What's the best way for a shipowner to avoid having a ship hijacked by pirates?

Reroute the ship even if it means a huge diversion
Stay within recommended safe limits and patrolled areas
Hire an on-board security team
Just hope for the best

November 18, 2008

International Shipholding special committee and Liberty Shipping trade shots

International Shipholding Group (NYSE:ISH) and its would be acquisitor, Liberty Shipping Group LLC, have been lobbing corporate custard pies at each other, as it were.

At 1.33 p.m. EST the International Shipholding special committee evaluating the Liberty offer released a statement saying that it was seeking a confidentiality agreement from Liberty, but that Liberty had refused to sign one.

At 4.33 p.m. EST, Liberty Shipping released a statement saying it had sent a letter telling the special committee that it intends to nominate an alternative slate of directors at ISH's next Annual Meeting

The special committee's announcement said that, with the assistance of its financial and legal advisors, it is continuing to evaluate the unsolicited offer to acquire the company made by Liberty Shipping Group LLC on September 2, 2008.

The special committee said that it would like to negotiate the terms of a confidentiality agreement with Liberty, which the special committee believes must contain customary standstill provisions, in order to permit Liberty to have access to non-public information regarding the company. However, the special committee says that, to date, Liberty has indicated it will not sign a confidentiality agreement that includes such provisions.

The special committee says it is also continuing to explore other strategic alternatives that may be in the best interests of all shareholders of the company.

Based upon the advice of counsel, the special committee believes that the lawsuit filed by Liberty on November 7, 2008 in Delaware against the company and the individual members of the Board of Directors of the company is without merit, and counsel will respond to such case in due course as required under Delaware law.

The text of the letter sent by Liberty to the special committee is as follows:

November 18, 2008

Mr. Edwin A. Lupberger Mr. Edward K. Trowbridge Mr. T. Lee Robinson, Jr. Mr. James J. McNamara Mr. H. Merritt Lane III as members of the Special Committee of the Board of Directors of International Shipholding Corporation

c/o International Shipholding Corporation 11 North Water Street, Suite 18290 Mobile, AL 36602


We were cautiously optimistic when the special committee's advisors reached out to us on November 7 with an indication that we start giving consideration to a due diligence request list in connection with our proposal to acquire International Shipholding (ISH). We promptly sent your legal advisors a due diligence request list and a draft confidentiality agreement, which contained terms comparable to those that ISH agreed to when we provided at your request confidential information relating to Liberty's ability to finance the proposed transaction. Four days later we received your proposed changes and additions to the confidentiality agreement. Our optimism turned to dismay with the realization that the special committee, management, the Johnsen family and their respective advisors are continuing to engage in more of the same obstructionist tactics that have characterized their actions since we initially raised the possibility of a business combination over five months ago.

In particular, we are very disappointed with your request that we agree to a standstill provision, as well as covenants directed at limiting our ability to communicate with other ISH shareholders. Perhaps even more egregiously, you asked that we agree to covenants imposing restrictions on our ability to conduct our day-to-day business in exchange for the receipt of ISH information. These provisions are entirely unacceptable and inappropriate under the circumstances.

Aside from a couple of brief telephone conversations between our advisors during the last ten days and the receipt of your mark-up to our proposed confidentiality agreement, there continues to be no dialogue between us. Both the committee and its advisors are in a constant state of paralysis and unable to act on a real-time basis, or otherwise do or say anything without apparently first consulting with the Johnsen family. This is contrary to your fiduciary duties as directors of ISH, and frankly defeats the purpose of forming a special committee to review our offer.

At this point it has become clear to us that ISH's current board and the members of the so-called "special committee" are acting at the direction and for the benefit of the Johnsen family and not in the best interest of stockholders. Therefore, we will seek to replace the entire ISH board at the company's next annual meeting. In the coming weeks we will provide further details to our fellow stockholders about the individuals who we will nominate to replace the Johnsen board. In the meantime, we will continue to prosecute our previously filed complaints in state and federal court. As you are undoubtedly aware by this point, we intend to hold each ISH director fully accountable for his actions and omissions to ISH's stockholders.

We continue to desire to engage in a cooperative dialogue with you, but, in light of your actions to date, the burden is now firmly on the special committee to demonstrate that it is prepared to act independently and in the best interest of all ISH stockholders.

Very truly yours,

/s/ Philip J. Shapiro

Philip J. Shapiro Chairman of the Board, President and Chief Executive Officer, Projection LLC

cc Corporate Secretary International Shipholding Corporation

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