Ship Financing The Basics

On behalf of HVB Global Shipping Welcome to WISTA CONFERENCE HAMBURG 2005

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Ship Financing The Basics

God must have been a shipowner. He placed the raw material far from where they are needed and covered two thirds of the earth with water. Erling Ness

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Ship Financing The Basics

Contents

3. Main Considerations 4. Financing Solutions 5. HVB Global Shipping

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Ship Financing The Basics

Contents

3. Main Considerations 4. Financing Solutions 5. HVB Global Shipping

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Ship Financing The Basics

1. Main Considerations Different Types of Vessels require Different Finance Solutions, e.g. Project Finance vs. Corporate Finance Spot Employment vs. Long Term Contracts / Liners but there is more to consider

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Ship Financing The Basics

Borrower Portfolio Type of Vessel

Pricing

Main Considerations

Leverage

Security Employment

Loan Period

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Ship Financing The Basics

1. Main Considerations Borrower

Financial Performance, Rating Management (technical / commercial) Reputation, Experience, Track Record Market Position Strategy

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Ship Financing The Basics

1. Main Considerations Type of Vessel

Newbuilding vs. Second Hand Age and estimated Use of Life Liquid Asset or Special Type Second Hand Market Age Distribution of World Fleet vs. Order Book

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Ship Financing The Basics

1. Main Considerations Type of Vessel NO GOES

Quelle: www.parismou.org

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Ship Financing The Basics

1. Main Considerations Leverage

Building Price / Purchase Price vs. Market

Value Market Volatility Employment / Market Situation Equity Contribution Liquid Asset vs. Special Tonnage

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Ship Financing The Basics

1. Main Considerations Leverage - continued
Deutsche Schiffsbank's Henning Winter said ... 60% gearing had proved to be a "bloody good rule" so far, giving the banks "ample breathing space".
Quelle: Trade Winds 19.04.2002

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Ship Financing The Basics

1. Main Considerations Loan Period

Repayment Schedule Balloon Profile Age at Maturity Loan to Value Ratio

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Ship Financing The Basics

1. Main Considerations Employment

Spot Trading / CoAs / Pool Arrangments /

Time Charter / Bare Boat Risk of Re-Employment Cash Flow Analysis

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Ship Financing The Basics

1. Main Considerations Security

First Priority Mortgage Personell or Corporate Guarantee Assignment of Income & Insurances Documentation: e.g. Law, Covenants such as MVC, Financial Covenants on Borrower / Guarantor, cross default

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Ship Financing The Basics

1. Main Considerations Pricing

Risk Adequate Margin over LIBOR Grid Pricing Underwriting Fee & Participation Fee Commitment Fee MEET YOUR RETURN REQUIREMENTS BUT REMEMBER THERE ARE COMPETITORS

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Ship Financing The Basics

1. Main Considerations Portfolio

Tonnage Diversification Average Loan to Value Repayment Profile Market Situation in terms of VALUES, RATES, PRICING

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Ship Financing The Basics

1. Main Considerations last but not least EXPECTATION OF YOUR CLIENT

High Leverage, Low Equity Long Loan Period Low Pricing No Covenants

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Ship Financing The Basics

Contents

3. Main Considerations 4. Financing Solutions 5. HVB Global Shipping

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Ship Financing The Basics

2. Financing Solutions

Plain Vanilla Asset Finance Structured Project Finance Corporate Finance Leasing Structures German KG

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Ship Financing The Basics

2. Financing Solutions Plain Vanilla Asset Finance s s s s
e.g. VLCC spot trade non-recourse reputable manager

60% leverage 8 12 yrs term 15 yrs profile (max.)

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Ship Financing The Basics

2. Financing Solutions Structured Project Finance s e.g. LNG Carrier s long term time charter
contract with energy major technial management !!! up to 90% leverage 10 - 15 yrs term 15 - 20 yrs profile

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Ship Financing The Basics

2. Financing Solutions Corporate Finance s e.g. Cruise Vessel s listed corporates as s
borrower generally no mortgage RCF in large syndicates 5 7 years bullet generally undrawn

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Ship Financing The Basics

2. Financing Solutions Leasing Stuctures s e.g. LNG/Container/Car s s

Carrier long term bare boat charter industrial shipping / liner industry annuity style facility 10 15 yrs loan period put option at maturity tax benefits documentation risk
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Ship Financing The Basics

2. Financing Solutions KG Finance s e.g. Container, Tanker, s s s s

LNG generally newbuildings long term time charter reputable charterer equity by privat German investors 60 70 % leverage 10-12 yrs term for long time rather closed banking market
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Ship Financing The Basics

2. Financing Solutions

Do you want to know more

please be kindly invited to join the afternoon session.

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Ship Financing The Basics

Contents

3. Main Considerations 4. Financing Solutions 5. HVB Global Shipping

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Ship Financing The Basics

3. HVB Global Shipping

Market Experience: north of 30 years Portfolio: north of EUR 4 bn. Vessels: north of 800 vessels Regions: world-wide Offices: Hamburg, Piraeus, Oslo Staff: in total 17 Relationship Managers, 15 Credit Specialists, 7 Team Assistants

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Ship Financing The Basics

3. HVB Global Shipping

20% shareholder in Deutsche Schiffsbank

AG Shareholder in First Ship Lease Shipyard Consulting we finance as well BOXES, TERMINALS and the Offshore Industry

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Ship Financing The Basics

3. HVB Global Shipping

come and visit us at

www.hvb.de/globalshipping

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Ship Financing The Basics

Thank you very much for your attention

Further questions??? Or contact me: Oliver Trennt, +49-40-3692-4069

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Ship Financing The Basics

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