SecProbe.io

CORRESP
1
filename1.htm

    June
    17, 2024
    Christopher
    J. Voss

    Partner

    CJ.Voss@klgates.com

    U.S.
    Securities and Exchange Commission
    T
    +1 206 370 7609

    Division
    of Corporation Finance
    F
    +1 206 370 6172

    Office
    of Mergers & Acquisitions

    100
    F Street, NE

    Washington,
    D.C. 20549

    Attn:
    Mr.
    Perry Hindin

    Re:
    Saltchuk
    Resources, Inc. / Overseas Shipholding Group, Inc.

    SC
    TO-T filed by Seahawk MergeCo., Inc. and Saltchuk Resources, Inc.

    Filed
    June 10, 2024

    File
    No. 005-30797

Dear
Mr. Hindin:

On
behalf of Saltchuk Resources, Inc. (“Saltchuk” or “Parent”), and in response to the comment of the staff (the
“Staff”) of the Division of Corporation Finance (the “Division”) of the U.S. Securities and Exchange Commission
set forth in your letter dated June 13, 2024 (the “Comment Letter”) to the Tender Offer Statement on Schedule TO filed by
Seahawk MergeCo., Inc. and Saltchuk on June 10, 2024 (the “Schedule TO”), we submit this letter containing Saltchuk’s
response to the Comment Letter.

For
your convenience, the text of the Staff’s comment is set forth below in bold, followed by Saltchuk’s response. Capitalized
terms not otherwise defined in this letter have the meanings given to them in the Offer to Purchase attached as Exhibit (a)(1)(A) to
the Schedule TO (the “Offer to Purchase”).

Comment

Disclosure
on page 22 indicates that Parent owned as of May 19, 2024 approximately 21.1% of the outstanding shares of OSG. Please provide a legal
analysis explaining why Parent is not an affiliate engaged in a going-private transaction subject to Exchange Act Rule 13e-3. In responding
to this comment, please include a discussion of the defined terms “affiliate” in Rule 13e-3(a)(1) and “control”
in Exchange Act Rule 12b-2. You may also wish to consider and address in your response sections 201.01, 201.05 and 201.06 of our Compliance
and Disclosure Interpretations for Going Private Transactions, Exchange Act Rule 13e-3 and Schedule 13E-3. Lastly, please also consider
the Commission’s discussion in Section II.D. of Exchange Act Release No. 34-39538 (Jan. 12, 1998), including the text accompanying
footnote 20 and the last sentence of footnote 20.

Response

After
careful consideration of the applicability of Rule 13e-3 (“Rule 13e-3”) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), including, without limitation, the Division’s guidance in the Going Private Transactions, Exchange
Act Rule 13e-3 and Schedule 13E-3 Compliance and Disclosure Interpretations (“C&DIs”), the Interpretative Release Relating
to Going Private Transactions Under Rule 13e-3 (Release No. 34-17719, April 13, 1981) (the “Interpretative Release”), Rule
12b-2 under the Exchange Act, and Release No. 34-39538 (Jan. 12, 1998) relating to Amendments to Beneficial Ownership Reporting Requirements
(the “Beneficial Ownership Reporting Amendments Release”), Saltchuk has determined, and respectfully submits to the Staff,
that (1) neither Saltchuk nor Purchaser is an affiliate of OSG, (2) OSG’s named executive officers (which constitute all of OSG’s
executive officers) (collectively, the “Management Parties”) are not “engaged in” the Transactions and are not
affiliates of Saltchuk or Purchaser who exerted control or influence on the transaction process, and (3) the Transactions do not raise
the concerns that Rule 13e-3 was intended to address because the Merger Agreement resulted from arm’s-length negotiations with
Saltchuk, in a process led by OSG’s board of directors (in consultation with its financial advisor and outside legal counsel).
Saltchuk’s analysis is more fully described below.

K&L
GATES LLP

925
FOURTH AVENUE SUITE 2900 SEATTLE WA 98104-1158

T
+1 206 623 7580 F +1 206 623 7022 klgates.com

A
“Rule 13e-3 transaction” includes (i) a “purchase of any equity security [of an issuer] by … an affiliate of
such issuer” or (ii) “a tender offer for or request or invitation for tenders of any equity security [of an issuer] made
by … an affiliate of such issuer,” that has a reasonable likelihood of causing the delisting of the issuer’s equity
securities. Because the Transactions involve the tender offer for OSG’s equity securities, and a second-step merger that would
result in a purchase of OSG’s equity securities and a delisting of OSG’s equity securities, our Rule 13e-3 transaction analysis
focuses on (a) whether Saltchuk or Purchaser is an affiliate of OSG, (b) whether the Management Parties are affiliates engaged in the
transaction, and (c) whether Rule 13e-3 was intended to address the type of transaction at issue, under Rule 13e-3 and the SEC’s
guidance.

