INTERNATIONAL SHIPHOLDING CORPORATION (OTCMKTS:ISHCQ) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01.
Entry into a Material Definitive Agreement.
The information set forth in Item 7.01 of this Current Report on
Form 8-K under the heading Restructuring Support Agreement is
incorporated by reference into this Item 1.01.
Item 7.01.
Regulation FD Disclosure.
As previously reported by International Shipholding Corporation
(the Company), on July 31, 2016, the Company and certain of its
direct and indirect subsidiaries (together with the Company, the
Debtors) filed voluntary petitions for relief under Chapter 11 of
Title 11 of the U.S. Code (the Bankruptcy Code) in the United
States Bankruptcy Court for the Southern District of New York
(the Bankruptcy Court).
Plan of Reorganization and Disclosure Statement
On November 14, 2016, the Debtors filed with the Bankruptcy Court
the Joint Chapter 11 Plan of Reorganization for International
Shipholding Corporation and its Affiliated Debtors (the Plan of
Reorganization) and the accompanying Disclosure Statement for
Joint Chapter 11 Plan of Reorganization for International
Shipholding Corporation and its Affiliated Debtors (the
Disclosure Statement). The Bankruptcy Court has scheduled a
hearing for December 20, 2016 to consider, among other things,
the compliance of the Disclosure Statement with the Bankruptcy
Codes disclosure requirements and the establishment of a February
2, 2017 hearing date to consider confirmation of the Plan of
Reorganization.
The classes and types of claims and interest in the Debtors are
described in the proposed Plan of Reorganization, and the terms
used below refer to the terms set forth in the Plan of
Reorganization. The proposed Plan of Reorganization generally
provides for the following:
SEACOR will cause $25 million of committed financing to
be made available to the Debtors by one or more money
center banks;
SEACOR will provide a cash infusion of $10 million
dollars (the Cash Consideration) in exchange for 35.6% of
the ownership interests in the reorganized Company;
SEACOR will buy out any portion of the
Debtor-in-Possession Credit Agreement among Company and
the other Debtors party thereto, as borrowers, SEACOR
Capital Corp, as administrative agent, collateral agent,
security trustee and a lender, and DVB BANK SE, as a
lender (as amended, the DIP Credit Facility) funded by
any other party, so that it is the sole beneficial owner
of any DIP Credit Facility claims in exchange for 64.4%
of the ownership interests in the reorganized Company;
holders of allowed secured claims on account of certain
of the Debtors fixed rate credit agreement with DVB Bank
SE will receive, at the option of the Debtors, with the
consent of SEACOR or the reorganized Debtors, as
applicable, in full and final satisfaction of such
claims, either (i) payment in full in cash, including
interest, to the extent applicable, (ii) in the event of
any disposition of the collateral securing such claims,
their share of the proceeds generated by such
disposition, (iii) delivery of the collateral securing
such claims to the agent under such fixed rate credit
agreement, or (iv) such other treatment as complies with
Bankruptcy Code section 1129;
holders of allowed secured claims on account of certain
of the Debtors credit agreement with Citizens Asset
Finance will receive, at the option of the Debtors, with
the consent of SEACOR or the applicable reorganized
Debtor, as applicable, in full and final satisfaction of
such claims, either (i) in the event of any disposition
of the collateral securing such claims, the proceeds
generated by such disposition, (ii) delivery of the
collateral securing such claims to the holder of such
claims, or (iii) such other treatment as complies with
Bankruptcy Code section 1129;
holders of allowed secured claims on account of certain
of the Debtors variable rate financing agreement with
Capital One N.A. will receive, at the option of the
Debtors, with the consent of SEACOR or the applicable
reorganized Debtor, as applicable, in full and final
satisfaction of such claims, either (i) in the event of
any disposition of the collateral securing such claims,
the proceeds generated by such disposition, (ii) delivery
of the collateral securing such claim to the holder of
such claim or (iii) such other treatment as complies with
Bankruptcy Code section 1129;
holders of allowed secured claims on account of certain
of the Debtors senior secured credit facility with a
syndicate of lenders led by Regions Bank will receive, at
the option of the Debtors, with the consent of SEACOR or
the applicable reorganized Debtor, as applicable, in full
and final satisfaction of such claims, (i) (x) either (i)
their pro rata share of proceeds generated from the
disposition of the Louisiana Enterprise and/or the Texas
Enterprise and/or the Florida Enterprise or (y) delivery
