March 7, 2012 U.S. Chapter 11: What Everyone Should Know Hal Malone Jefferies Maritime Group Jefferies & Company, Inc.

1 Key U.S. Bankruptcy Provisions: Chapter 7, Chapter 11 and Chapter 15

2 U.S. Bankruptcy Process (Chapter 11) is Available to Non-U.S. Companies Many market participants believe Chapter 11 only applicable to U.S. listed or U.S. based companies Recent experiences of Omega Navigation and Marco Polo demonstrate that Chapter 11 is an option for most international shipping companies Chapter 11 keeps companies afloat as operating entities while eliminating unattractive contracts and restructuring debts  Management / board receives initial 120 day period to file reorg plan  Automatic global stay preventing creditor action Bankruptcy process can be good for both companies and creditors

3 Key Terms / Concepts Global Automatic Stay Exclusivity Period Debtor-in-Possession (“DIP”) Financing Use of Cash Collateral Cash Collateral Budget Adequate Protection Plan of Reorganization Pre-Packaged Plan Consensual Plan “Cramdown” Plan Impaired Consenting Class

4 Key Benefits to Companies of U.S. Chapter 11 Company has exclusive right to file a plan of reorganization Management generally remains in control during the process Additional financing is often made available in the form of a debtor-in-possession (“DIP”) facility Company can reject unprofitable contracts Company can force counterparties to honor attractive contracts even if language provides for cancellation in bankruptcy Ability to bind minority in a class vote (i.e. requires 2/3 of similarly situated creditors instead of 100%) Ability to sell certain assets or the entire business free and clear of all liens

5 Key Benefits to Creditors of U.S. Chapter 11 Transparent process with access to material company information Right to seek adequate protection of collateral / assets Ability to bind hold-out creditors (i.e. requires majority or 2/3 of similarly situated creditors instead of 100%) Aggressive enforcement of global stay means trade creditors will not arrest ships Ability to eliminate leakage to junior constituents and eliminate unprofitable contracts Specific cases where creditors may want to use Chapter 11: Above market charters-in Subordinated sellers’ credit

6 Chapter 11 Drawbacks Expensive for all parties Creates uncertainty as to outcome Can be lengthy and time consuming process Highly public, which may impact market perceptions of company Can encourage adversarial / litigious behavior Potential to add additional parties to complicated negotiations May allow external parties to influence results

7 Benefits of Pre-Packaged vs. Freefall Chapter 11 Preserves enterprise value proactively Quicker, less disruptive and cheaper than freefall Chapter 11 Process could be completed as quickly as 45 days after a filing Predetermined outcome reduces “bankruptcy taint”

8 New Investor / Capital Provider Perspectives Investors are keen to enter the sector Creditors not aggressively calling defaults currently as they do not want to be shipowners However, creditors will begin seizing vessels as asset values rise, thereby capturing upside New investors may treat management favorably, including potentially management carried interest in profits

9 Reality Bites…

10 Jefferies Key Points of Contact Maritime Group Hamish Norton (Global Head of Maritime Group) +1 (212) Harold Malone (Senior Vice President) +1 (212) Restructuring & Recapitalization Group Steven Strom (Global Head of Restructuring & Recapitalization Group) +1 (212) Tero Jänne (Managing Director) +1 (212)