Ship finance and the Ship building industry

Newsfront/Naftiliaki Conference 6 th April 2011 Ship finance and the Ship building industry presented by Ted Petropoulos HEAD

A. Shipbuilding and ship finance considerations -The symbiosis of shipbuilding and ship finance

A. Shipbuilding and ship finance considerations Ship finance considerations for private and public companies

A. Shipbuilding and ship finance considerations Taking a risk with post delivery finance

B. The demand for newbuilding finance - The total fleet order book

B. The demand for newbuilding finance Order book Delivery year World Merchant Fleet Number of vessels 2011 Total fleet 3016 Bulkers 1340 Tankers 207 Others 1469 2012 2013 Total fleet 1654 Bulk Carriers 895 Tankers 121 Others 638 Total fleet 458 Bulk Carriers 229 Tankers 53 Others 176 Overall total n/b orders 2011-2013 5128 Source: Clarksons - October 2010

B. The demand for newbuilding finance Conversions / cancellations; some estimates

B. The demand for newbuilding finance Additional newbuilding orders

B. The demand for newbuilding finance Can the demand for newbuilding finance be accommodated?

B. The demand for newbuilding finance 2011 2012 2013 orders 3016 1654 458 cancellations 15% 452 15% 248 10% 46 conversions 20% 603 15% 248 10% 46 additional orders 1000 Total newbuildings to be financed 1961 1158 1667 amounting to 4786 vessels Assuming average unit price of $30m $35m Total required (3 years) $143.58bn $167.51bn Assuming 60% finance $86.148bn $100.51bn Assuming 10% loan runoff on $420bn drawn global portfolios x3 years= $126bn

B. The demand for newbuilding finance Second hand finance and other requirements

B. The demand for newbuilding finance 2nd hand sales From 10/1/2010-9/1/2011 $20.240bn Number of vessels 830 Average price of vessel $24.38million Source: www.gmoundreas.gr

B. The demand for newbuilding finance We project for 2011 2013 a further $50bn for PETROFIN S.A. a ) second-hand finance b)mergers and acquisitions c) additional net finance due to refinancings d) additional shipping finance raised for shipping purposes based on additional non-shipping assets In summary, we anticipate organic additional finance requirements of approx. $50bn over the 3-year period Consequently, the total ship finance requirements for both newbuildings and organic shipping finance is expected to exceed the loan runoffs by $10 to $24.5bn over the 3-year period

C. The supply of ship finance In the following Graph we show the loan portfolio of the top 40 banks

Bank Lending to Shipping Ship finance based on data up to November 2010 in $bn Total loans of leading 40 ship finance banks approximately $449.76bn Top 6 Banks Finance approx. 39.88% of Shipping Loans 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 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 33.600 35.480 49.000 Source: Petrofin Bank Research / Marine Money November 2010 * Market estimates

C. The supply of ship finance Global ship finance exposure asymmetrical distribution

Top 40 banks portfolios according to geographical location in US$bn Total top banks portfolio: US$449.76bn $66.40 Graph 2 $9.50 USA Far East Europe April 2011 $373.86 Europe USA Far East

$82.58 Scandinavia European ship finance portfolios - 32 banks $20.50 Other $53.86 UK and Ireland France and Belgium Graph 3 $36.70 Greece Holland $12.78 Germany $13.00 January 2011 $154.44 UK and Ireland France and Belgium Holland Germany Greece Scandinavia Other European

January 2011 Graph 5 German vs Far Eastern ship finance 45.00% 40.00% 44.25% 42.44% 42.59% 35.00% 30.00% 32.55% 25.00% 20.00% 15.00% 14.76% 10.00% 5.00% 3.89% 5.31% 6.42% 0.00% 2007 2008 2009 2010 Far Eastern ship finance German ship finance

$8.50 Far Eastern ship finance portfolios-6 banks Total Far Eastern portfolio: $48.9bn Korea Graph 4 $30.90 Japan China $27.00 January 2011 China Japan Korea

C. The supply of ship finance Trends and expectations over the next 3 years

C. The supply of ship finance Attitude to newbuilding finance versus used vessel finance

C. The supply of ship finance Capacity considerations: New banks in the horizon?

C. The supply of ship finance Other providers of debt and equity; alternative finance, private capital, the role of public companies.