of the Louisiana Enterprise and/or the Texas Enterprise
and/or Florida Enterprise to the agent under such senior
secured credit facility plus (b) cash in an amount
necessary to satisfy their allowed secured claims (after
accounting for (x) and (y) above) or (ii) such other
treatment as complies with Bankruptcy Code section 1129;
holders of allowed claims arising from the unsecured
portions of the pre-petition secured credit facility
claims, which are deficiency claims against the
applicable Debtors for amounts by which the allowed
aggregate amount of the claims under the applicable
pre-petition secured credit facility exceeds the amount
of the collateral for the secured claim under the
applicable pre-petition secured credit facility, will
receive, in full and final satisfaction of such claims,
their pro rata share of the applicable Debtors cash
available for distribution after satisfaction of certain
fees and claims;
holders of Allowed Other Priority Claims will receive, in
full and final satisfaction of such claims, payment of
such claims in full in cash;
holders of Allowed Other Secured Claims will receive, at
the option of the applicable Debtor, with the consent of
SEACOR or the applicable reorganized Debtor, as
applicable, in full and final satisfaction of such
claims, either (i) payment in full in cash, including
interest, to the extent applicable, (ii) delivery of the
collateral securing such claim to the holder of such
claim, or (iii) such other treatment as may be agreed to
by the holders of such claim and the applicable
reorganized Debtor;
holders of Allowed General Unsecured Claims will receive,
in full and final satisfaction of such claims, their pro
rata share of the applicable Debtors cash available for
distribution after satisfaction of certain fees and
claims;
holders of Allowed Convenience Claims, which is any claim
that would otherwise be a General Unsecured Claim and
that is (i) greater than $0 and less than or equal to an
undetermined dollar amount in allowed amount or (ii)
irrevocably reduced to an undetermined dollar amount at
the election of the holder of the claim, will receive, in
full and final satisfaction of such claims, cash in the
amount of an undetermined percentage of such claims;
there will be no distribution to holders of Allowed 510
Claims;
there will be no distribution to the holders of
intercompany claims on account of such claims, and such
claims will be cancelled, reinstated, or modified, as
determined by the Debtors in consultation with SEACOR, on
the effective date of the Plan of Reorganization; and
all current equity interests in the Debtors shall be
cancelled and existing equity holders will not receive a
distribution on account of their equity interests.
Information contained in the proposed Plan of Reorganization is
subject to change, whether as a result of amendments to the Plan
of Reorganization, third-party actions, or otherwise. The Plan of
Reorganization is subject to acceptance by certain of the Debtors
creditors (as and to the extent required under the Bankruptcy
Code) and confirmation by the Bankruptcy Court. In addition, the
Disclosure Statement is subject to approval by the Bankruptcy
Court. There can be no assurances that the Bankruptcy Court will
approve the Disclosure Statement, that the creditors of the
Debtors will accept the proposed Plan of Reorganization, or that
the Bankruptcy Court will confirm the Plan of Reorganization.
The description of the Plan of Reorganization and the Disclosure
Statement is qualified in its entirety by reference to the full
text of the Plan of Reorganization and Disclosure Statement,
copies of which are attached as Exhibit 99.1 and 99.2,
respectively, to this Current Report on Form 8-K and incorporated
into this Item 7.01 by reference.
Cautionary Note Regarding the Companys Common Stock
The proposed Plan of Reorganization provides that the Companys
existing common stock will be cancelled and the existing holders
will not receive any distribution. If certain requirements of the
Bankruptcy Code are met, a Chapter 11 plan of reorganization can
be confirmed notwithstanding its rejection by the Companys equity
securityholders and notwithstanding the fact that such equity
securityholders do not receive or retain any property on account
of their equity interests under the plan.
The Company cautions that trading in the Companys common stock
during the pendency of the Chapter 11 case is highly speculative
and poses substantial risks. Even though the Companys common
stock continues to be quoted on the OTC Pink Marketplace, it has
no underlying asset value under the proposed Plan of
Reorganization. The Companys stockholders should not view the
trading activity of its common stock on the OTC Pink Marketplace
or any other market or trading platform as being indicative of
the recovery the Companys stockholders will receive, if any, in
the Chapter 11 case.
