Diana Shipping to spin off container shipping subsidiary

Diana Shipping currently owns approximately 55 percent of Diana Containerships issued and outstanding common stock. Diana Shipping will distribute 2,667,066 shares of common stock of Diana Containerships, or 80 percent of Diana Shipping’s interest in Diana Containerships. The number of shares of common stock of Diana Containerships to be distributed for each share of common stock of Diana Shipping will be determined by dividing 2,667,066 by the aggregate number of issued and outstanding shares of common stock of Diana Shipping on January 3, 2011, the record date for the distribution. As of December 21, 2010, that would have resulted in the distribution of 0.0325 shares of common stock of Diana Containerships for every one share of common stock of Diana Shipping. The distribution date is expected to be January 18, 2011. Due to the nature of the distribution the New York Stock Exchange is expected to establish the ex-dividend date as January 19, 2011. Immediately following the distribution, Diana Shipping’s shareholders will own directly approximately 44 percent of Diana Containerships.

Fractional shares of Diana Containerships common stock will not be distributed to Diana Shipping shareholders. Instead, fractional shares of Diana Containerships will be aggregated and sold in the open market, with the net proceeds distributed pro rata in the form of cash payments to Diana Shipping shareholders who would otherwise be entitled to receive a fractional share of Diana Containerships common stock.

The distribution of Diana Containerships common stock or cash in lieu thereof will be characterized as a taxable dividend for United States federal income tax purposes.

Diana Containerships has applied to list its common stock on the Nasdaq Global Market. Diana Containerships common stock is expected to begin trading on a “when-issued” basis on the NASDAQ Global Market under the symbol “DCIXV” beginning on or around January 3, 2011. Diana Containerships common stock is expected to begin “regular-way” trading on January 19, 2011 under the symbol “DCIX”.

December 23, 2010