Download International Seaways, Inc. – Registration Statement on Form 10 PDF

TitleInternational Seaways, Inc. – Registration Statement on Form 10
File Size857.6 KB
Total Pages256
Document Text Contents
Page 1

As filed with the Securities and Exchange Commission on November 4, 2016
File No. 001-37836


Washington, D.C. 20549

Amendment No. 4


Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

International Seaways, Inc.*
(Exact name of registrant as specified in its charter)

Marshall Islands 98-0467117
(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

600 Third Avenue, 39th Floor
New York, New York 10016

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 953-4100

with copies to:

James D. Small, Esq.
Senior Vice President, Secretary and General Counsel

Overseas Shipholding Group, Inc.
600 Third Avenue, 39th Floor
New York, New York 10016

(212) 953-4100

Jeffrey D. Karpf, Esq.
Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza
New York, New York 10006

(212) 225-2000

Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class
to be so registered

Name of each exchange on which
each class is to be registered

Common Stock, no par value New York Stock Exchange

Securities to be registered pursuant to Section 12(g) of the Act:

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated file, or a
smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting
company’’ in Rule 12b-2 of the Exchange Act.

Large accelerated filer � Accelerated filer �
Non-accelerated filer � (Do not check if a smaller reporting company) Smaller reporting company �

* The registrant was formerly named OSG International, Inc. Effective as of October 5, 2016, the registrant changed its
name to International Seaways, Inc.

Page 128

bunker swaps. The Company’s exit from its full-service Crude Tankers Lightering business in September 2014
coupled with the deployment of most of its conventional tanker fleet in commercial pools and time charters
currently limits the Company’s direct exposure to fluctuations in fuel prices as a component of voyage

Interest Rate Sensitivity

The following table presents information about the Company’s financial instruments that are sensitive to
changes in interest rates. For debt obligations, the table presents the principal cash flows and related weighted
average interest rates by expected maturity dates of the Company’s debt obligations.

Principal (Notional) Amount (dollars in millions) by Expected Maturity and Average Interest (Swap) Rate

At December 31, 2016 2017 2018 2019

2019 Total
Fair Value at
June 30, 2016

Long-term debt(1)

Fixed rate debt . . . . . . . . . . $ — $ — $ — $ — $— $ — $ —
Average interest rate . . . . . . . — — — — — — —
Variable rate debt . . . . . . . . . $ 3.1 $ 6.2 $ 6.2 $522.6 $— $538.1 $534.0
Average interest rate . . . . . . . 5.83% 5.83% 5.83% 5.83% —

(1) Includes current portion.

As of June 30, 2016, the Company had a secured term loan (INSW Term Loan) and a revolving credit facility
(INSW Revolver Facility) under which borrowings bear interest at a rate based on LIBOR, plus the applicable
margin, as stated in the respective loan agreements. There were no amounts outstanding under the
INSW Revolver Facility as of June 30, 2016.

Critical Accounting Policies

The Company’s consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States, which require the Company to make estimates in the application of its
accounting policies based on the best assumptions, judgments, and opinions of management. Following is a
discussion of the accounting policies that involve a higher degree of judgment and the methods of their
application. For a description of all of the Company’s material accounting policies, see Note 3, ‘‘Summary of
Significant Accounting Policies,’’ to the Company’s audited consolidated financial statements and unaudited
condensed consolidated financial statements included elsewhere in this Information Statement.

Revenue Recognition

The Company generates a majority of its revenue from voyage charters, including vessels in pools that
predominantly perform voyage charters. Within the shipping industry, there are two methods used to account
for voyage charter revenue: (1) ratably over the estimated length of each voyage and (2) completed voyage.
The recognition of voyage revenues ratably over the estimated length of each voyage is the most prevalent
method of accounting for voyage revenues in the shipping industry and the method used by INSW. Under
each method, voyages may be calculated on either a load-to-load or discharge-to-discharge basis. In applying
its revenue recognition method, management believes that the discharge-to-discharge basis of calculating
voyages more accurately estimates voyage results than the load-to-load basis. Since, at the time of discharge,
management generally knows the next load port and expected discharge port, the discharge-to-discharge
calculation of voyage revenues can be estimated with a greater degree of accuracy. INSW does not begin
recognizing voyage revenue until a charter has been agreed to by both the Company and the customer, even if
the vessel has discharged its cargo and is sailing to the anticipated load port on its next voyage, because it is
at this time the charter rate is determinable for the specified load and discharge ports and collectability is
reasonably assured.

