Capital Product Partners To Keep Tankers Chartered To OSG at a Discount

(Reuters) – Ship owner Capital Product Partners LP said it would continue to lease three of its product tankers to Overseas Shipholding Group Inc, which has filed for bankruptcy protection, but at a lower rate.

The new long-term bareboat charters – an arrangement to hire a boat without crew or provisions – are for $6,250 per day, almost 50 percent lower than those under the existing charter.

Debt-laden Overseas Shipholding, better known by its earlier ticker symbol OSG, filed for bankruptcy protection last November as questions about its financial statements shut it out of credit markets.

The bankruptcy filing sent companies that lease ships to OSG, including Capital Product, Wilbur Ross-backed Diamond S Shipping and DHT Holdings Inc, scrambling to find alternative customers.

Analysts had said Capital Product’s above-market leases with OSG could be at risk.

OSG has filed a motion seeking court approval of the new charters and approval to “reject” the existing bareboat charters, Capital Product said in a statement late on Thursday.

The new charters, if approved, will be effective March 1.

However, if the charters are rejected, Greece-based Capital Product can make a claim for the difference in the rate between the new and the existing charters, the company said.

(c) 2013 Thomson Reuters, Click For Restrictions