 A. Background

Saltchuk
is a private, family-owned company that provides air cargo, marine services, energy distribution, domestic shipping, international shipping
and logistics services through its subsidiary business units and operating companies.

Beginning
in July 2019, Saltchuk began to acquire shares of OSG Class A common stock (the “Common Stock”) in open market purchases,
and in March 2020 filed a Schedule 13D when its aggregate holdings exceeded 5% of the outstanding Common Stock. Saltchuk amended its
Schedule 13D in August 2020 and April 2021 to reflect additional purchases of OSG Common Stock.

      2 June 17, 2024

At
the time Saltchuk filed its initial Schedule 13D, reporting ownership of approximately 13% of OSG’s outstanding stock, Cyrus Capital
Partners, L.P. (“Cyrus Capital”), an investment firm unaffiliated with Saltchuk, held approximately 24% of OSG’s outstanding
stock. At the time of Saltchuk’s most recent purchase of OSG Common Stock in April 2021, Saltchuk reported ownership of approximately
17.5% of OSG’s outstanding stock, and Cyrus Capital continued to hold approximately 24% of OSG’s outstanding stock. Throughout
this period, a representative of Cyrus Capital served on OSG’s board of directors.

As
noted in its initial Schedule 13D filing, Saltchuk believed that OSG’s Common Stock was undervalued and represented an attractive
investment opportunity.1 Although Saltchuk acquired the OSG shares for investment purposes and not with the purpose of changing
or influencing the control of OSG, or in connection with or as a participant in any transaction having that purpose or effect, Saltchuk
elected to disclose its ownership stake on Schedule 13D rather than on Schedule 13G after careful consideration and out of an abundance
of caution, in the event that Saltchuk might in the future change its intentions with respect to the matters referenced in Item 4 of
its Schedule 13D.

Since
Saltchuk’s most recent purchase of OSG Common Stock, OSG has undertaken a series of stock repurchases. Because these stock repurchases
decreased the number of outstanding shares of OSG Common Stock, the percentage of OSG’s outstanding shares held by Saltchuk passively
increased to approximately 21%, even though Saltchuk has not acquired any additional shares since April 2021.

No
director of OSG or Management Party owns any interest in Saltchuk.

Prior
to January 26, 2024, the date on which Saltchuk proposed to acquire all of the outstanding shares of OSG Common Stock not already owned
by Saltchuk for $6.25 per share, nine other stockholders, including three other Schedule 13D/G filers and the CEO of OSG, owned approximately
34% of the outstanding Common Stock.

Like
other bidders for OSG, Saltchuk was required to participate in a competitive bidding process managed by OSG’s board (including
a transaction committee composed of OSG’s independent directors) with the assistance of OSG’s outside legal counsel and financial
advisor. As part of that process, on February 27, 2024, like other bidders, Saltchuk entered into a non-disclosure agreement with OSG
that included a standstill provision. Ultimately, as a result of the process undertaken by the OSG board, on April 23, 2024, Saltchuk
submitted a revised proposal pursuant to which it proposed to acquire all of the outstanding shares of OSG not already owned by Saltchuk
for $8.50 per share in cash (the “Revised Saltchuk Proposal”). The Revised Saltchuk Proposal represented a 61% premium to
OSG’s 30-day volume-weighted average price on January 26, 2024, the last trading day before Saltchuk disclosed its original $6.25
proposal, and a 44% premium to the January 26, 2024 closing price of OSG Common Stock. It also represented a 36% premium to Saltchuk’s
original $6.25 per share proposal.

1
During the period July 2019 – April 2021, OSG’s stock traded at between $1.80 and $2.60 per share. OSG’s stock
closed at $5.83 on January 25, 2024, the day before Saltchuk publicly disclosed its interest in acquiring OSG.

      3 June 17, 2024

Immediately
following the closing of the tender offer and merger, OSG will be a wholly-owned subsidiary of Saltchuk, and the four current directors
of Purchaser (none of whom are Management Parties) will serve as the directors of OSG. Saltchuk anticipates that Mr. Samuel Norton, OSG’s
Chief Executive Officer and President (“Mr. Norton”), will subsequently be appointed to the board of OSG as a fifth director,
although Saltchuk has no contractual obligation to do so, Mr. Norton has no right to be a member of the post-closing board of OSG, and
Mr. Norton will be subject to removal as a director at any time, with or without cause, by Saltchuk. No other Management Parties are
expected to be appointed to the post-closing board of OSG.

 B. Neither
                                            Saltchuk nor Purchaser is an Affiliate of OSG

Rule
13e-3(a)(1) defines an “affiliate” of an issuer as “a person that directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with such issuer.” Exchange Act Rule 12b-2 defines “control”
to mean “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract, or otherwise.”

