Overseas Shipholding Group (OSG) has bought back $11.4m in warrants from shareholder Cyrus Capital Partners, about two weeks after it had repurchased $15m in shares from the New York-based hedge fund.
New York-listed OSG has taken back 13.9m warrants for common shares from Cyrus for $11.4m in a private deal that will deplete Cyrus of all its warrants, the US-flag tanker owner announced on Friday.
OSG plans to convert the repurchased warrants into 2.63m common shares on Monday with available cash.
“The agreement to purchase nearly 75% of OSG’s outstanding warrants is a welcome development,” chief executive Sam Norton said in a statement.
“Retiring these warrants will simplify our capital structure and will reduce our fully diluted share count, with the benefit accruing to all shareholders.
“As well, the purchase of warrants does not impact the number of our outstanding shares, thus maintaining market liquidity.”
He said OSG views the repurchase price for the warrants as “attractive”.
“As with the case of other recently transacted share repurchases, has been done at an equivalent enterprise value to projected 2023 adjusted Ebitda multiple of less than four times,” Norton said.
OSG has said it has repurchased 16.8m shares at an average price of $3.33 per share through both open-market and off-market transactions over the past 15 months, including the latest Cyrus move.
The latest share repurchase is not part of a previously announced programme to buy up to $20m of OSG stock after initially announcing a plan to buy back only $10m in shares.
“The recent success of our operations and the duration of our current book of charter contracts continues to give OSG the appropriate level of visibility to reasonably expect a steady stream of cash flows from both our specialized and conventional trading businesses for the foreseeable future,” Norton said.
“The purchase of shares and warrants at attractive prices is one of several options for utilizing excess cash that our board of directors continuously reviews, and we look forward to reporting on cash deployment opportunities in the quarters ahead.”
OSG has been buying back shares while reaping higher profits in recent quarters due to stronger clean tanker markets.
On 7 August, the owner posted a profit of $12.3m for the second quarter, up from a $3.7m profit during the same period last year.