Revenues from time charters and bareboat charters are accounted for as operating leases and are thus
recognized ratably over the rental periods of such charters, as service is performed. The Company does not
recognize time charter revenues during periods that vessels are off hire.


Page 129

For the Company’s vessels operating in Commercial Pools, revenues and voyage expenses are pooled and
allocated to each pool’s participants on a time charter equivalent basis in accordance with an agreed-upon
formula. The formulas in the pool agreements for allocating gross shipping revenues net of voyage expenses
are based on points allocated to participants’ vessels based on cargo carrying capacity and other technical
characteristics, such as speed and fuel consumption. The selection of charterers, negotiation of rates and
collection of related receivables and the payment of voyage expenses are the responsibility of the pools. The
pools may enter into contracts that earn either voyage charter revenue or time charter revenue. Each of the
pools follows the same revenue recognition principles, as applied by the Company, in determining shipping
revenues and voyage expenses, including recognizing revenue only after a charter has been agreed to by both
the pool and the customer, even if the vessel has discharged its cargo and is sailing to the anticipated load
port on its next voyage.

For the pools in which the Company participates, management monitors, among other things, the relative
proportion of the Company’s vessels operating in each of the pools to the total number of vessels in each of
the respective pools, and assesses whether or not INSW’s participation interest in each of the pools is
sufficiently significant so as to determine that INSW has effective control of the pool. Management determined
that as of June 30, 2013, it had effective control of one of the pools in which the Company participated. Such
pool was not a legal entity but operated under a contractual agreement. Therefore, effective July 1, 2013
through June 30, 2014, when the Company’s participation in this pool ended, the Company’s allocated
TCE revenues for such pool were reported on a gross basis as voyage charter revenues and voyage expenses
in the consolidated statement of operations. The impact of this method of presenting earnings for this pool
was an increase in both voyage charter revenues and voyage expenses of $40,454 and $70,817 for the years
ended December 31, 2014 and 2013, respectively.

Vessel Lives and Salvage Values

The carrying value of each of the Company’s vessels represents its original cost at the time it was delivered or
purchased less depreciation calculated using an estimated useful life of 25 years years (except for FSO service
vessels for which estimated useful lives of 30 years are used and LNG Carriers for which estimated useful
lives of 35 years are used) from the date such vessel was originally delivered from the shipyard. A vessel’s
carrying value is reduced to its new cost basis (i.e. its current fair value) if a vessel impairment charge is

If the estimated economic lives assigned to the Company’s vessels prove to be too long because of new
regulations, an extended period of weak markets, the broad imposition of age restrictions by the Company’s
customers, or other future events, it could result in higher depreciation expense and impairment losses in
future periods related to a reduction in the useful lives of any affected vessels.

The Company estimates the scrap value of all of its International Flag vessels to be $300 per lightweight ton.
The Company’s assumptions used in the determination of estimated salvage value take into account current
scrap prices, the historic pattern of annual average scrap rates over the five years ended December 31, 2015,
which ranged from $290 to $480 per lightweight ton, estimated changes in future market demand for scrap
steel and estimated future demand for vessels. Scrap prices also fluctuate depending upon type of ship,
bunkers on board, spares on board and delivery range. Industry publications indicate a year-over-year decline
in scrapping activity in the Asian markets and the likelihood of a further decline in the near term, particularly
in the Indian subcontinent where markets are under severe pressure as a result of the sale of cheap Chinese
steel billets and finished products which have flooded the market, undercutting the price of steel that breakers
resell to steel mills. Other market conditions that could influence the volume and pricing of scrapping activity
in 2016 and beyond include the combined impact of scheduled newbuild deliveries and charter rate
expectations for vessels potentially facing age restrictions imposed by oil majors. These factors will influence
owners’ decisions to accelerate the disposal of older vessels, especially those with upcoming special surveys
including first generation double hull vessels.

Although management believes that the assumptions used to determine the scrap rate for its International Flag
vessels are reasonable and appropriate, such assumptions are highly subjective, in part, because of the
cyclicality of the nature of future demand for scrap steel.


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