1. IPO vs Private Equity CS: Sale and Lease Back

2. Agenda Capital Markets Considerations for an IPO Private Equity Considerations for Private Equity Sale and Lease back. Financing Scheme Process Requirements Advantages – Disadvantages

3. Capital Markets Mid – 1990s: the US Capital Markets had no exposure to the International shipping industry. March 2006: the US Capital Markets: over 20 shipping companies March 2007: 23 Greek ocean-going shipping companies publicly listed in major stock exchanges around the globe Investors Appetite: Recent Profitability, STEADY and high growth of the Shipping Industry.Shipping has become more sophisticated as a number of participants have a better understanding of financial markets & instruments. Good for the industry: Increasing number of IPOs has a positive effect on the shipping industry; some of the benefits of this trend are transparency, improved reporting standards and independent boards. Investment Banks: Shipping companies capital markets related needs are not catered by the shipping banks that assist them in their debt financing. Instead they are catered by specialized US based Investment banks THE CYCLICALITY OF THE SHIPPING INDUSTRY DETERS THE INVESTMENT COMMUNITYS INTEREST

4. Considerations for an IPO Which Bourse? What amount? Loss of Controlling interest? Cost Involved? The Story? 1. Vessels 2. Employment period 3. Dividend payout strategy Valuation Metrics?

5. IPOs…To be Public or not to be? ADVANTAGES 1. Exit Strategy (Liquidity) for Minority Owners 2. Valuation (Higher) – above Net Asset and Book Value 3. Fleet Growth through access to capital markets 4. Cost of Capital is reduced due to Liquidity of Companys stock 5. Ability to make acquisitions using company stock DIS-ADVANTAGES 1. Less Confidentiality (complete financial and related party disclosure) 2. Time Consuming (Management devotes time to public company operations) 3. Higher Costs (Regulatory, Auditing, Legal and Investor relations requirements) 4. Continuous scrutiny (Investors and Analysts) 5. Investors Interest (not steady) 6. Strategy (not easy to change) 7. Asset play (not easy to conduct)

6. Private Equity Purest Form: Participation in the shipowners business (either at the Company Level or at a Project Level) Where do we find private equity? 1. Historically: Friends & Family and Retained Earnings (operation & Asset Play) 2. High Net Worth Individuals (HNWI) e.g. Private Banking 3. Institutional Investors (Listed or Private Equity P/E Funds) Why does Private Equity wish to invest in a shipowners business? RETURN ON EQUITY - The Private equity investors seek to obtain a return on the funds they invest of more than 15% p.a. DIVERSIFICATION – The Private Equity funds need to diversify their investment portfolio.

7. Private Equity What are Private Equity Investors looking for?... Counterparties: reputable companies, track record Corporate structure: transparency, shareholding structure, rating (or not), succession Exit: defined upon entering of investment Control: ability to control own invested capital/participation Asset age: young to middle aged assets Asset type: Liquid assets versus specialised (diversification / timing) Yield: minimum annual dividend with degree of predictability Structure: Standard versus tailor made Sponsor support: corporate backing, guarantees, asset cover Employment: bareboat, time charter, pool or joint venture backed investments

8. Sale and Lease back Financing Scheme Investors (2-6) Shipping Fund SPC Vessel Owning Bareboat Charterer Time Charterer Group (Guarantor) Bank 100% 75% 20% Loan Equity Sellers Credit 5%

9. Process Sale of the vessel – MOA Lease Back – Bareboat Charter Charterers Undertakings Security Buy Back – Option Agreement Additional Charter Guarantee Charterers Assignment Account Pledge

10. Requirements From the Shipping Fund – Counterparties: Reputable companies, track record – Corporate Structure: Transparency, Shareholding structure (Group – Holding Co) – Control: Ability to control the own invested capital – Age: Young to middle aged assets – Guarantees: Corporate support, asset cover – Employment: Time Charter, Contract of Affreignment

11. Requirements From the Bank – Know Your Customer – First Priority Mortgage – Financial Convenants a. Minimum Market Adjusted Net Worth b. Maximum leverage c. Working Capital greater than zero

12. Advantages - Disadvantages Increased Liquidity (finance 100% of the MV of assets) Confidentiality Managements Control Evenly spread repayment High Cost of Capital (effective interest rate 8%) High Exit Cost Long term time charter or CoA Inflexible exit scenarios Financial Covenant (Debt ratio)

13. The figures… Year 5thYear 6thYear 7thYear 8th Capital raised42650000 BB rate-16112-15914-15773-15667 Total BB fees-29050921-34428046-39805171-45182296 Buy Back Price-29750000-26750000-23650000-17525000 Total Repayment-58800921-61178046-63455171-62707296 Diff-16150921-18528046-20805171-20057296 IRR8,78%8,74%8,76%8,05%

14. Thank You!