wrote down book values of their assets by $175.8 million and we felt that with VLCC and product carrier rates on a significant rebound, Osprey was in a good position to not only service current obligations but also to take advantage of opportunities in the market.

Unfortunately, the deal fell apart. One of the conditions set forth by Schroder was that the deal had to be approved by all senior creditors to the company, i.e. the 14 banks that make up the syndicate for Osprey’s $944 million term loan facility signed July 18th, 1997. One bank refused and the deal fell through. What would this deal have meant for Osprey? How could one bank see so differently on an issue which 13 of their peers agreed on? Was this a case where special credit committees take over from the relationship banker? And most importantly, what now for Osprey? These are a few of the questions left after the stranded deal and we will answer them throughout the article.

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