International Seaways, Inc. (NYSE:INSW) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
| Entry into a Material Definitive Agreement. |
Agreements with Overseas Shipholding Group, Inc.
Effective as of 5:00 p.m., New York time, on November 30, 2016
(the Distribution Date), Overseas Shipholding Group, Inc. (OSG)
completed the previously announced spin-off (the Spin-Off or the
Distribution) of its wholly-owned subsidiary, International
Seaways, Inc. (the Company or INSW). On the Distribution Date,
OSG distributed all of the outstanding shares of INSWs common
stock, no par value (INSW common stock), on a pro rata basis, to
holders of OSGs Class A common stock (OSG common stock) and Class
A warrants (OSG warrants) of record as of 5:00 p.m., New York
time, on November 18, 2016 (the Record Date). On the Distribution
Date, each holder of OSG common stock received 0.3333 shares of
INSW common stock for every share of OSG common stock held on the
Record Date. Each holder of OSG warrants received 0.3333 shares
of INSW common stock for every one share of OSG common stock they
would have received if they exercised their warrants immediately
prior to the Distribution (or 0.063327 shares of INSW common
stock per warrant). Holders of OSG common stock and OSG warrants
received cash in lieu of fractional shares of INSW common stock.
In connection with the Distribution, INSW entered into a
Separation and Distribution Agreement with OSG, dated as of
November 30, 2016. In addition to the Separation and Distribution
Agreement, INSW and OSG entered into certain ancillary
agreements, including a Transition Services Agreement and an
Employee Matters Agreement, each dated as of November 30, 2016.
These agreements govern the relationship between INSW and OSG
following the Spin-Off and provide for the allocation of various
assets, liabilities, rights and obligations. These agreements
also include arrangements for transition services to be provided
by OSG to INSW and by INSW to OSG.
A summary of the material terms of each of the foregoing
agreements can be found in the Companys Information Statement,
dated November 10, 2016 (the Information Statement), which is
included as Exhibit 99.1 to this Current Report on Form 8-K,
under the section entitled Certain Relationships and Transactions
with Related Persons, Affiliates and Affiliated
EntitiesAgreements with OSG. This summary is incorporated by
reference into this Item 1.01. The summary is qualified in its
entirety by reference to the Separation and Distribution
Agreement, the Transition Services Agreement and the Employee
Matters Agreement, which are attached hereto as Exhibits 2.1,
10.1 and 10.2, respectively, and are incorporated herein by
reference.
Registration Rights Agreement
In connection with the Distribution, INSW entered into a
registration rights agreement, dated as of November 30, 2016 (the
Registration Rights Agreement), with certain stockholders
affiliated with Cyrus Capital Partners, L.P. and Paulson Co. Inc.
to the Registration Rights Agreement, we will be required to
register, on a registration statement filed with the Securities
and Exchange Commission (the SEC) the resale of certain shares of
INSW common stock for the benefit of the stockholders party
thereto and potentially certain other stockholders. Under the
terms of the Registration Rights Agreement, the stockholders
party thereto are provided with certain demand registration
rights subject to certain conditions and limitations. At any time
and from time to time after a shelf registration statement has
been declared effective by the SEC, any one or more of the
stockholders party thereto may request to sell all or any portion
of their Registrable Securities (as defined in the Registration
Rights Agreement) in an underwritten offering, provided that the
total offering price of the securities to be offered in such
offering is reasonably expected to exceed, in the aggregate (i)
in the case of a demand by at least one selling securityholder
party to the Registration Rights Agreement that is an affiliate
(within the meaning of Rule 405 under the Securities Act of 1933,
as amended), $25.0 million or (ii) in all other cases, $75.0
million.
The foregoing description does not purport to be complete and is
qualified in its entirety by reference to the Registration Rights
Agreement, which is attached hereto as Exhibit 4.1 and is
incorporated herein by reference.