Restructuring Support Agreement
On November 18, 2016, the Restructuring Support Agreement (the
Restructuring Support Agreement) between the Debtors and SEACOR
Capital Corp (SEACOR) was approved by the Bankruptcy Court and
became effective and binding on the parties. Under the terms of
the Restructuring Support Agreement, the parties agreed to use
commercially reasonable efforts to implement a financial
restructuring of the Debtors capital structure and financial
obligations within the timeframe and on the terms and conditions
set forth in the Restructuring Support Agreement and attached
term sheet. The Restructuring Support Agreement provides that the
restructuring will be implemented through the Plan of
Reorganization on the terms and conditions described in the
Restructuring Support Agreement and attached term sheet and
otherwise in form and substance acceptable to the Debtors and
SEACOR.
The Restructuring Support Agreement provides that the Debtors
will reimburse SEACOR for reasonable and documented out-of-pocket
fees, including certain legal fees, incurred in connection with
the restructuring and the Restructuring Support Agreement (the
Expense Reimbursement). The order of the Bankruptcy Court
approving the entry into the Restructuring Support Agreement
provided that the Expense Reimbursement may not exceed $1 million
in the aggregate without the prior consent of the unsecured
creditors committee, not to be unreasonably withheld or delayed,
or the Bankruptcy Court.
The Restructuring Support Agreement may be terminated by the
Debtors or SEACOR upon the occurrence of certain events. SEACOR
has the right to terminate the Restructuring Support Agreement
if, among other things, the Debtors file a plan or related
disclosure statement in the Chapter 11 cases that is materially
inconsistent with the terms of the Restructuring Support
Agreement and attached term sheet and not otherwise in form and
substance acceptable to SEACOR or fail to comply with certain
milestones within the time periods provided in the Restructuring
Support Agreement. The milestones include covenants by the
Debtors to (i) obtain approval by the Bankruptcy Court of a
disclosure statement with respect to the Plan of Reorganization
on or before December 22, 2016, (ii) obtain entry of an order
confirming the Plan of Reorganization on or before February 2,
2017, which must become a final order no later than 14 days from
the date of entry, and (iii) use commercially reasonable efforts
to consummate the Plan of Reorganization as soon as reasonably
practicable after entry of the confirmation order and in no event
later than 90 days after entry of the confirmation order. The
Debtors may terminate the Restructuring Support Agreement if,
among other things, the board of directors of the Company
determines, in good faith after seeking the advice of outside
counsel, that proceeding with the restructuring and pursuit and
confirmation of the Plan of Reorganization would be inconsistent
with the continued exercise of the Debtors fiduciary duties under
applicable law.
Although the Debtors intend to pursue the restructuring in
accordance with the terms set forth in the Restructuring Support
Agreement and attached term sheet, there can be no assurance that
the Debtors will be successful in completing a restructuring or
any other similar transaction on the terms set forth in the
Restructuring Support Agreement and attached term sheet, on
different terms, or at all.
The description of the Restructuring Support Agreement is
qualified in its entirety by reference to the full text of the
Restructuring Support Agreement, a copy of which is filed as
Exhibit 10.1 to this Current Report on Form 8-K and incorporated
into this Item 7.01 by reference.
Cautionary Note
The information contained in this Current Report on Form 8-K
(including the exhibits) is for informational purposes only and
does not constitute an offer to buy, nor a solicitation of an
offer to sell, any securities of the Company, nor does it
constitute a solicitation of a vote or consent from any persons
on the Plan of Reorganization. Securityholders are urged to read
the disclosure materials, including the Disclosure Statement,
because they contain important information regarding the
restructuring.
Monthly Operating Report
On November 15, 2016, the Company filed a Monthly Operating
Report for the month of October 2016 with the Bankruptcy Court.
The Monthly Operating Report is furnished as Exhibit 99.3 to this
Current Report on Form 8-K and incorporated into this Item 7.01
by reference.
