Stelmar announces record earnings as merger buzz persists

"We are pleased to have achieved record earnings for both the second quarter and the six month period, said Peter Goodfellow, President and Chief Executive Officer of Stelmar Shipping Ltd. (NYSE:SJH), today, in Athens.

"Our strong results reflect our continued success with a range of ongoing initiatives that are designed to maximize Stelmar's ability to take advantage of strong market conditions without sacrificing earnings visibility," said Goodfellow. "Through our joint venture with Cape Tankers, we have been able to more fully benefit from the substantial operating leverage provided by Panamax tankers. In addition, our success with other initiatives such as optimizing our overall time charter/spot balance and signing profit sharing agreements have also increased our upside potential. Finally, the company's success at significantly expanding its operating days in a strong market has also contributed to our strong results."

For the second quarter ended June 30, 2004, Stelmar reported net income of $15,840,000, or $0.90 per fully diluted share, compared with net income of $4,489,000, or $0.26 per fully diluted share, for the second quarter of 2003. Net income for the quarter included a charge of $760,000, or $0.04 per fully diluted share, representing a monthly accrual for fees of financial advisors involved in the company's strategic review process.

For the second quarter of 2004, operating income was $19,704,000, compared with $16,324,000 for the second quarter of 2003. EBITDA for the second quarter was $32,507,000, compared with $27,266,000 for last year's second quarter.

Revenues from vessels for the quarter were $58,959,000, compared to $44,442,000 recorded in the second quarter of last year. Time charter earned revenues for the second quarter of 2004 were $37,313,000 or approximately 68% of revenue on a time charter basis, as opposed to $36,488,000 or approximately 87.3% for the same quarter last year.

For the six months ended June 30, 2004, Stelmar reported net income of $31,568,000, or $1.80 per fully diluted share, compared to $15,914,000, or $0.93 per fully diluted share, for the first half of 2003.

Net income for the six months ended June 30, 2004, included a charge of $760,000, or $0.04 per fully diluted share, representing a monthly accrual for fees of financial advisors involved in the company's strategic review process. The weighted average number of diluted shares used in the computations was 17,496,575 and 17,178,434 for the six month periods ended June 30, 2004 and 2003, respectively. For the six month period ended June 30, 2004, operating income was $39,441,000, compared with $32,498,000 for the first half of 2003. EBITDA for the first six months of 2004 was $64,008,000, compared to $54,340,000 for the same period last year. Revenues from vessels for the six month period ended June 30, 2004 were $111,257,000, compared to $88,811,000 recorded in the first half of 2003. Time charter earned revenues for the six month period ended June 30, 2004 were $77,863,000 or approximately 74.9% of revenue on a time charter basis, as opposed to $72,388,000 or approximately 86.6% for the same period last year.

MERGER TARGET

Stelmar has been the subject of well-publicized attention by would be suitors-- notably OMI--and founder and major shareholder Stelios Haji Ioannou has been sharply critical of the board's treatment of these approaches.

Just yesterday, Haji-Ioannou disclosed that on he had received a copy of a July 15 letter to the Stelmar board from Victor Restis on behalf of Golden Energy Management SA, saying , in part "Golden Energy wishes to register its interest in acquiring the Company [Stelmar] in full on the basis that the board of the Company accepts in principal and entertains favorably Golden Energy's wish to take
over control of the Company, subject of course to standard due diligence amongst
other things."

"At this stage," commented Haji-Ioannou, "it is the Board's responsibility to maximize shareholder value by reviewing eriously any and all offers being made for Stelmar. I hope the board will stop procrastinating and publicly announce the results of the auction that I hope is being conducted."
 
"Whilst any serious offer for 100% of the shares of any public company, particularly if it is in cash, should be considered," he continued, "I am not inclined to accept any offer for Stelmar unless it comes at a significant premium to the current share price of $33-$34. In any event my preference is not to exit the industry completely but to exchange my shares for another shipping company's publicly traded shares.  For the record, the value of OMI's recently terminated offer for Stelmar (3.1 OMI shares) at last night's closing price would have been worth well in excess of $40 per Stelmar share. I have no faith in the current Stelmar management any longer and I think the outside directors should, at the very least, be looking to replace them ASAP, just  like Marks and Spencer PLC did with their Chairman and CEO as soon as an offer was received for their company."

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