1. Financing / investing the offshore and maritime
energy transportation
Good Afternoon Ladies & Gentlemen.
It is a great honor for me to participate in Mare Forum’s 2nd Conference in Cyprus.
Mr. Kostoulas and his Team have done an excellent job organizing this successful event for 2 years in a row which clearly demonstrate Cyprus’ importance in the Offshore / LNG Energy space.
Last year, when I also had the honor to join the 1st Mare Forum, I had communicated to the audience, that I have strong personal links with this island. My wife is from Cyprus, my two boys were born here and I worked in Nicosia on the banking side from 2000 to 2003.
As a result I am very familiar with Cypriot’s desire to excel, through disciplined and hard work.
It is through this Hard Work, Discipline and Commitment that Cyprus has become an important player in the Energy space.
The purpose of my speech is to provide you an overview of the Financing Environment for the Offshore and Maritime Energy Transportation.
Presentation to
Ioannis Alexopoulos, Director
.: London
.: Athens
.: Singapore
Eurofin
Eurofin S.A.
Seafin

2. Eurofin Group (Overview)
Oldest, largest, specialized ship-financing investment boutique with global coverage
30 Years Committed in Ship-Finance
US$15 Billion Ship-Financing Deals (globally)
Flexibility Tailor made structures
Commitment Team dedicated to ship-financing
Strong Relationships Ship-financing Providers / Owners
Recognition Representing KfW IPEX-Bank
Global Coverage Offices in major shipping centers
Before I begin with my presentation allow me to provide you with a small overview of our Group.
(READ FROM SLIDE)
At present, we are actively involved both on the Arrangement side but also with our associates in Frankfurt from KfW IPEX-Bank, on the financing of a number of Maritime Energy transactions.
London
Athens
Singapore

3. Freight Rates & Asset values have plummeted
Shipping environment
Freight Rates & Asset values have plummeted
In all three main shipping sectors
Shipping Charter Rates (Indexed - as at Q )
Asset Values (US$ mm - as at June 2013)
Dry
150
~(79%)
5-year Peak: $150m
% Change to Current: ~(79%) 31
5-Year old Capesize
In order for us to understand what is happening on the Ship-Financing side, we have to briefly review the state of the shipping market.
I.e. What is Happening with the EARNINGS & ASSET Values.
For the Traditional shipping sectors the picture is not good.
Since 2008, we have witnessed a sharp correction in both Freight Rates & Asset Values.
July June 2013
Container 65
~(72%)
5-year Peak: $65m
% Change to Current: ~(72%)
18.5
5-Yr 3,500 Teu vessel
July June 2013
(80%)
(74%)
(69%)
% Change
Tanker 79
~(66%)
5-year Peak: $79m
% Change to Current: ~(66%) 27
5-Year old Aframax
July June 2013
Source: Clarkson’s Research, Baltic Exchange

4. A totally different picture
Offshore & Energy Maritime Environment
A totally different picture
Increased demand for specialized offshore / energy maritime assets
Coupled with a tight supply of available tonnage
LNG – Freight Rates
On the offshore and Energy Maritime front there’s a totally different picture.
Freight Rates ( ) are at historically high levels (despite a correction which you can see on the graph)
Newbuilding Prices (2003 – 2013) are relatively low making newbuilding acquisitions relatively attractive.
AS A RESULT ONE CAN ARGUE THAT FOR THE OFFSHORE / ENERGY MARITIME SECTOR NUMBERS MAKE SENSE.
LNG – Newbuilding Prices
Source: RS Platou

5. The (Traditional – Plain Vanilla) Senior DEBT Ship-Financing Environment
TURNING NOW on the AVAILABILITY OF CAPITAL for the Offshore Maritime Energy sector, one has to look first of all on the availability of Senior DEBT Financing. 5

6. Failed US Banks Ship financing environment: EUROPE Any guesses? 6
The Global ship-financing industry (which mostly dominated by European Banks) has not only been hit by the poor shipping market but also by the Sovereign Debt Crisis which has affected Europe and the whole world as a whole.
Nobody can guess how the European Debt Crisis will be resolved but the on-going uncertainty and the bad news that are coming out are severely affecting the Global Banking environment.
© Chappatte - 6 6

7. Senior Debt – GLOBAL Ship-Financing environment
Reduction in Global Shipping Banks’ Capacity
25 Largest Global Shipping Banks Portfolios in Dec 2012: US $347.6 billion (from US $358 billion in 2008)
INCREASE from 2008
DECREASE from 2008
You may not be able to read this graph as fonts are small but I understand the presentations will be available from Mare Forum. This shows the 25 Largest Shipping Banks globally and their capacity from 2008 to 2012.
RED columns indicate reduction in exposure by a number of shipping banks.
Source: Marine Money, May 2013

