June 30, 2004

OMI agreement with Stelios runs out

OMI Corporation today announced that the standstill and support agreements entered into with Stelios Haji-Ioannou and certain members of his family relating to its previously announced offer to merge with Stelmar Shipping have been terminated in accordance with their terms.

Craig H. Stevenson, Chairman and CEO of OMI said, "In light of our recent acquisitions of vessels from Athenian Sea Carriers and Arcadia Ship Management, and our recently announced equity offerings, which have had a positive impact on OMI, we will no longer pursue a transaction with Stelmar under the specific terms outlined in theagreements with the Haji-Ioannou family."

Stelmar turned down OMI's original merger offer on June 7. But on Monday, June 28, the Stelmar Board of Directors authorized the company's management and its financial advisors to "review strategic alternatives for further enhancing shareholder value."

Stelmar said the review would include the "continued execution of the company's successful stand-alone business strategy as well as a range of possible alternatives, such as acquisitions, strategic alliances, business combinations, the sale of the company and others."

Morgan Stanley and Jefferies & Co. are acting as financial advisors to Stelmar.

Announcement of the review came after a June 24 statement by Loeb Partners Corporation, which owns approximately 4.2% of Stelmar declared itself "of the firm belief that the Board of Directors of Stelmar should auction the company in a process in which OMI Group may participate, and/or negotiate a definitive agreement with OMI Group which allows Stelmar actively to solicit other offers pending completion of the transaction. "

"As shareholders," declared Loeb," we have been disenfranchised. Stelmar does not seem to be taking immediate steps to maximize value; instead, the directors have changed by-laws under the guise of protecting shareholders and controlling a process, and have visited with shareholders in a sudden investor relations spasm. What process is Stelmar attempting to control? The process of maximizing value? It would appear not. Rather, it appears that the Board of Directors is preventing any value-creation process from taking place. The by-law changes in Article II, Section 3 serve only to prevent large shareholders from adopting special resolutions that would create value. No reasonable shareholder will support change unless value is created, so why not let us vote? "

"In light of recent events concerning OMI Group," said Loeb, "Stelmar has no alternative but to undertake an auction process. An acquisition strategy and a new emphasis on shareholder relations are not alternatives to what is an opportunity to create immediate value instead of the mere possibility of increased present value. As many tanker industry investors and participants know, it is a relatively simple process to conduct due diligence on and negotiate a tanker deal. Stelmar could have completed this by now. Instead, Stelmar is talking, changing by-laws, and wasting our opportunity. We call on Stelmar's Board of Directors, headed by Nicholas Hartley, to empower shareholders by reinstating the by-laws and to perform their fiduciary responsibilities with care, notwithstanding the fact that they each have a minimal equity stake in the company they run."

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