Newsfront/Na-iliaki

Conference

6th April 2011

Ship nance and the Ship building industry

presented by

Ted Petropoulos HEAD PETROFIN RESEARCH

A.

Shipbuilding and ship nance consideraHons

-The symbiosis of shipbuilding and ship nance

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A.

Shipbuilding and ship nance consideraHons

Ship nance consideraHons for private and public companies

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A.

Shipbuilding and ship nance consideraHons

Taking a risk with post delivery nance

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B.

The demand for newbuilding nance

- The total eet order book

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B.
Delivery year 2011 2012 2013

The demand for newbuilding nance

Order book
World Merchant Fleet Total eet Bulkers Tankers Others Total eet Bulk Carriers Tankers Others Total eet Bulk Carriers Tankers Others Overall total n/b orders 2011-2013 Source: Clarksons - October 2010
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Number of vessels 3016 1340 207 1469 1654 895 121 638 458 229 53 176 5128

B.

The demand for newbuilding nance

Conversions / cancellaHons; some esHmates

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B.

The demand for newbuilding nance

AddiHonal newbuilding orders

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B.

The demand for newbuilding nance

Can the demand for newbuilding nance be accommodated?

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B.
orders

The demand for newbuilding nance

2011 15% 20% $30m $143.58bn $86.148bn 3016 452 603 1961 4786 15% 15% vessels $35m $167.51bn $100.51bn 2012 1654 248 248 1158 2013 458 10% 10% $126bn 46 46 1667

cancellaHons conversions Total newbuildings to be nanced amounHng to Assuming average unit price of Total required (3 years) Assuming 60% nance
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addiHonal orders 1000

Assuming 10% loan runo on $420bn drawn global porbolios x3 years=

B.

The demand for newbuilding nance

Second hand nance and other requirements

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B.

The demand for newbuilding nance

2nd hand sales From 10/1/2010-9/1/2011 Number of vessels Average price of vessel
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$20.240bn 830 $24.38million

Source: www.gmoundreas.gr

B.

The demand for newbuilding nance

PETROFIN S.A. www.petron.gr

We project for 2011 2013 a further $50bn for a ) second-hand nance b)mergers and acquisiHons c) addiHonal net nance due to renancings

d) addiHonal shipping nance raised for shipping purposes based on addiHonal non-shipping assets In summary, we anHcipate organic addiHonal nance requirements of approx. $50bn over the 3-year period Consequently, the total ship nance requirements for both newbuildings and organic shipping nance is expected to exceed the loan runos by $10 to $24.5bn over the 3-year period

C.

The supply of ship nance

In the following Graph we show the loan porbolio of the top 40 banks

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Bank Lending to Shipping

Ship finance based on data up to November 2010 in $bn

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Total loans of leading 40 ship finance banks approximately $449.76bn Top 6 Banks Finance approx. 39.88% of Shipping Loans
49.000 35.480 33.600 22.600 20.300 18.400 18.000 17.000 16.900 16.000 13.900 13.200 13.100 13.000 13.000 11.400 10.000 9.800 9.200 8.600 8.500 8.000 8.000 8.000 6.100 5.000 5.000 4.800 4.700 4.500 3.220 3.000 3.000 3.000 2.680 2.620 2.450 1.810 1.500 1.400

HSH Nordbak DNB Nor Commerzbank/Deutsche Schiffsbank RBS KfW Nordea BNP PARIBAS / Fortis Belgium BTMU* Lloyds Banking Group Credit Suisse* Credit Agricole CIB Bank of China* DVB HSBC* China Exim* Unicredit SMBC* Bremer Landesbank Deutsche Bank Danish Ship Finance Korea Exim* Citibank Danske Bank/Focus Bank Nord LB SEB ABN Amro ING Natixis ICBC Santander* National Bank of Greece NIBC Swedbank Helaba Alpha bank Emporiki Bank Marfin Egnatia Piraeus Bank* JP Morgan Bank of Ireland

Source: Petrofin Bank Research / Marine Money November 2010

* Market estimates

C.