Amendment to INSW Credit Agreement
On November 30, 2016, INSW and certain of its subsidiaries
entered into a fourth amendment (the Fourth INSW Credit Agreement
Amendment) to the secured term loan and revolver facilities,
dated as of August 5, 2014, as amended by that certain First
Amendment, dated as of June 3, 2015, that certain Second
Amendment, dated as of July 18, 2016 and that certain Third
Amendment, dated as of September 20, 2016 (as amended, the INSW
Facilities), among OSG, INSW, OIN Delaware LLC (the sole member
of which is INSW), certain INSW subsidiaries, Jefferies Finance
LLC, as administrative agent, and other lenders party thereto,
both secured by a first lien on substantially all of the
International Flag assets of INSW and its subsidiaries.
The Company entered into the Fourth Credit Agreement Amendment
primarily to reflect the Spin-Off of INSW from OSG. The Fourth
INSW Credit Agreement Amendment, among other things, (i) removed
OSG as a guarantor of the facility; (ii) replaced restrictions on
the movement of funds to OSG with limitations on the use of the
Available Amount to pay dividends to shareholders and (iii) added
or modified certain definitions.
The foregoing description does not purport to be complete and is
qualified in its entirety by reference to the Fourth INSW Credit
Agreement Amendment, which is attached hereto as Exhibit 10.3 and
is incorporated herein by reference.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
INSW has an interest in a joint venture that converted two ULCCs
to Floating Storage and Offloading Service vessels (the FSO joint
ventures). Currently, the FSO joint venture is party to a number
of contracts to which OSG serves as guarantor: (a) the FSO joint
venture is the borrower to a loan agreement, as amended and
restated, with OSG and Euronav, each as guarantors, certain other
parties thereto and ING Bank N.V. as agent and security trustee
(the Loan Agreement); (b) the FSO joint venture is an obligor to
a guarantee facility agreement, by and among, the FSO joint
venture, those banks and financial institutions listed therein,
Nordea Bank Finland PLC, as issuing bank, Nordea Bank Norge ASA
as agent and ING Bank N.V. as Security Trustee (the Guarantee
Facility); and (c) the FSO joint venture is party to two service
contracts with Maersk Oil Qatar AS (the MOQ Service Contracts).
In connection with the Distribution, INSW became of a guarantor
of the obligations of the FSO joint venture to the Loan Agreement
and the Guarantee Facility (together, the ING and Nordea
Guarantees) and the obligations of the FSO joint venture to the
MOQ Service Contracts (the MOQ Guarantee, together with the ING
and Nordea Guarantees, the INSW FSO Guarantees). OSG will
continue to guarantee the obligations of the FSO joint venture to
the Loan Agreement and the Guarantee Facility (together, the OSG
FSO Guarantees).
INSW agreed that in connection with the spin-off, it will
guarantee certain arrangements, including certain agreements in
favor of (a) Qatar Liquefied Gas Company Limited (2) (LNG
Charterer) and relating to certain LNG Tanker Time Charter Party
Agreements with the LNG Charterer and each of Overseas LNG H1
Corporation, Overseas LNG H2 Corporation, Overseas LNG S1
Corporation and Overseas LNG S2 Corporation (such agreements, the
LNG Charter Party Agreements, and such guarantees, collectively,
the LNG Performance Guarantees) and (b) the named charter party
and relating to certain Charter Party Agreements, dated March 1,
2013 with each of Sifnos Tanker Corporation, Kimolos Tanker
Corporation and Serifos Tanker Corporation (such agreements, the
Bareboat Charter Agreements and such guarantees, the Bareboat
Charter Guarantees). OSG will continue to provide a guarantee in
favor of the LNG Charterer relating to the LNG Charter Party
Agreements (such guarantees, the OSG LNG Performance Guarantees
and collectively, with the OSG FSO Guarantees the Continuing OSG
Guarantees).
