OSG-owned VLCC Overseas Everest. File photo (c) MarineTraffic.com
By Nate Raymond
NEW YORK, Aug 7 (Reuters) – Overseas Shipholding Group Inc investors have reached $16.25 million in settlements with the executives, underwriters and an auditor of the tanker company in a lawsuit related to its 2012 bankruptcy and tax problems.
Company directors and officers, including former Chief Executive Morten Arntzen and former Chief Financial Officer Myles Itkin, agreed to pay $10.5 million, papers filed in Manhattan federal court on Thursday showed.
Underwriters including Citigroup Inc, Deutsche Bank AG and Goldman Sachs Group Inc will pay $4 million, while accounting firm PricewaterhouseCoopers LLP will pay $1.75 million.
“We’re think its an extraordinary result in an extremely complex case,” David Rosenfeld, a lawyer for the plaintiffs, said on Friday.
David Kistenbroker, Itkin’s lawyer, said he was “gratified” by the settlement. The other defendants’ lawyers either declined to comment or did not respond to requests for comment.
OSG shareholders sued the company’s officers shortly before it sought Chapter 11 in November 2012 as questions about its financial statements shut it out of credit markets. They accused the 21 defendants of making false and misleading statements about OSG’s operational status and financial projections.
The settlement is on top of an earlier deal in OSG’s bankruptcy case for the company to pay investors at least $15 million. OSG emerged from bankruptcy last year, and in May filed for an initial public offering.
The lawsuit said OSG entered into various debt arrangements for a subsidiary that acted as a holding company for foreign entities that owned or operated OSG’s international vessels.
Those agreements triggered millions of dollars in income tax liability, but for years, OSG’s leadership maintained it owed nothing, the lawsuit said.
In September 2012, Allen Andreas, a director and member of the audit committee, resigned over disagreements with the board in reviewing the tax issue. A month later, OSG said its financial statements for the three years through Dec. 31, 2011, should not be relied on.
During bankruptcy proceedings, the Internal Revenue Service filed a claim stating OSG owed the government over $435 million plus $27.9 million in interest. Those claims were later settled.
The class action settlements require court approval and would cover investors who either bought senior notes traced to a 2010 offering or who purchased stock from Oct. 29, 2007 through Oct. 19, 2012.
The lead plaintiffs include Stichting Pensioenfonds DSM Nederland and the treasurer of the state of Indiana. (Reporting by Nate Raymond in New York; Editing by Richard Chang)
(c) Copyright Thomson Reuters 2015.
Sign up for our newsletter