Standard & Poor’s Ratings Services has lowered Overseas Shipholding Group’s long-term credit rating to ‘D’ after the company voluntarily filed for Chapter 11 earlier today.
“We are lowering our ratings on the company, including our long-term corporate credit rating to ‘D’ from ‘CCC-’, based on the bankruptcy filing, and removing the ratings from CreditWatch, where we placed them with negative implications on Oct. 22, 2012,” S&P said in a statement.
S&P also lowered their ratings on OSG’s senior unsecured debt to ‘D’ from ‘CCC-’.
Meanwhile, the S&P statement said that the company’s recovery rating will remain unchanged, but added the decision does not take into account any potential tax liabilities that OSG may have.
“The ’3′ recovery rating, indicating our expectation that lenders will receive a meaningful (50%-70%) recovery in a payment default scenario, remains unchanged for now,” the statement said. “However, the company has disclosed a potential tax liability that we estimate could lower the recovery to a 10% to 30% range.”
Based in New York, OSG listed assets of $4.15 billion and debt of $2.67 billion in its Chapter 11 filing today in U.S. Bankruptcy Court in Wilmington, Delaware. The company has more than 100 vessels that transport oil, refined products and natural gas worldwide.
On Oct. 22, the company said in a regulatory filing that it was evaluating options, including bankruptcy, after a tax review prompted its audit committee to consider whether financial statements for the three years leading up to Dec. 31, 2011, should no longer be relied upon.