The supply of ship nance

Global ship nance exposure asymmetrical distribuHon

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$66.40 $9.50
USA

Top 40 banks porbolios according to geographical locaHon in US$bn Total top banks porbolio: US$449.76bn

Graph 2

Far East

Europe
$373.86
April 2011

Europe

USA

Far East
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European ship nance porbolios - 32 banks

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$20.50 $82.58 Scandinavia

Other

$53.86
UK and Ireland

Graph 3

$36.70

France and Belgium Holland

Greece

$12.78
January 2011

Germany
$154.44

$13.00

UK and Ireland Greece

France and Belgium Holland Scandinavia Other European

Germany

January 2011
Graph 5

German vs Far Eastern ship nance

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45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

44.25%

42.44%

42.59%

32.55%

14.76% 6.42%

3.89%

5.31%

2007

2008

2009

2010

Far Eastern ship nance

German ship nance

Far Eastern ship nance porbolios-6 banks

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$8.50

Total Far Eastern porbolio: $48.9bn

Graph 4

Korea

$30.90

Japan
$27.00

China

January 2011

China

Japan

Korea

C.

The supply of ship nance

Trends and expectaHons over the next 3 years

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C.

The supply of ship nance

Amtude to newbuilding nance versus used vessel nance

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C.

The supply of ship nance

Capacity consideraHons: New banks in the horizon?

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C.

The supply of ship nance

Other providers of debt and equity; alternaHve nance, private capital, the role of public companies.

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C.

The supply of ship nance

Listed Companies - as of January 2011

from Newsfront GSI - 1st April 2011
1 2 3 4 5 6 7 8 9 10 11 12 13 14

Aegean Marine BalHc Trading (BALT) Capital Product Costamare Inc Crude Carriers Diana Shipping Dry Ships (DRYS) Eagle Bulk Shipping Euroseas Ltd Excel MariHme Freeseas Genco Ship & Trading Genmar Globus MariHme

US US US US US US US US US US US US US US

15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Goldenport Hellenic Carriers Navios Holdings Navios Marit Acquis Navios Marit Partners Newlead Holdings Oceanfreight Omega NavigaHon OSG Ship Mngt (GR) Paragon Shipping Safe Bulkers Seanergy MariHme Star Bulk Carriers Stealthgas TEN Top Ships Torm

UK UK US US US US US US US US US US US US US US US

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Selected Shipping Funds

Summary
n

Asset Types / Investment Strategy

n

Capital
n

Argonaut
n n

Strategy is to have exposure in the bulker, tanker, offshore/supply, LNG, LPG and cruise sectors. Financial institutions have provided the fund with three times leverage Aim is to trade in spreads between shipping equities in a way that will avoid large swings on returns Invests in shipping, oil services and energy equities as well as the associated freight forward agreements and commodities Recently acquired 9 AHTS, 2 aframax tankers, 2 1,700-teu boxships and 1 supramax bulker from Allocean in co-operation with SIF Limited OHF takes long and short positions in equity instruments and derivatives Raised $77 million (sought to raise $200 million), with $20 million contributed by Clarksons Assets under management as at 31 December 2008 were US$161 million (31 December 2007: US$168 million) Redemptions have decreased assets under management to US$54 million as at 1 March 2009 Shipping hedge fund backed by German based Aquila Capital The German-based freight consultant, HF Navigator, acts as an investment advisor to the fund Shipping hedge fund backed by Castalia Partners Fund managed by Philippe van den Abeele (formerly from Clarksons freight derivatives brokerage arm) Shipping focused hedge fund set up in 2009 The funds equities desk is headed by John Kartsonas, formerly the senior shipping analyst at Citigroup Investment Research The freight derivatives desk is headed by Pavlos Hitiroglou, formerly the senior FFA trader at Navios Holdings Fund targeting distressed asset acquisition opportunities M2Ms third fund, in the process of raising capital The two other funds are Global Maritime Investments and Global Maritime Futures Shariah-compliant shipping fund with the aim of raising $150 million to invest in modern tonnage The fund will be established through a limited partnership in the Cayman Islands before the end of 2009 Private open ended fund incorporated in Luxembourg on April 18th of 2007 to invest in the shipping industry 7 years plus 2 year structure Key parameters: target return 15% p.a. with a minimum investment $0.25 million Distressed shipping assets fund Oceanbulk Shipping of Greece is rumoured to have committed $10 million Fund for acquisition of shipping assets Credit Suisse involved Rumoured to have teamed up with an undisclosed Greek shipbroking firm Private equity fund intended for ship acquisitions Targeting Asian and Indian investors Shipping fund backed by Hamburg based Komrowski Shipping Listed on Hamburg Stock Exchange 26 June 2009 Aim to operate as a conventional shipping company by both buying and chartering-in vessels Manages 3 closed funds; Horizon Global Shipping Funds I and II (HGSF I&II) and Courtney Fynn HGSF I&II currently has 9 bunkering tankers (four built, of which two have been sold, plus five newbuilds delivering 2009-2010) and 4 chemical tankers under construction, delivering 2008 - 2011 Courtney Fynn currently has 5 bitumen tankers under construction for delivery in 2009/10

