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Thompson’s BHR Capital Takes Large Stake In Overseas Shipholding Group Inc. (OSGIQ)

Michael Thompson’s BHR Capital has reported taking a large stake in Overseas Shipholding Group Inc. (OTCMKTS:OSGIQ). BHR recently filed a 13D disclosing ownership of 27.2 million shares representing 8.4% of the company’s common stock. Michael Thompson is the Portfolio Manager for the investment vehicles managed by BHR Capital, which he founded in 2009.  Thompson does all of the portfolio construction, security selection, and risk management activities and oversees BHR’s investment team. Prior to founding BHR, Thompson worked for Bay Harbour Management. Thompson was also previously a managing director at Wachovia Securities with management responsibilities for a $3 billion+ proprietary trading book.  Mr. Thompson graduated magna cum laude with a BBA in International Finance from the Honors Program at the University of Georgia.

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One of those investment vehicles, BHR-OSG On-Shore Funding LLC reported owning 19.2 million of Overseas Shipholding Group Inc. (OTCMKTS:OSGIQ)’s shares representing 5.9% of the company’s common shares. Why the involvement of the BHR-OSG investment vehicle? Because OSG is subject to The Jones Act, which restricts foreign ownership of vessels engaged in coastwise trade in the United States. So the Class A warrants held by BHR Master (a Cayman Corporation), were not convertible into Class A Common Stock. BHR-OSG (a Delaware LLC) was formed, in part, to address this restriction and allow U.S. investors in BHR Master to take indirect ownership of their Class A Securities (including Class A Warrants) through BHR-OSG to allow possible future conversion of the Class A Warrants into Class A Common Stock. Also noteworthy, the filing also showed BHR Capital entered into a non-disclosure agreement with OSG. To the extent that BHR Capital comes into possession of any material nonpublic information, the NDA and applicable securities law prohibits BHR Capital and any affiliate from transacting in securities of OSG.

Overseas Shipholding Group Inc. (OSG) is a $200 million market cap tanker company with its corporate offices in Midtown Manhattan. The company is a provider of energy transportation services. It is mainly involved in ocean transportation of crude oil and petroleum products. As of December 31, 2014, OSG owns and operates a fleet of 81 International Flag and U.S. Flag vessels. On March 16, Overseas Shipholding Group Inc. (OTCMKTS:OSGIQ) reported fourth quarter and full-year 2014 results. Net income for the fourth quarter was $26.5 million, or $0.05 per diluted share. Net loss for fiscal year 2014 was $152.2 million, or $0.65 per diluted share. OSG reported time charter equivalent (TCE) revenues of $198.9 million, an increase of $5.0 million, or 3%, from $193.8 million in the comparable 2013 quarter. For the full year, OSG reported $761.4 million in TCE revenue.

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Disclosure: None

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