OSG Reaches Settlement With Department of Justice

Overseas Shipholding Group, Inc. announced that it has reached a comprehensive settlement with the United States Department of Justice regarding violations stemming from an investigation that began in 2003. Under the agreement, the Company will plead guilty to a total of 33 counts including one charge concerning an improper discharge of oil in 2002 and multiple record-keeping violations, including making false statements, obstruction and conspiracy related to such violations. The settlement concludes a multi-jurisdictional investigation that involved 12 vessels. The Company also agreed to pay a fine in the amount of $27.8 million and pay $9.2 million to designated environmental community service programs. As a result of the agreement, all outstanding charges against OSG as an organization will be settled, including the indictment regarding the Pacific Ruby announced earlier this year. This settlement is subject to the acceptance by federal courts in the District of Massachusetts and Eastern District of Texas.

As previously announced, the Company has reserved $37 million in anticipation of a settlement. OSG does not believe that this settlement will have a material financial impact on its ongoing business, its relations with customers and vendors or any of its contractual arrangements. While OSG was encouraged by the decision on December 4, 2006 by Judge Heartfield in the Eastern District of Texas to dismiss eight of the ten charges against the Company regarding the Company's vessel, Pacific Ruby, OSG concluded that it was in the best interests of its shareholders, employees and customers to agree to a comprehensive settlement.