50% in U.S.-listed entities, 30% in European shipping companies and another 20% in Asia-listed owners

Start-up capital is expected to reach $50 million and the fund plans to exceed $100 million

Oceanic Hedge Fund Equity Focused Funds

n n n n n

Long/Short Equity Tanker, container, cruise, dry cargo shipping, industrial shipping, shipbuilding, energy and oil services sectors

Assets under management of c. $1 billion

Invests in shares of shipping companies and freight derivatives in the dry bulk and tanker markets

Assets under management of $54 million

Okeanos Shipping Fund

n n

Funds primary strategy is to employ directional trading of forward freight agreements, with an emphasis on short-term trading

N/A

Castalia Springs

n n

Focus purely on FFA trading

N/A

n n

Sea Advisors Fund

n

Trade in freight derivatives and shipping equities

N/A

M2M Global Maritime Assets

n n n

Focus on dry bulk vessels, particularly handysize segment Invest directly in high quality and modern vessels to be chartered out on long-term contracts Preference for offshore tonnage such as offshore supply vessels and platform supply vessels All vessel classes and sizes contemplated (initial fleet 2 supramax bulkers, 2 capesize newbuildings)

Target $250 million

SFS Group & Kuwait Finance House

n n

Target $150 million

Asset Focused Funds

n n n n n n

Target $50 100 million

Focus on acquiring dry bulkers and containerships

Target $400 million

Tsakos

Not disclosed

N/A

/ Alterna

Target distressed ship sales Not disclosed Focus on containerships and dry bulkers Aim to own eight vessels by the end of 2009

N/A $750 million Raised $42 million in an IPO on the Hamuburg Stock Exchange HGSF I&II: over $50 million invested per fund Courtney Fynn: $500 million invested N/A

n n n

Vilmaris

n n n

n n

n n

Focus on niche vessel classes

n

n n

UK based shipping fund Actively manages the ships in their portfolio

Focuses on acquiring modern, 'generic' ships, i.e. standard bulkcarriers, tankers, and containerships

Selected Shipping Funds (Contd)

Summary
n n

Asset Types / Investment Strategy

n n n n n

Capital
n

Fund for investments in maritime, energy and offshore Providing capital for balance sheet restructuring and / or growth Pacific Transportation Fund is dedicated to investments in shipping and transportation and targeting opportunities in regional trade Focus on Asian-based shipping and related assets Provider of equity to niche shipping and related services companies Private equity and alternative investments family office founded in 1994, representing several high net worth families Focused on shipping & oilfield services Recently announced $250 million fund for opportunity-driven investments in the shipping and offshore industry Formed via DVBs Shipping and Intermodal Investment Management (SIIM) team, aiming to create an opening for long-term investment as values eventually recover DVB is looking for a limited number of institutional investors (5-7) to raise capital for the DVB Invest Opportunity Fund and will use $50 million of its own money to capitalise it as well Former OMI chief executive Craig H Stevenson joining forces with private-equity power First Reserve to form a $300 million venture geared toward energy-related shipping acquisitions Strategy broad and could be individual ship purchases and/or the acquisition of a company or fleet Announced joint effort to pursue investments in the maritime sector in early 2009 Anticipate deploying a minimum of $100 million of capital through investments in shipping companies and assets as market conditions evolve over the next two years Greenbriar is a private equity firm which focuses exclusively on the global transportation industry Diversified Athens listed investment group with focus on Food & Dairy, Transportation, Healthcare, Private equity, Financial Institutions, IT & Telecoms Acquired Olympic Airlines in March 2009 from the Greek government for 177 million Dubai Group Ltd is the companys single largest shareholder with a stake of 17.9% Rumoured to be backing Theodore Veniamis of Golden Union in setting up a shipping private equity fund Private equity fund focused on investing in the shipping and offshore oil service sectors Joint venture by Northern Navigation and MT Maritime Management Group (MTMM)