C. The supply of ship finance Listed Companies - as of January 2011 from Newsfront GSI - 1st April 2011 1 Aegean Marine US 15 Goldenport UK 2 Baltic Trading (BALT) US 16 Hellenic Carriers UK 3 Capital Product US 17 Navios Holdings US 4 Costamare Inc US 18 Navios Marit Acquis US 5 Crude Carriers US 19 Navios Marit Partners US 6 Diana Shipping US 20 Newlead Holdings US 7 Dry Ships (DRYS) US 21 Oceanfreight US 8 Eagle Bulk Shipping US 22 Omega Navigation US 9 Euroseas Ltd US 23 OSG Ship Mngt (GR) US 10 Excel Maritime US 24 Paragon Shipping US 11 Freeseas US 25 Safe Bulkers US 12 Genco Ship & Trading US 26 Seanergy Maritime US 13 Genmar US 27 Star Bulk Carriers US 14 Globus Maritime US 28 Stealthgas US 29 TEN US 30 Top Ships US 31 Torm US

Asset Focused Funds Equity Focused Funds Selected Shipping Funds Summary Asset Types / Investment Strategy Capital Argonaut 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 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 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 Long/Short Equity Tanker, container, cruise, dry cargo shipping, industrial shipping, shipbuilding, energy and oil services sectors Assets under management of c. $1 billion 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 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 Shipping hedge fund backed by German based Aquila Capital The German-based freight consultant, HF Navigator, acts as an investment advisor to the fund Fund s primary strategy is to employ directional trading of forward freight agreements, with an emphasis on short-term trading N/A Castalia Springs Sea Advisors 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 fund s 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 Focus purely on FFA trading N/A Trade in freight derivatives and shipping equities N/A M2M Global Maritime Assets Fund targeting distressed asset acquisition opportunities M2M s third fund, in the process of raising capital The two other funds are Global Maritime Investments and Global Maritime Futures Focus on dry bulk vessels, particularly handysize segment Target $250 million SFS Group & Kuwait Finance House 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 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 Target $150 million 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 All vessel classes and sizes contemplated (initial fleet 2 supramax bulkers, 2 capesize newbuildings) Target $50 100 million Tsakos Distressed shipping assets fund Oceanbulk Shipping of Greece is rumoured to have committed $10 million Fund for acquisition of shipping assets Credit Suisse involved Focus on acquiring dry bulkers and containerships Target $400 million Not disclosed N/A / Alterna Rumoured to have teamed up with an undisclosed Greek shipbroking firm Target distressed ship sales N/A Private equity fund intended for ship acquisitions Targeting Asian and Indian investors Not disclosed $750 million Vilmaris 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 Focus on containerships and dry bulkers Aim to own eight vessels by the end of 2009 Raised $42 million in an IPO on the Hamuburg Stock Exchange 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 Focus on niche vessel classes HGSF I&II: over $50 million invested per fund Courtney Fynn: $500 million invested UK based shipping fund Actively manages the ships in their portfolio Focuses on acquiring modern, 'generic' ships, i.e. standard bulkcarriers, tankers, and containerships N/A

C. The supply of ship finance Influencing factors: capital adequacy, Basel III, liquidity, risk

Table 1 50.00% Ship finance banks capacity 2009 Global portfolio, top 42 banks: $463.75bn 2010 Global portfolio, top 42 banks: $436.93bn Banks with lending capacity 47.57% 46.64% 45.00% 40.00% Banks with neutral/unclear policy/capacity Banks with reduced capacity 36.13% 35.00% 31.19% 30.00% 22 banks 25.00% 21.24% 12 banks 18 banks 20.00% 15.00% 16 banks 17.34% 10.00% 12 banks 4 banks 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 finance capacity Greek ship finance presenting the latest Petrofin Bank Research as of end 2010, released April 2011