Cautionary Statement Regarding the Monthly Operating Report
The Company cautions investors and potential investors not to
place undue reliance on the information contained in the Monthly
Operating Report, which was not prepared for the purpose of
providing the basis for an investment decision relating to any of
the securities of the Company. The Monthly Operating Report is
limited in scope, covers a limited time period, and has been
prepared solely for the purpose of complying with the monthly
reporting requirements of the Bankruptcy Court. The Monthly
Operating Report was not audited or reviewed by an independent
registered public accounting firm and was not prepared in
accordance with generally accepted accounting principles in the
United States. The Monthly Operating Report is in a format
prescribed by applicable bankruptcy laws and remains subject to
future adjustment and reconciliation. Therefore, the Monthly
Operating Report does not necessarily contain all information
required in filings to the Securities Exchange Act of 1934, as
amended (the Exchange Act), or may present such information
differently from the presentation of information in Exchange Act
reports. There can be no assurance that, from the perspective of
an investor or potential investor in the Companys securities, the
Monthly Operating Report is complete. The Monthly Operating
Report also contains information for periods which are shorter or
otherwise different from those required in Exchange Act reports,
and such information might not be indicative of the Companys
financial condition or operating results for the period that
would be reflected in the Companys financial statements or in its
Exchange Act reports. Results set forth in the Monthly Operating
Report should not be viewed as indicative of future results.
Cautionary Note Regarding Forward-Looking Statements
Certain statements and information included herein may constitute
forward-looking statements, as such term is defined in Section
21E of the Securities Exchange Act of 1934, as amended, relating
to future events. Such statements are only predictions and
involve risks and uncertainties, resulting in the possibility
that actual events will differ materially from such predictions
as a result of certain risk factors. Important factors that could
cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, the
ability to consummate the sale of the specialty business assets;
the ability to confirm and consummate the Plan of Reorganization;
risks attendant to the Chapter 11 process, including the effects
thereof on the Debtors business and on the interests of various
constituents, the length of time that the Debtors might be
required to operate in Chapter 11 and the continued availability
of operating capital during the pendency of the Chapter 11
proceedings; risks associated with third party motions in any
Chapter 11 case, which may interfere with the ability to confirm
and consummate a plan of reorganization; potential adverse
effects on the Debtors liquidity or results of operations;
increased costs to execute the restructuring; effects on the
market price of the Companys common stock; and the risk factors
and known trends and uncertainties as described in the Companys
Annual Report on Form 10-K. Readers are cautioned not to place
undue reliance on forward-looking statements, which speak only to
managements plans, assumptions and expectations as of the date of
this Current Report on Form 8-K. The Company disclaims any duty
to update or alter any forward-looking statements, except as
required by applicable law.
Exchange Act Reports
The Company has suspended the filing of its regular periodic
reports on Form 10-K and Form 10-Q with the SEC. The Company,
however, intends to furnish copies of the Monthly Operating
Reports that are required to be submitted to the Bankruptcy Court
under cover of Current Reports on Form 8-K and to continue to
file Forms 8-K disclosing material developments concerning the
Company.
Item 9.01.
Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit No.
Description
10.1
Restructuring Support Agreement, dated as of November 18,
2016, among International Shipholding Corporation and its
direct and indirect subsidiaries party thereto and SEACOR
Capital Corp.
99.1
Joint Chapter 11 Plan of Reorganization for International
Shipholding Corporation and its Affiliated Debtors
99.2
Disclosure Statement for Joint Chapter 11 Plan of
Reorganization for International Shipholding Corporation
and its Affiliated Debtors
99.3
Monthly Operating Report
About INTERNATIONAL SHIPHOLDING CORPORATION (OTCMKTS:ISHCQ)
International Shipholding Corporation is a holding company. The Company, through its subsidiaries, operates a diversified fleet of the United States and international-flagged vessels that provide domestic and international maritime transportation services under medium to long-term time charters or contracts of affreightment. It operates through three segments: Jones Act, which deploys over two bulk carriers, over three integrated tug or barge units, each consisting of one tug and one barge, and one harbor tug acquired; one belt self-unloading coal carrier to transport coal under a time charter, and one vessel that transports molten sulfur under a contract of affreightment; Pure Car Truck Carriers (PCTCs), which deploys over five PCTCs, including over four United States flag vessels and one international-flagged vessel, and Rail-Ferry, which uses its two roll-on or roll-off special purpose double deck vessels that carry rail cars between the United States Gulf Coast and Mexico. INTERNATIONAL SHIPHOLDING CORPORATION (OTCMKTS:ISHCQ) Recent Trading Information
INTERNATIONAL SHIPHOLDING CORPORATION (OTCMKTS:ISHCQ) closed its last trading session up +0.0001 at 0.0201 with 110,780 shares trading hands.
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