Under the terms of the Separation and Distribution Agreement,
INSW will pay a $125,000 fee per year to OSG in connection with
the Continuing OSG Guarantees, which is subject to escalation
after 2017 and will be terminated if OSG ceases to provide the
OSG LNG Performance Guarantees. Additionally, INSW will indemnify
OSG for liabilities arising from the Continuing OSG Guarantees to
the terms of the Separation and Distribution Agreement. The
foregoing description does not purport to be complete and is
qualified in its entirety by reference to the Separation and
Distribution Agreement, which is attached hereto as Exhibit 2.1
and is incorporated herein by reference.
| Item 3.03 |
Material Modification to Rights of Security Holders. |
The information provided under Item 5.03 of this Current Report
on Form 8-K is incorporated by reference into this Item 3.03 as
if fully set forth herein.
| Item 5.01 | Changes in Control of Registrant. |
Immediately prior to the Distribution, the Company was a
wholly-owned subsidiary of OSG. Effective as of the Distribution
Date, all of the outstanding shares of INSW common stock were
distributed, on a pro rata basis, to OSGs stockholders and
warrantholders of record as of the Record Date. On the
Distribution Date, each holder of OSG common stock received
0.3333 shares of INSW common stock for every share of OSG common
stock held on the Record Date. Each holder of OSG warrants
received 0.3333 shares of INSW common stock for every one share
of OSG common stock they would have received if they exercised
their warrants immediately prior to the Distribution, without
giving effect to the exercise price (or 0.063327 INSW shares per
warrant). Holders of OSG common stock and warrants received cash
in lieu of fractional shares of INSW common stock.
Upon the completion of the Spin-Off, INSW became an independent
company. Its shares are listed on the New York Stock Exchange and
began regular-way trading on December 1, 2016 under the symbol
INSW. The description of the Distribution included under Item
1.01 of this Current Report on Form 8-K is incorporated by
reference into this Item 5.01 as if fully set forth herein.
| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Resignation and Appointment of Directors
On November 30, 2016, in connection with the Spin-Off, Rick F.
Oricchio and Lois K. Zabrocky resigned as members of the Companys
board of directors (the Board). Ian T. Blackley and Gregory A.
Wright had previously been appointed as directors of INSW and
will continue to serve as such following the Spin-Off.
On November 30, 2016, in connection with the Spin-Off, Timothy J.
Bernlohr, Randee E. Day, Joseph I. Kronsberg, Ronald Steger, Chad
L. Valerio, Ty E. Wallach and Douglas D. Wheat were appointed to
the Board.
On November 30, 2016, in connection with the Spin-Off, Mr. Wheat
was appointed Nonexecutive Chairman of the Board, and certain of
the newly appointed directors joined the standing committees of
the Board. Effective as of November 30, 2016, the Board has three
standing committees: an Audit Committee, a Human Resources and
Compensation Committee and a Corporate Governance and Risk
Assessment Committee. The current members of the Board and each
of the standing committees are listed in the table below:
| Director | Audit Committee |
Human Resources and Compensation Committee |
Corporate Governance and Risk Assessment Committee |
|||
| Timothy J. Bernlohr | Chair | X | ||||
| Ian T. Blackley | ||||||
| Randee E. Day | X | X | ||||
| Joseph I. Kronsberg | ||||||
| Ronald Steger | X | Chair | ||||
| Chad L. Valerio | ||||||
| Ty E. Wallach | X | |||||
| Douglas D. Wheat | ||||||
| Gregory A. Wright | Chair | X |
Biographical information on each of the Companys directors can be
found in the Information Statement under the section entitled
ManagementOur Directors Following the Distribution, which is
incorporated by reference into this Item 5.02.
Resignation and Appointment of Officers
On November 28, 2016, in connection with the Spin-Off, Ian T.
Blackley ceased to serve as Chief Financial Officer of the
Company.
On November 28, 2016, in connection with the Spin-Off, the
Company appointed Jeffrey Pribor as Chief Financial Officer.
On November 30, 2016, in connection with the Spin-Off, Ian T.