All banks financing Greek shipping in USm Royal Bank of Scotland Deutsche Schiffsbank Credit Suisse* HSH Nordbank* National Bank of Greece DNB Nor Emporiki Bank DB - Deutsche shipping Marfin Egnatia Alpha Bank HSBC BNP Paribas DVB Calyon* Piraeus Bank* Unicredit EFG Eurobank LBG Shipping Finance Nordea Citibank Bremer Landesbank First Business Bank Nord LB CHINA EXIM* KFW* Natixis ING KEXIM* Bank of Cyprus ABN AMRO (Fortis Bank Netherlands) Aegean Baltic Proton Bank Beremberg* Bank of Ireland Deka* Tbank - ex Aspis Bank Agricultural Bank of Greece Santander (ex Alliance and Leicester) Corner* $3,500 $2,881 $2,545 $2,297 $2,126 $2,439 $2,181 $2,120 $1,900 $1,980 $2,080 $1,500 $1,870 $1,701 $1,211 $1,272 $1,050 $780 $449 $663 $525 $500 $333 $442 $402 $200 $360 $304 $291 $202 $200 $161 $100 $81 $66 $50 $25 $160 $454 $25 $162 $150 $225 $16 $0 $200 $16 $42 $36 $18 $30 $50 $199 $89 $300 $5,007 $241 $459 $580 $604 $174 $302 $350 $400 $264 $94 $500 $130 $183 $1,000 $11,288 $549 $1,151 Petrofin Bank Research April 2011 Total Banks: 39 Total exposure to Greek shipping: $66.235bn $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Market estimate Drawn Loans Committed but undrawn loans

Analysis of the ship finance market December 2001 December 2002 December 2003 December 2004 December 2005 December 2006 December 2007 December 2008 December 2009 December 2010 Growth percentage 28.66% 20.19% 26.61% 11.62% 28.45% 44.31% 9.39% -8.478% -1.17% Total Greek Shipping Portfolio $16,525m $21,261m $25,554m 32,353m $36,112m $46,387m $66,941m $73,228m $67,020m $66,235m Petrofin Bank Research - April 2011

Analysis of the ship finance market Petrofin Bank Research April 2011 Overall Greek ship lending portfolio as of end 2010 Overall Greek ship lending portfolio as of end 2009 Overall Greek ship lending portfolio as of end 2008 Percentage of growth between December 2009 and December 2010 Percentage of growth between December 2008 and December 2009 Percentage of growth between December 2001 and December 2010 Average yearly growth since 2001 International Banks WITH a Greek presence International Banks WITHOUT a Greek presence $35,882.29 $36,777.31 $38,984.4-2.43% -5.66% $14,468.76 $14,101.65 $17.299.5 +2.60% -18.49% Greek banks $15,883.60 $16,140.55 $16,944.24-1.59% -4.74% Total $66,234.65 $67,019.51 $73,228.14-1.17% -8.48% Petrofin Bank Research - April 2011 408.97% (Between 2001 and 2009: 421.66%) 134.69% (Between 2001 and 2009: 128.74%) 379.87% (Between 2001 and 2009: 387.63%) 300.81% (Between 2001 and 2009: 305.56%) 19.82% (Between 2001 and 2009: 22.93%) 9.94% (Between 2001 and 2009: 10.9%) 19.04% (Between 2001 and 2009: 21.9%) 16.68% (Between 2001 and 2009: 19.13%)

Totals 2009: $73.2bn Totals 2010: $67.02bn Totals end 2010: $66.23bn Bank capacity in financing Greek shipping November 2009: 35 banks February 2010: 40 banks Autumn 2010: 39 banks end 2010: 39 banks 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Banks with lending capacity 14 banks Nov 2009 33.25% 20 banks Feb 2010 13 banks Autumn 2010 39.33% 28.45% 15 banks end 2010 44.21% Banks with reduced lending capacity 14 banks Nov 2009 51.49% 13 banks Feb 2010 47.16% 19 banks Autumn 2010 62.73% 19 banks end 2010 49.49% 7 banks Nov 2009 Banks with neutral/unclear policy/capacity 7 banks Feb 2010 15.26% 13.55% 7 banks Autumn 2010 8.81% 5 banks end 2010 6.30% April 2011

PETROFIN RESEARCH Conclusions

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