Acquiring ongoing businesses or parts of larger fleets / non-core businesses Does not require a majority stake in a company Focus on niche markets, aim to build up dominant market share Build or buy into ship owning and operating companies Target transaction size of US$15-85 million in equity, leveraging to about US$60-200 million Focus on Asia Acquisition of vessels with long-term contracts to quality counterparties; often as part of a roll-up strategy All shipping sectors targeted Companies which have ships on order / want to raise cash via sale-and-leasebacks Bridge equity finance and structured financing solutions Vessel age no more than 15 years

$300 million

n n n n n n n

Raised $250 million in H2 2008

n n

N/A

n n n n

Target up to $250 million ($50m committed by DVB)

DVB Invest Opportunity Fund

Diamond S Shipping LLC Diverse Strategy Funds

n n n

n n

Does not appear to have made any investments to date

Initial Commitments: $300m contributed by First Reserve $3m contributed by C. Stevenson

Greenbriar Equity Group & Seacove Shipping Partners

n n n

n n

Financial investments (equity, debt, warrants, and mezzanine) and assets (vessels) Focusing on niche maritime segments Maritime investments include 86% stake in Greek ferry operator Attica Group Rumoured to be in advanced negotiations to buy Hellenic Shipyards at Skaramanga Investment approach include: sale and leaseback structures; mezzanine structures; equity investments; secured secondary bonds/bank debt Strategy to acquire vessels through distressed asset sales / as creditors to non-performing bonds Targeting a 25% net return

Allocated capital of $100 million

n n

Total investments of $4.5 billion

/ Theodore Veniamis

n n

n n

Have raised capital of $110 million Aim to raise $100m at its first close, probably in August 2009 Looking to raise a further $100m to $200m at the second close by the end of 2009

Oceanic Distressed Funds

n n

Tufton Oceanic in the process of raising a distressed asset fund and a distressed bond fund
n

Pareto Distress Fund

In the process of raising / setting up fund to take advantage of distress or value opportunities in the maritime industry Recent examples include: HCI Shipping Opportunity Fund, recently set up by German KG house HCI and Peter Dohle to acquire shipping assets in todays market Wolbern Shipping, backed by Bankhaus Wolbern, has recently acquired 9 newbuidling chemical tankers for $250 million Hamburg-based KG house MPC has recently started raising capital in the Netherlands by the sale of shipping funds shares Ocean Partners Shipping Invest, a joint venture between Aquila Capital, Howe Robinson Financial Services and investment firm K & K set up in mid-2008 to acquire second-hand container vessels

Diversified maritime assets

N/A

German KG funds

Diversified shipping acquisitions

N/A

C.

The supply of ship nance

Inuencing factors: capital adequacy, Basel III, liquidity, risk

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Table 1
50.00%

2009 Global porbolio, top 42 banks: $463.75bn 2010 Global porbolio, top 42 banks: $436.93bn

Ship nance banks capacity

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Banks with lending capacity

47.57%
Banks with reduced capacity

46.64%

45.00%

40.00%

Banks with neutral/unclear policy/capacity

36.13%

35.00%

31.19%
22 banks

30.00%

25.00%

21.24% 17.34%
16 banks 4 banks 12 banks

12 banks

18 banks

20.00%

15.00%

10.00%

5.00%

0.00%

DATA based on 2009

DATA based on 2010

DATA based on 2009

DATA based on 2010

DATA based on 2009

DATA based on 2010

D.