8. Are Shipping Banks still there?
Senior Debt – Global Ship-Financing environment
Are Shipping Banks still there?
Greek Banks : CLOSED
UK Banks: LIMITED Capacity (if any)
FRENCH Banks: LIMITED Capacity (if any)
GERMAN Banks: SOME Capacity for new deals
Scandinavian / Swiss Banks / US / Australian: (SELECTIVE )
All Re-organizing Balance Sheets / Re-building regulatory capital (BASEL III )
So Overall Are Shipping Banks open?
Greek Banks : These are CLOSED as they have severe liquidity issues.
UK Banks: There is Limited Capacity (if any) as they are adversely affected by the economic crisis – Shipping is a non Core sector for some whilst a number of them have issues with Problem loans in their portfolios.
French Banks: Again there is Limited Capacity as they are adversely affected by European sovereign debt crisis
German Banks: These have some Capacity for new deals / but again one has to remember that they have US$ Funding Cost
Scandinavian / Swiss Banks / US / Australian are open SELECTIVELY for new deals.
All in All one has to remember there is an on-going effort for Banks to Re-organize their Balance Sheets and Re-building regulatory capital (BASEL III )

9. A (totally) different picture
Senior Debt – Offshore & Energy Maritime
A (totally) different picture
Capacity is there
Syndication & Club Deals structures are available
Wide range of different Banks:
(German / US / Swiss / Norwegian / Swedish / Australian)
Benchmark on Pricing and Leverage (Gaslog)
Although Shipping Companies may find it difficult to attract interest from the last few remaining Banks Standing, this is exactly opposite for Companies involved in the Offshore and Maritime Energy sector.
Capacity is there from the Few banks that are still active
Syndication market is active
Different Banks of different nationality are interested
On the Leverage and Pricing one can review Gaslog IPO prospectus and can find information on these.

10. ALTERNATIVE Ship-Financing Sources
Filling the gap
CHINESE BANKS
CAPACITY IS NOT AN ISSUE
POLICY BANKS
China Exim Bank
China Development Bank
Chinese Banks are IMPORTANT for Global Ship-financing as these are the Biggest in the World in terms of capitalization.
CAPACITY is not an issue.
The most active of these are the Policy Banks.

11. Chinese Newbuilding Requirement is not being met
Chinese Banks
Are they really there?
Issues for (NON policy) Chinese Shipping Banks
(a) Credit Tightening (to control possible inflation pressures)
(b) HIGH US $ Funding Cost (Scarce Availability)
Requirements
(A) Strong Chinese Element:
(China Newbuilding / Time Charter to Chinese SOE)
Chinese Newbuilding Requirement is not being met .
ALTHOUGH ADMITTEDLY THEY DO HAVE HUGE CAPACITY they have Issues and Requirements and which make them not particularly suitable for Offshore and Maritime Energy deals
Issues for (NON policy) Chinese Shipping Banks
(a) Credit Tightening to control an overheated economy
(b) US $ Funding (Availability is scarce and Funding Cost is High); Liquidity is with the People’s Bank of China.
Requirements
(A) Strong Chinese Element: ( China Newbuilding / Time Charter to Chinese SOE
Especially in view of these requirements and as Drillships / LNG Carriers / Shuttle Tankers are very specialized shipping assets and are not being built in China we are not seeing Chinese Banks being particularly interested for this sector.
Not particularly relevant at present
for the Offshore & Energy Maritime

12. ALTERNATIVE Ship-Financing Sources
Filling the gap
Export Credit Agency (ECA) Ship-Financing Structures
An important financing source for Offshore and Maritime Energy transactions are Export Credit Agency schemes.

13. Competition at a political level
Export Credit Agency (ECA) Structures
Competition at a political level
GOVERNMENT AGENCIES assisting EXPORT finance
JAPAN
NEXI: Nippon Export and Investment Insurance
JBIC: Japan Bank for International Cooperation
KOREA
K-sure: Korea Trade Insurance Corp.
Korea Exim Bank
NORWAY
GIEK: Insurance Agency
Eksportfinans
GERMANY
Euler Hermes
KfW IPEX-Bank
These are government agencies that support their countries export either by providing the necessary financing to the Buyer / Borrower (the Importer) or by providing an Insurance cover for the financing to the Bank that is providing same.
The ECA financing schemes are governed under OECD rules.
Examples of ECA are provided on the slide.
KfW IPEX is Germany’s state owned Bank that is responsible for Export financing.

14. Competition at a political level
Export Credit Agency (ECA) Structures
Competition at a political level
KfW IPEX-Bank finances Royal Caribbean
German ship financier KfW Ipex led the export credit financing $997 million
for USA shipowner Royal Caribbean International.
The vessel was ordered from Papenburg-based Meyer Werft.
As an example of ECAs involvement and role one can see a recent transaction that came into press about KfW supporting Royal Carribean in a sizeable debt financing deal. The vessel was built in a German yard.
The loan is covered by a government export guarantee administered by credit insurer Euler Hermes.

15. Competition at a political level
Export Credit Agency (ECA) Structures
Competition at a political level
THENAMARIS SECURED $400 MILLION LOAN FACILITY FOR ITS 3 LNG NB.
A $200 million tranche was extended by KEXIM
The remaining $200 million was equally shared between 3 banks; DnB NOR, ABN AMRO and ITF (part of DVB)
Another example of ECA role is KEXIM’s involvement in THENAMARIS’ 3 x LNGS vessels financing.

