June 23, 2004

OMI in $585 million fleet expansion

OMI Corporation (NYSE:OMM - News), announced today that it has reached an agreement to purchase four Suezmax vessels (built in 2003 and 2004) and eight product carriers under construction at Hyundai Mipo Shipyard from Athenian Sea Carriers, Ltd., Athens, Greece.

The total consideration paid for the assets will be approximately $585 million cash, including $393 million by August 2004 and the remaining $192 million of payments to the shipyard between November 2004 and June 2006.

OMI also announced the sale of two single hull vessels, the ELBE (built 1984) and the VOLGA (built 1981) in this quarter. A gain of approximately $300,000 in the second quarter of 2004 will be recognized on the sale of these two vessels

The following is a list of ships to be purchased:


Vessel Year Built / Date Delivered
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Suezmax (1) 2003
Suezmax 2003
Suezmax 2004
Suezmax 2004
47,000 dwt Handymax (2) June 2004
47,000 dwt Handymax November 2004
47,000 dwt Handymax January 2005
47,000 dwt Handymax April 2005
47,000 dwt Handymax March 2006
47,000 dwt Handymax April 2006
47,000 dwt Handymax May 2006
47,000 dwt Handymax June 2006
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(1) One of the Suexmaxes Built in 2003 is on Time Charter Until November 25, 2006.

(2) The first handymax is committed to a time charter for six months upon delivery.

Craig Stevenson, Chairman and Chief Executive Officer commented, "We are pleased to have the opportunity to grow our core Suezmax and product carrier fleets with these high quality, modern vessels--many of which are sister ships to those in our current fleet. In aggregate, we are acquiring 1,012,000 dwt of additional capacity, all of which is double-hulled. Importantly, we expect this purchase to be accretive to our 2004 and 2005 earnings. This purchase, together with the disposition of the ELBE and VOLGA, will lower the average age of our fleet from 6.6 years to 4.8 years by the end of the year and increase the percentage of our fleet which is double-hulled to 85%."
In its initial statement OMI said it may use a variety of financing sources to fund the purchase price and future shipyard payments. Depending on market conditions, OMI may draw on its existing revolver capacity, use existing cash, issue equity, arrange new bank financing or use cash flow from operations between now and the future delivery dates.

In a later statement OMI announced that it is making a public offering of 12,000,000 shares of its common stock. The shares of common stock will be offered pursuant to OMI's effective shelf registration statement. Goldman, Sachs & Co. will act as sole bookrunning lead manager and Dahlman, Rose, Weiss, LLC will act as a co-manager. OMI expects to grant the underwriters an option to purchase an additional 1,800,000 shares of its common stock based on the same terms; this option would be exercisable within 30 days.

The proceeds of this offering will be used to partially fund the Athenian Sea Carriers purchase; if for some reason the purchase is not consummated, OMI will use the proceeds for general corporate purposes.

OMI says it is expected to take delivery of the Suezmax vessels and one of the product carrier newbuildings between the end of June and August of this year.

OMI is also in advanced negotiations for the acquisition of two additional modern Suezmax vessels, which are sister ships to others in itsexisting fleet, from another seller. No assurances can be provided at this time whether or not these two additional vessels will ultimately be purchased.

On May 17, 2004, OMI announced its interest in combining with Stelmar Shipping Ltd ("Stelmar"). OMI announced on June 9, 2004 that it formally withdrew its offer to merge with Stelmar. As indicated in the press release on June 9, 2004, if the Stelmar Board were to express a willingness to engage in discussions with OMI, OMI would be prepared to participate. .

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