Blackley ceased to serve as Senior Vice President, Rick F.
Oricchio ceased to serve as Senior Vice President and Comptroller
and Geoffrey L. Carpenter ceased to serve as Treasurer of INSW.
On November 30, 2016, in connection with the Spin-Off, the
Company appointed Lois K. Zabrocky as President and Chief
Executive Officer, Jeffrey Pribor as Senior Vice President and
Treasurer, James D. Small III as Chief Administrative Officer,
Senior Vice President, Secretary and General Counsel and Adewale
O. Oshodi as Controller.
Biographical information on each of the Companys officers can be
found in the Information Statement under the section entitled
ManagementOur Executive Officers Following the Distribution,
which is incorporated by reference into this Item 5.02.
| Item 5.03 |
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
In connection with the Distribution, on November 30, 2016, INSW
amended and restated its Articles of Incorporation (the Amended
and Restated Articles of Incorporation) and its By-Laws (the
Amended and Restated By-Laws). The Amended and Restated Articles
of Incorporation increased the number of authorized shares of
INSW common stock and effected a forward stock split on the
issued and outstanding shares of INSW common stock (the Stock
Split) in order to facilitate the distribution of such shares to
holders of OSG common stock and warrants. Following the
Distribution, INSWs authorized capital stock consisted of
100,000,000 shares of no par value common stock and 10,000,000
shares of no par value preferred stock. Following the
Distribution there are 29,157,387 issued and outstanding shares
of INSW common stock.
A description of the material provisions of each of the Amended
and Restated Articles of Incorporation and the Amended and
Restated By-Laws can be found in the Information Statement under
the section entitled Description of Our Capital Stock. This
description is incorporated by reference into this Item 5.03. The
foregoing description does not purport to be complete and is
qualified in its entirety by reference to the Amended and
Restated Articles of Incorporation and the Amended and Restated
By-Laws, which are attached hereto as Exhibits 3.1 and 3.2,
respectively, and are incorporated herein by reference.
| Item 5.05 |
Amendments to the Registrants Code of Ethics, or Waiver of a Provision of the Code of Ethics. |
In connection with the Distribution, the Board adopted a Code of
Business Conduct and Ethics, a copy of which is available under
the Investor Relations section of the Companys website at
www.intlseas.com. Information contained on the Companys website
or that can be accessed through the Companys website is not
incorporated into and does not constitute a part of this Current
Report on Form 8-K. The Company has included its website address
only as an inactive textual reference and does not intend it to
be an active link to the Companys website.
| Item 5.07 |
Submission of Matters to a Vote of Security Holders. |
On November 28, 2016, OSG, as the sole stockholder of INSW,
acting by written consent in lieu of a meeting of stockholders,
approved and adopted (a) the Amended and Restated Articles of
Incorporation and the Amended and Restated By-Laws, (b) the
increase in authorized shares, (c) the Stock Split, (d) the
expansion of the Board from three to nine members and (e) the
election and removal of the individuals listed under Item 5.02
above as directors of INSW.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit No. | Description |
| 2.1 |
Separation and Distribution Agreement, dated as of November 30, 2016, by and between Overseas Shipholding Group, Inc. and International Seaways, Inc.* |
| 3.1 |
Amended and Restated Articles of Incorporation of International Seaways, Inc. |
| 3.2 | Amended and Restated By-Laws of International Seaways, Inc. |
| 4.1 |
Registration Rights Agreement, dated as of November 30, 2016, between International Seaways, Inc. and certain stockholders party thereto. |
| 10.1 |
Transition Services Agreement, dated as of November 30, 2016, between Overseas Shipholding Group, Inc. and International Seaways, Inc. |
| 10.2 |