16. ALTERNATIVE Ship-Financing Sources
Filling the gap
Public Equity
Public Debt
Private Equity
Besides, Senior Debt and ECA financing schemes an important source of Capital for Offshore and Maritime Energy projects is the Capital Markets and Private Equity.

17. Public equity helped (if you were public)
Alternative ship financing: Public Equity
Public equity helped (if you were public)
Powerful for already listed shipping companies
Mostly Follow On Offerings to reduce Debt Exposure
Golar:
Equity raised (for Expansion in the LNG , FSRU energy sector) of more than $0.5 Billion in 6 Months
July 2012: 1st Follow-On : $223 Million
November 2012: 2nd Follow-On : $181 Million
February 2013: 3rd Follow-On : $130 Million
OPEN - for Offshore & Energy Maritime
For Shipping Companies the Capital Markets are closed.
For the Offshore and the Marime Energy sector however these are open.
As an example one can see Golar LNG
It should be remembered that the Capital markets are particularly important for this sector as Capital requirements are very big.

18. Golar LNG Partners LP (6-Month)
Alternative ship financing: Public Equity
Golar LNG Partners LP (6-Month)
Also one can see here that despite the repeated F.O. Offerings, the share price continued to increase as the investment community is particularly interested in the sector’s prospects.

19. Attractive alternative to L/T amortising debt
Alternative ship financing: Public Debt
Attractive alternative to L/T amortising debt
Accommodating for already listed companies
Closed in the heights of the credit crisis, but opened up quickly from Q2 2009, faster than expected
Non-investment grade bonds
High yields / Convertibles
Good opportunity to diversify
Shipowners: Ability to meet near term liquidity needs and to improve near term cash flow
Gaslog announced that it has priced an offering of NOK 500,000,000 aggregate principal amount of senior unsecured notes due 2018
Bond financing, and in particular High Yield and Convertible bonds have played an increasingly important part in the global ship financing. Over the last years Bond financing has increased and returned at the same levels as in 2004.
We expect Bonds to become relatively more important for shipping companies going forward and especially for Offshore and Energy Maritime transactions this is an important source of capotal.
OPEN - for Offshore & Energy Maritime

20. Post 2008 Private Equity Transactions in Shipping
Alternative ship financing: Private Equity
Post Private Equity Transactions in Shipping
This graph provides information on joint ventures set up between PE firms and Shipowners.
Prime names of PE firms investing in shipping are:
(READ).
In addition to these, Oaktree has acquired part of Lloyds Shipping portfolio at a discount.
Overall Private Equity is important for the sector but other shipping sectors (e.g. Dry and Wet where Asset Values are at historical lows) attract more interest as PE funds are increasingly interested in the asset play.
Source: Tiger Analysis

21. Offshore & Energy Maritime
Conclusions
Offshore & Energy Maritime
TOP ON THE AGENDA
[of the Few Remaining Shipping Banks]
DEBT: POSITIVE ELEMENTS
[+ve Macros / Demand & Supply Balance / Modern Specialised Assets / Strong Corporates / Long Term Employment with Investment Grade Charterers / possible ECA cover]
CAPITAL MARKETS: AN IMPORTANT ELEMENT
High Capital Intensive sector; it is necessary to establish a well diversified Capital Structure (with different capital sources).
To Summarize the position:
The Offshore / Maritime Energy sector is at the TOP of the Agenda of the Few Remaining Shipping Banks.
Senior Debt Providers are particularly attracted for these type of transactions as there are a number of Positive Elements:
+ve Macros
Demand & Supply Balance
Modern Specialised Assets
Strong Corporates
Long Term Employment with Investment Grade Charterers
possible ECA cover
Capital Markets also have an interest for this sector in view of the visibility and the strength of its Earning Capacity.
As a result and since the Offshore / Maritime Energy sector is Highly Capital Intensive, Companies operating in it should develop access to the Capital markets and develop a diversified Capital structure in order to ensure uninterrupted access to all capital sources.

22. U.S. becoming a major LNG exporter
Developments (to watch out for)
U.S. becoming a major LNG exporter
Global impacts of LNG exports from the
United States

23. The Global (Financial) state of Affairs
Developments (to watch out for)
The Global (Financial) state of Affairs
SEC commissioner Dan Gallagher – April 2013
$3.7 trillion muni bond market
74% of that money came from retail investors.
Detroit said on Friday it would stop making payments on some of its about $18.5 billion debt, ....called on most of its creditors to accept pennies on the dollar
REUTERS – June 2013

24. Ioannis Alexopoulos, Director Eurofin Group of Companies
Thank You
Ioannis Alexopoulos, Director
11 Neofytou Douka Str., Athens, Greece - T:  
Website:
Eurofin Group of Companies
.: London
.: Athens
.: Singapore
Eurofin
Eurofin S.A.
Seafin