Sold my stock in maritime outfits decades ago

I now see a proposal for OSG from another bidder, Now the 5th or 6th potential bidder on once a great fleet back in the day. IOT, Sonat, Maritrans, OSG prior owners. Orignal bid was $3.What is the strategy to almost double your offer now?

Saltchuk seems to be making another run at the fleet. I guess they own roughly 20% of the company.

HOS is trying to go public again too…

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News Flash. HOS went public in Sept. The stock is down to 30 cents from then.

OSG Sam will soon be looking for work if this goes thru. I wonder if he regrets his hair brain idea regarding Foreign Crew. I don’t think that press release served OSG well. Just saying.

Sam doesn’t care.

They just filed their s1 in December…

OSG is in a totally different financial and operational state than when Saltchuk offered $3. If we take the EV/enterprise value of OSG June 2021 @$3 and compare to EV today @$6.25, the add’l EV net to Saltchuk is only ~$40M with the higher offer. In other words, they are only “paying” ~$40M more today @$6.25 then they would have back in June 2021. This is because OSG debt has been reduced, share count reduced quite a bit, and cash on hand increased a lot. Rumor was that Saltchuk could not obtain a JV partner to finance June 2021 and could not sweeten their offer to the OSG board, so negotiations were shelved. OSG is in a far stronger financial and operating position now, so many of us feel $6.25 is too low, even though at first glance it would appear to be a generous hike from the $3 lowball of 2021. I am happy to get more into the weeds around finances (EV/EBITDA multiples, fcf multiples, etc) but suffice it to say Saltchuk’s offer is not “generous” by any means. It is exactly what I would do in Saltchuk’s shoes though. If a deal does go through, I think it will be closer to $6.75-7.00, but that’s speculation and a bit of wishful thinking on my part.

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Another way to look at Saltchuk’s offer is to look at what Maritime Partners paid for AMSC’s fleet of 10 MR tankers. They paid ~$747M (EV) for 10 ships producing roughly $85M in annual EBITDA. That’s roughly an 8.7x multiple. OSG is set to produce ~$175-180M annual EBITDA in 2024. I estimate $200-210M in 2025. OSG’s EV @$6.25 is $743M… And Saltchuk already owns ~21% of shares outstanding, so EV net to them minus the shares they already own is ~$649M. $6.25/share is a really good deal for Saltchuk, if it goes through.

Haven’t heard from you in a while sir. Always welcome your comments regarding this subject…

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The numbers/financials are nowhere as interesting as hearing from real mariners like yourself. I am just now reading the most recent OSG board member is angering some mariners.

This may be a rather short board term for her is the buyout goes through. One thing about being a public company is ~$5-6M cost for all the things necessary to be publicly listed. Board compensation, regulatory costs, etc. Most boards are anchors and not useful, so that would be one good thing for OSG going private. If they do end up being incorporated within Saltchuk it will be interesting what type of senior-level mgmt shuffling occurs. OSG has relationships with all sorts of trading desks, and those relationships are important. And will Saltchuk choose to keep some parts of OSG (the Alaskan Tankers seem something they would like) while selling off some parts like the very niche and lucrative Delaware Bay lightering license/ATB? OSG is really a collection of different niche market vessels combined with bareboat chartering of the commodity MR fleet that Maritime Partners bought from AMSC last year. From a top-down view, it makes sense to separate/sell off these various parts. This is all complete speculation on my part, obviously, as I have no idea what is being discussed between OSG and Saltchuk. And who knows what Maritime Partners is thinking about now. One thing that seems obvious is there is a shortage of mariners. Kirby had their Q4 earnings call late last week and mentioned this more than once. Hat tip to all you mariners doing this important work. My primary employment is a general and colorectal surgeon. I am familiar with 100 hour work weeks and nights away from home, etc. That said, I am not accustomed to weeks away from home. Thanks again to those of you doing this job.