It
is generally understood that beneficial ownership above 10% of a class of voting securities requires special scrutiny of the facts and
circumstances of the relationship to determine whether or not a person is an affiliate. The determination of “control,” which
is fundamental to the concept of “affiliate” as defined in Rule 13e-3, is dependent upon specific facts and circumstances.
As noted in footnote 28 of the Interpretive Release, “The existence of a control relationship [between a target company and an
acquiror] does not turn solely upon the ownership of any specific percentage of securities. Rather, the question is whether there is
the ability, directly or indirectly, to direct or to cause the direction of the management and policies of [the target], whether through
the ownership of voting securities, contract or otherwise.” It should also be noted that footnote 20 to the Beneficial Ownership
Reporting Amendments Release indicates that the beneficial ownership reporting rules (which, among other things, limit Passive Investor
(as defined therein) status to holders of less than 20% of the class of subject securities) do not “create a presumption that beneficial
ownership of 20 percent or more indicates control,” despite the “inherent control implications corresponding to such ownership
positions held by persons that do not purchase securities in the ordinary course of business” noted in the text accompanying footnote
20.

      4 June 17, 2024

Saltchuk
lacks “control” over OSG because, notwithstanding its approximate 21.1% ownership of OSG’s outstanding shares, Saltchuk
does not possess the power to direct or cause the direction of the management and policies of OSG. Saltchuk acquired all of its OSG shares
in either open market transactions or privately-negotiated purchases with third parties and not from OSG, and Saltchuk has none of the
rights that traditionally accompany an investment intended to provide the investor with influence or control over the management and
policies of OSG. Saltchuk has not had, and does not currently have, any representation on OSG’s board of directors or a contractual
right to nominate any candidates to the board; has not been and is not currently a party to any stockholder’s agreement, voting
agreement, support agreement, or other contractual arrangement with OSG or with respect to OSG’s voting securities; and has no
commercial relationship with OSG. Prior to entering into the Merger Agreement, which was entered into after arm’s-length negotiations
with OSG, as described below, Saltchuk did not have any approval or veto rights over any activities or matters involving OSG,
or any right to be involved, or even consulted, with respect to any such activities or matters. Saltchuk has never sought to exert control
or influence over OSG’s management, operations, or policies, and has never undertaken a “hostile” position or been
an activist with respect to OSG.

Moreover,
as noted in the Beneficial Ownership Reporting Amendments Release, Saltchuk’s 21.1% ownership of OSG’s outstanding shares
does not presumptively indicate control.

Because
Saltchuk does not possess control with respect to OSG, Saltchuk has determined that neither Saltchuk nor Purchaser is an “affiliate”
of OSG.

 C. The
                                            Management Parties are not “Engaged in” the Transaction

According
to C&DI Section 201.05, the Staff considers the Management Parties to be affiliates of OSG. However, the Management Parties are not
“engaged in” the transaction and are not affiliates of Saltchuk or Purchaser and, therefore, are not subject to Rule 13e-3.

C&DI
Section 201.01 provides that continuity of management post-transaction is an important consideration in a Rule 13e-3 transaction analysis.
Where such continuity of management exists, factors to consider include: “increases in consideration to be received by management,
alterations in management’s executive agreements favorable to such management, the equity participation of management in the acquiror,
and the representation of management on the board of the acquiror.” In addition, C&DI Section 201.05 provides that an important
element of the Rule 13e-3 analysis is whether “the issuer’s management ultimately would hold a material amount of the surviving
company’s outstanding equity securities, occupy seats on the board of the company in addition to senior management positions, and
otherwise be in a position to ‘control’ the surviving company within the meaning of Exchange Act Rule 12b-2 (i.e., ‘possession,
direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership
of voting securities, by contract, or otherwise.’).”

We
respectfully submit that the totality of the foregoing factors suggest that the Management Parties are not “engaged in” the
transaction and are not affiliates of Saltchuk or Purchaser.

      5 June 17, 2024

Except
as described below, at the time of the signing of the Merger Agreement, there were no, and there continues to be no, formal or informal
agreements, arrangements or understandings among the Management Parties, on the one hand, and Saltchuk and Purchaser, or their respective
affiliates, on the other hand, with respect to post-closing employment or compensation, incentive or equity arrangements for the Management
Parties, including no employment agreements, offer letters or term sheets with respect to the foregoing. Indeed, each of Saltchuk and
Purchaser represented to OSG, pursuant to Section 6.9 of the Merger Agreement, that none of Saltchuk, Purchaser nor any of their affiliates
is a party to any such agreement with any director, officer or affiliate of OSG relating to (i) the Merger Agreement or the transactions
contemplated thereby or (ii) OSG, its subsidiaries, its businesses or its operations, including as to conti