Greek ship nance capacity

Greek ship nance presenHng the latest Petron Bank Research as of end 2010, released April 2011

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Royal Bank of Scotland Deutsche Schisbank Credit Suisse* HSH Nordbank* NaHonal Bank of Greece DNB Nor Emporiki Bank DB - Deutsche shipping Marn EgnaHa Alpha Bank HSBC BNP Paribas DVB Calyon* Piraeus Bank* Unicredit EFG Eurobank LBG Shipping Finance Nordea CiHbank Bremer Landesbank First Business Bank Nord LB CHINA EXIM* KFW* NaHxis ING KEXIM* Bank of Cyprus ABN AMRO (ForHs Bank Netherlands) Aegean BalHc Proton Bank Beremberg* Bank of Ireland Deka* Tbank - ex Aspis Bank Agricultural Bank of Greece Santander (ex Alliance and Leicester) Corner*

$5,007 $3,500 $2,881 $241 $2,545 $459 $2,297 $580 $2,126 $604 $174 $2,439 $302 $2,181 $350 $2,120 $400 $1,900 $264 $1,980 $94 $2,080 $500 $1,500 $130 $1,870 $183 $1,701 $1,211 $199 $89 $1,272 $300 $1,050 $780 $160 $449 $454 $663 $25 $525 $162 $500 $150 $333 $225 $442 $16 $0 $402 $200 $200 $360 $16 $304 $42 $291 $36 $202 $18 $200 $161 $100 $50 $81 $30 $66 $50 $25 $1,000

$11,288 $549

$1,151

All banks nancing Greek shipping in USm

Petron Bank Research April 2011

Total Banks: 39
Total exposure to Greek shipping: $66.235bn

$0
* Market es@mate

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Drawn Loans

CommiPed but undrawn loans

Analysis of the ship nance market

Growth percentage

December December December December December December December December December December 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

28.66% 20.19% 26.61% 11.62% 28.45% 44.31%

9.39% -8.478% -1.17%

Total Greek $16,525m $21,261m $25,554m 32,353m $36,112m $46,387m $66,941m $73,228m $67,020m $66,235m Shipping Portfolio

Petrofin Bank Research - April 2011

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Analysis of the ship nance market

Petrofin Bank Research April 2011

Percentage of Overall Greek Overall Greek Overall Greek growth between ship lending ship lending ship lending December 2009 portfolio as of end portfolio as of end portfolio as of end and December 2010 2009 2008 2010

Percentage of growth between December 2008 and December 2009

Percentage of growth between Average yearly December 2001 growth since 2001 and December 2010

International Banks WITH $35,882.29 $36,777.31 $38,984.4 a Greek presence International Banks WITHOUT a $14,468.76 $14,101.65 $17.299.5 Greek presence Greek banks $15,883.60 $16,140.55 $16,944.24

-2.43%

-5.66%

408.97%

19.82%

(Between 2001 and (Between 2001 and 2009: 421.66%) 2009: 22.93%)

+2.60%

-18.49%

134.69%

9.94%

(Between 2001 and (Between 2001 and 2009: 128.74%) 2009: 10.9%)

-1.59% -1.17%

-4.74% -8.48%

379.87% 300.81%

19.04% 16.68%

(Between 2001 and (Between 2001 and 2009: 387.63%) 2009: 21.9%)

Total

$66,234.65 $67,019.51 $73,228.14

(Between 2001 and (Between 2001 and 2009: 305.56%) 2009: 19.13%)

Petrofin Bank Research - April 2011

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Totals 2009: $73.2bn Totals 2010: $67.02bn Totals end 2010: $66.23bn

Bank capacity in nancing Greek shipping

February 2010: 40 banks Autumn 2010: 39 banks end 2010: 39 banks
Banks with reduced lending capacity
19 banks Autumn 2010

November 2009: 35 banks

70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 39.33%

Banks with lending capacity

20 banks Feb 2010

14 banks Nov 2009

15 banks end 2010

13 banks Autumn 2010

44.21% 28.45%

14 banks Nov 2009

51.49%

13 banks Feb 2010

62.73% 47.16%

19 banks end 2010

Banks with neutral/unclear policy/capacity

49.49%

33.25%

7 banks Nov 2009

15.26%

13.55%

7 banks 7 banks Feb Autumn 5 banks 2010 2010 end 2010

8.81% 6.30%

April 2011

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Conclusions

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What is required for a) The newbuilding industry b) Owners c) The overall shipping industry