Maritime Group 2011 Year in Review - Seward and Kissel

Seward & Kissel Litigation Results - 20112011 Representative TransactionsOf the numerous cases in which Seward & Kissel lawyers were involved in 2011, two decisions stand out: the decision of the SupremeCourt of the Marshall Islands in Rosenquist v. George Economou, DryShips, Inc., et al., and the United States Federal Court decision inLitwin v. OceanFreight Inc.Represented Diamond S Shipping in connection with two credit facilities aggregating $1.07 billion and acted as maritime counsel inconnection with its acquisition of 30 vessel owning companies from CIDO Tanker Holding Co.Represented Box Ships Inc. in connection with a $105 million initial public offering of common stock underwritten by UBS Investment Bankand Morgan Stanley.DryShipsIn the DryShips case, a shareholder of the company brought a“derivative” claim in the High Court of the Marshall Islands in 2009. Aderivative claim is brought by a shareholder on behalf of a companyand seeks to recover damages against officers and directors of thecompany whom the shareholder alleges have not exercised theirobligations to the company properly. The shareholder alleged thata number of transactions were not given fair consideration by theindependent members of the board of directors and that insidersbenefited from those transactions. The complaint also alleged thatthe independent directors were not truly independent because thehigh level of compensation they received from the company madethem beholden to management. The case was argued in the HighCourt of the Marshall Islands in January 2010, where the Chief Judgeof the High Court dismissed the complaint and took the plaintiffs totask for failing to inspect the books and records of the company priorto bringing the action, but gave them an opportunity to do so aftermaking his decision. Rather than inspecting the books and recordsof the company, the plaintiff appealed the case to the SupremeCourt of the Marshall Islands. The Supreme Court heard argumentin April 2011 and on October 3, 2011, handed down a decisionaffirming the High Court and dismissing the complaint. The Courtheld, among other things, that the complaint lacked particularizedfacts establishing that the defendants’ decisions were made out ofloyalty to, or fear of reprisal from, management, and that the levelof compensation given to the independent directors, without more,was not enough to establish a lack of independence of the board.The Supreme Court also held that the board’s decisions to enter thechallenged transactions were entitled to the presumption that theywere done in good faith and in the exercise of business judgment, andthe dismissal of the complaint was affirmed.OceanFreightIn the OceanFreight case, Litwin, a holder of a small number ofOceanFreight shares, brought a motion to enjoin the merger ofOceanFreight Inc. and DryShips Inc., one week before the merger wasscheduled to be voted upon at a shareholders’ meeting. The plaintiffalleged that the information contained in the proxy statement relatingto the merger was insufficient for shareholders to cast an informedvote at the meeting. In order to succeed in obtaining an injunction,the plaintiff was required to show, among other things, a likelihoodof success on the merits. The judge held that there was no likelihoodof success on the plaintiff’s federal securities law claims because thecompany, as a foreign issuer, was exempt from many of the proxyrules plaintiff alleged that the company had violated, and that inany event, the plaintiff could not show that any representationsin the proxy statement had caused the shareholders injury.The Court also held that the “balance of the equities”favored the company, and that granting theinjunction would possibly do more harm thangood. The Court denied the injunction motion,the vote occurred and the merger wasconsummated on schedule.Represented Scorpio Tankers Inc. in connection with three credit facilities aggregating $392 million. Also represented Scorpio Tankers Inc.in connection with two follow-on public offerings aggregating $101.5 million underwritten by Morgan Stanley.Represented a syndicate led by Wells Fargo Bank, National Association and JP Morgan Chase Bank N.A. in respect of a $350 million creditfacility to Era Group Inc., a wholly-owned subsidiary of SEACOR Holdings Inc., secured by a pool of helicopters servicing the offshore oil fleet.Represented Ocean Rig UDW Inc. as U.S. counsel in connection with a $500 million offering of common stock pursuant to Rule 144A andRegulation S of the Exchange Act of 1934.Represented a private equity sponsored ship owner in connection with three credit facilities aggregating $201.8 million for the purchase of12 newbuild drybulk carriers.Represented DNB Bank ASA as agent in connection with a $180 million revolving credit facility provided by a syndicate of banks to meet theborrower’s working capital requirements and general corporate purposes.Represented Diana Containerships Inc. in a $132 million initial public offering of common stock underwritten by Wells Fargo Securities,BofA Merrill Lynch and Jefferies.Represented the defendants in Rosenquist v. George Economou, DryShips, Inc., et al. in a shareholder derivative action heard by theSupreme Court of the Marshall Islands.Represented OceanFreight Inc. in a merger with DryShips Inc. Also represented OceanFreight as defendant in Litwin v. OceanFreight,Inc., a case tried in United States Federal Court, where the plaintiff unsuccessfully sought to enjoin the merger of OceanFreight Inc. andDryShips, Inc.Represented underwriters UBS Investment Bank, BofA Merrill Lynch and Citi in a $71.7 million follow-on public offering of common stockby DHT Holdings Inc.Contact UsFor more information about Seward & Kissel’s Maritime Group or the contents of this Review, contact your relationship attorney.Gary Wolfe212.574.1223wolfe@sewkis.comRob Lustrin212.574.1420lustrin@sewkis.comTed Horton212.574.1265horton@sewkis.comSEWARD & KISSEL LLPLarry Rutkowski212.574.1206rutkowski@sewkis.comHadley Roe212.574.1224roe@sewkis.comMike Timpone212.574.1342timpone@sewkis.comDerick Betts212.574.1662betts@sewkis.comBruce Paulsen212.574.1533paulsen@sewkis.comJim Cofer212.574.1688cofer@sewkis.comThe decision provides solid guidelines to shipowners on thegovernance of Marshall Islands companies and demonstrates thestrength of the Marshall Islands legal system.One Battery Park PlazaNew York, NY 10004Tel: 212.574.1200 Fax: 212.480.8421www.sewkis.com1200 G Street, NWWashington, DC 20005Tel: 202.737.8833 Fax: 202.737.51848SEWARD & KISSEL LLPwww.sewkis.comSEWARD & KISSEL LLPThis publication contains attorney advertising. Prior results do not guarantee a similar outcome.www.sewkis.com