OSG Acquires Heidmar Lightering Business

Overseas Shipholding Group (OSG), one of the world’s largest publicly-traded tanker companies, has announced that the acquisition of the Heidmar lightering business from Heidmar, Inc., a subsidiary of Morgan Stanley Capital Group, Inc., was completed on April 20, 2007. The acquisition is the second major move by OSG in just the last five months and comes directly on the heels of its finalization of the purchase of Maritrans in November.


The Heidmar lightering operation will come with staff based in Houston, and also includes a fleet of four international flag Aframax tankers and two U.S. flag workboats that provide crude oil lightering services to refiners, oil companies and trading companies, primarily in the U.S. Gulf. Under terms of the deal, OSG acquired the lightering fleet, which is time-chartered in, as well as a 50% residual interest in two specialized lightering Aframax tankers, the Heidmar Sabine and the Heidmar Brazos.

According to OSG, the all-cash deal is worth about $41 million and finalizes the deal between the two players originally announced on February 26, 2007. OSG will rename the business unit “OSG Lightering.” The lightering operation will expand OSG’s already significant penetration into the Aframax cargo businesses. Heidmar Lightering has performed as many as 900 individual lighterings since beginning operations in November 2002. The lightering trade is defined as the transfer of crude oil and petroleum products at sea, typically between 40 and 60 miles offshore.

In November, OSG finalized its acquisition of crude oil and petroleum tanker operator Maritrans, Inc. The cash transaction, originally announced in September of last year, is valued at around $455 million and immediately positioned Overseas Shipholding as a dominant Jones Act ship operator. Tampa, Florida-based Maritrans operated 11 articulated tug and barges (ATB) units, five product carriers and had three large ATB tug barges under construction. Beginning in 2005, Maritrans had embarked on a program to convert its existing fleet of 16 vessels from single hull to double hull to meet international mandates. OSG has continued on that building campaign.

The Maritrans acquisition gave OSG control over about one-third of the refined product trade in the coastwise U.S. markets and overnight, OSG doubled its fleet of U.S. Jones Act-protected vessels to 36 ships. At the time, the New-York-based OSG owned or leased a fleet of 88 ships, making it among the largest publicly-traded tanker firms, both in terms of number of vessels and deadweight tonnage. OSG also maintains a notable presence in the Jones Act market on the East and West Coasts. That deal was quickly hailed by commercial shipping analysts as a good one, with niche petroleum carrier Maritrans in good position to add value and strategic benefits to OSG.

•About OSG

Overseas Shipholding Group, Inc. (NYSE:OSG) is one of the largest publicly-traded tanker companies in the world. As a market leader in global energy transportation services for crude oil and petroleum products in the U.S. and international flag markets, OSG is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the world's most customer-focused marine transportation companies, with offices in Athens, Houston, London, Manila, Montreal, Newcastle, New York City, Philadelphia, Singapore and Tampa. More information is available at http://www.osg.com.