OSG’s Double Hull Tankers: Preserving Capital, Securing Optionality

By Matt McCleery

The most recent shipping IPO to debut in New York is the long-rumored OSG sale/leaseback Double Hull Tankers. As most readers of these pages know, OSG has been using the current strong tanker market and the company’s platinum credit standing to sell off select tonnage at high prices and lease it back at favorable rates for medium term periods.

These transactions allow OSG to take the capital gains as operating income and then continue to generate earnings by operating the ships. But more importantly, these deals allow OSG to control the intensity and profile of their asset ownership without losing control of the ships. In addition to selling ships and leasing them back, OSG has been actively chartering-in ships to achieve many of the same objectives.

The OSG treasury department must be thrilled with the results; in a market choked with liquidity and starved for good credits, debt providers, shipowners and private equity funds have pounced on the OSG transactions with as many as 20 offers coming on the product tanker deal the company concluded with Lou Kollakis earlier this year. We suspect that Double Hull Tankers will also be wildly well received by both investors in the new deal and current OSG investors.

This is only an excerpt of OSG’s Double Hull Tankers: Preserving Capital, Securing Optionality

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