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May 7, 2004

Stelmar in sale and leaseback deal

Stelmar Shipping Ltd. (NYSE: SJH) has completed, with the assistance of DVB Bank and Pareto Private Equity, a five-year sale-lease back transaction for all nine of its pre-1990 built Handymax vessels. The vessels in the transaction include the Ermar and Fulmar, built in 1989; the Allenmar, Primar, Jamar, and Camar built in 1988; and the Capemar, City University, and Colmar built in 1987.

The sale-lease back will give Stelmar proceeds of approximately $107 million . Stelmar will realize net cash from the sale of approximately $42 million without recording any non- operating book losses. The sale-lease back arrangements will be completed during May and June 2004.

Stelmar will retain commercial control of the nine vessels and they will remain inits fleet over the next five years.

CEO and president Peter Goodfellow stated: "The refinancing of these nine vessels enables Stelmar to generate a significant amount of cash and further improve its balance sheet. We intend to draw upon our strong financial position to seek additional opportunities to further enhance shareholder value and solidify our leadership position in the Handymax and Panamax sectors. With the addition of five newbuildings to be received by July 2004, Stelmar will maintain one of the most modern fleets in the industry and continue to provide customers with safe and environmentally friendly operations."

CFO Stamatis Molaris commented: "We are very pleased to have concluded a transaction that mitigates any residual value risk arising from the Company's pre-1990 built fleet. We have achieved this important objective by exploiting the positive market conditions for secondhand values. We intend to utilize the proceeds from this transaction to decrease the Company's leverage by almost $64 million and further improve our net debt to book capitalization ratio. The combination of our decreasing leverage and significant time charter coverage provides the Company with the financial flexibility to take advantage of opportunities as they arise. We are pleased to have leased back these vessels at a very attractive fixed bareboat rate of less than $6,500 per ship per day on average, and have once again completed a transaction that best serves our shareholders at a very competitive cost. The refinancing will enable the Company to maintain commercial control of core vessels and will be structured in a manner that the effect on quarterly earnings over the remaining half of the year will not exceed $0.08 per share, assuming proceeds are not invested."

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