Employee Matters Agreement, dated as of November 30, 2016, between Overseas Shipholding Group, Inc. and International Seaways, Inc. |
| 10.3 |
Fourth Amendment, dated as of November 30, 2016, to Credit Agreement dated as of August 5, 2014, among International Seaways, Inc. (formerly OSG International, Inc.), Overseas Shipholding Group, Inc., OIN Delaware LLC, certain subsidiaries of International Seaways, Inc. (formerly OSG International, Inc.) as other guarantors, various lenders, Jefferies Finance LLC, Barclays Bank PLC and UBS Securities LLC, as joint lead arrangers and joint book running managers, Jefferies Finance LLC, as administrative agent, Barclays Bank PLC and UBS Securities LLC, as co-documentation agents, Jefferies Finance LLC, as syndication agent, collateral agent and mortgage trustee, swingline lender, and issuing bank. |
| 99.1 |
Information Statement of International Seaways, Inc., dated November 10, 2016. |
| * |
Schedules and exhibits have been omitted to Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. |
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
| INTERNATIONALSEAWAYS,INC. | |||
| (Registrant) | |||
| Date: December 2, 2016 | By | /s/ James D. Small III | |
| Name: | James D. Small III | ||
| Title: |
Chief Administrative Officer, Senior Vice President, Secretary and General Counsel |
||
EXHIBIT INDEX
| Exhibit No. | Description |
| 2.1 |
Separation and Distribution Agreement, dated as of November 30, 2016, by and between Overseas Shipholding Group, Inc. and International Seaways, Inc.* |
| 3.1 |
Amended and Restated Articles of Incorporation of International Seaways, Inc. |
| 3.2 | Amended and Restated By-Laws of International Seaways, Inc. |
| 4.1 |
Registration Rights Agreement, dated as of November 30, 2016, between International Seaways, Inc. and certain stockholders party thereto. |
| 10.1 |
Transition Services Agreement, dated as of November 30, 2016, between Overseas Shipholding Group, Inc. and International Seaways, Inc. |
| 10.2 |
Employee Matters Agreement, dated as of November 30, 2016, between Overseas Shipholding Group, Inc. and International Seaways, Inc. |
| 10.3 |
Fourth Amendment, dated as of November 30, 2016, to Credit Agreement dated as of August 5, 2014, among International Seaways, Inc. (formerly OSG International, Inc.), Overseas Shipholding Group, Inc., OIN Delaware LLC, certain subsidiaries of International Seaways, Inc. (formerly OSG International, Inc.) as other guarantors, various lenders, Jefferies Finance LLC, Barclays Bank PLC and UBS Securities LLC, as joint lead arrangers and joint book running managers, Jefferies Finance LLC, as administrative agent, Barclays Bank PLC and UBS Securities LLC, as co-documentation agents, Jefferies Finance LLC, as syndication agent, collateral agent and mortgage trustee, swingline lender, and issuing bank. |
| 99.1 |
Information Statement of International Seaways, Inc., dated November 10, 2016. |
| * | Schedules and exhibits have been omitted |
About International Seaways, Inc. (NYSE:INSW)
International Seaways, Inc. and its subsidiaries own and operate a fleet of oceangoing vessels. The Company’s oceangoing vessels engage in the transportation of crude oil and petroleum products in the International Flag trades. The Company’s segments are International Crude Tankers and International Product Carriers. Its 55-vessel fleet consists of Ultra Large Crude Carrier (ULCC), Very Large Crude Carrier (VLCC), Aframax and Panamax crude tankers, as well as long range 1 (LR1), LR2 and medium range (MR) product carriers. Its International Crude Tankers segment is made up of a ULCC and a fleet of VLCCs, Aframaxes, and Panamaxes. Its International Product Carriers segment consists of a fleet of MRs, LR1s and an LR2 engaged in the transportation of crude and refined petroleum products. Through joint venture partnerships (the JVs), it has ownership interests in approximately four liquefied natural gas carriers and approximately two floating storage and offloading service vessels. International Seaways, Inc. (NYSE:INSW) Recent Trading Information
International Seaways, Inc. (NYSE:INSW) closed its last trading session at with 382,947 shares trading hands.