Omega Navigation Enterprises files Chapter 11 plan of reorganization

Omega Navigation Enterprises Inc. (OTC US - ONAVQ) announced that, in connection with its Chapter 11 proceedings in Houston, Texas, Omega has filed a Chapter 11 Disclosure Statement and proposed Plan of Reorganization. As discussed in detail herein, the key components of the Plan include the following:
• the continuation of Omega's operations in the ordinary course of business on a reorganized basis, including the continued ownership and management of Omega's fleet;
• a "new value" equity investment of $2,500,000 or $2,600,000 (depending on the circumstances) from an entity affiliated with Omega's Founder and Chief Executive Officer, subject to agreement as to the final terms of such investment and satisfaction of related conditions;
• the replacement of the current Senior Facilities Agreement with a New Facilities Agreement maturing on October 30, 2017, which would include a new money working capital facility in the maximum amount of $7,500,000 to fund certain Omega Chapter 11 expenses and for working capital purposes going forward;
• a rights offering entitling Omega's general unsecured creditors to purchase equity of the reorganized Omega on a dollar-for-dollar basis with the new value equity investment, and in which Omega's Junior Lenders can also participate if they accept the Plan;
• a cash distribution of approximately 10% to Omega's unsecured creditors over time if they accept the Plan (but no distribution if they do not accept the Plan); and
• the payment in full of all administrative expenses and other priority claims.
Because the Plan does not propose to pay Omega's unsecured creditors in full, Chapter 11 does not permit a distribution to current shareholders. Accordingly, the Plan contemplates that Omega's current shareholders will not receive or retain any shares or other distributions on account of their equity interests and that Omega will emerge from Chapter 11 as a private company no longer subject to public reporting requirements.
The Plan is subject to various conditions, including the acceptance of the Plan by Omega's Senior Lenders. While Omega remains in discussions with its Senior Lenders, there can be no assurance that the Senior Lenders will ultimately agree to accept the Plan. If they have not agreed to accept the Plan by the date of the Bankruptcy Court hearing on approval of the Disclosure Statement (September 4, 2012), Omega has reserved the right to withdraw the Plan and to pursue other options.
Omega believes that the Plan, if accepted by the Senior Lenders and certain other persons and approved by the Bankruptcy Court, will enable Omega to emerge from Chapter 11 in early November 2012 as a financially stronger business that will be positioned to enjoy future growth based on the strength of its existing modern fleet of product tanker vessels.
Source: Omega Navigation Enterprises