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									Strictly private and confidential

A Brief Look at the State of the Shipping
Industry & Finance

May 2010
Strictly private and confidential

IMPORTANT: This presentation has been prepared by members of our investment banking department. Statements and opinions
regarding the Company's investment case, positioning and valuation are not, and should not be construed as, an indication that
Deutsche Bank will provide favourable research coverage of the Company or publish research containing any particular rating or
price target for the Company's common stock. This presentation speaks only as of the date it is given, and the views expressed
are subject to change based upon a number of factors, including market conditions and the Company's business and prospects.

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin – Federal Financial Supervisory
Authority) and authorised and subject to limited regulation by the Financial Services Authority. Details about the extent of our
authorisation and regulation by the Financial Services Authority are available on request.


1           Major market trends                                  1

2           Industry landscape and key players                   5

3           Port sector outlook                                  9

4           Shipping financing considerations                    11

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Major market trends                                              Section 1

Section 1
Major market trends

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                                          Major market trends                                                                                                                                                                                                                                                Section 1

                                          Economic downturn and shifting global trade patterns have
                                          major impact on the shipping industry
                                                                                            Shipping plays a vital role in world trade and is the backbone of the world economy, it is one of the few truly globalised industries
        Vessel prices have                                                                  Around 90% of world trade is carried by the international shipping industry
          dropped 60-70%                                                                    Freight rates significantly depressed in 2009 by a combination of weak demand and massive overcapacity, but are picking up due to
             since Aug 08                                                                    double digit Asian exports, which is a key demand driver for the global container shipping sector
                                                 Overview                                   Sale and purchase activity continues to be slower than in the past. Interest still remains strong, however it is still seen that many
                                                                                             buyers are inspecting potential purchases. The common hold up has been difficulties in financing and prospective buyers’ inability to
Volume of world trade by sea
                                                                                             meet asking prices
General cargo                     32%
                                                                                            New building activity has also lessened relative to the robust activity witnessed over the past quarter, yet prices have held up
Tankers                           26%
Bulk carriers                     15%
Passenger                         13%                                                                                                                                                                                                                                                 
                                                                                            The shipping industry is facing a period of substantial adjustment in the wake of the downturn in the world economy and slump in
Container                          9%
Other                              5%                                                        world trade
                                               Facing the                                   The signs of the beginnings of a recovery in the global economy will stimulate consumer spending and trade. Throughout the last
                                               challenges                                    century the shipping industry has seen a general trend of increases in total trade volume
                                                                                            The annual volume of shipping syndicated loans was at a record low of US$32.9 billion in 2009, substantially below 2008’s volume of
   Share price performance                                                                   circa US$85 billion, reflecting the full effect of the credit crisis

                                                                                                                                                          Percentage of world fleet
                                             20%         15.68% 15.33%
 20                                          16%
                                             12%                                 9.50% 8.40%
                                              8%                                                         4.54% 4.22% 3.62% 3.05%
  0                                                                                                                              2.86% 2.80% 2.70% 2.55% 1.79% 1.66% 1.56% 1.55% 1.40% 1.35% 1.32%
                                              4%                                                                                                                                                   1.22%

                                                                                                                                                                                            Province of…


                                                                                                                    (Republic of)





                                                                                                                                                                                                                                                                                             Iran (Islamic

                                                                                                                                                    Hong Kong,

                                                                                                                                    United States

                                                                                                                                                                                                                                                                          Saudi Arabia
                                                                                                                                                                           United Kingdom

                                                                                                                                                                                                                                                                                             Republic of)

 20-May-09      18-Nov-09     19-May-10

                Shipping Index
                Gulf Navigation

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                            Major market trends                                                                                                                                                  Section 1

                            Shipping future market outlook

 To varying degrees, all
     sectors face supply                                                                        Huge capacity expansions and order book, weak freight rate dynamics due to slowing OECD growth
side threats. Increasing              Containerships
                                                                                                Sector with the greatest relative stress
    likelihood of owners
       defaulting on new
building orders when all
sources of financing are                                                                        Cargo base well diversified, growth closely linked to Chinese industrial production
                                         Bulk carriers
  exhausted. Subject to                                                                         Order book > 40% of existing fleet, though a lot of pending supply may not materialise

 economic shocks, long
      term fundamentals
               are strong                                                                       Near term weakness in freight rates on the back of unpredictable demand
                                             Tankers                                            Outlook expected to improve in 2010, Asia and Middle East experiencing strong growth in oil and
                                                                                                 product exports

                                                                                                LNG production poised to expand rapidly over next five years
                                           LNG ships                                            Exuberant ordering by ship-owners. Charter rates could be pressured by delays in upstream LNG
                                                                                                 projects and reduction in demand from OECD countries

                                                                                                Ageing fleet, utilization linked to oil prices and exploration programs of oil majors
                                                                                                Most exploration activity concentrated in deep waters, which will drive demand for associated vessels

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                         Major market trends                                                                                   Section 1

                         Key sectorial issues

   Severe downturn
                                                           Shipping lines                      Key sector issues
     since Q4 2008

     Vessel earnings
    and asset values                   Sharp decrease in container volumes
      severely tested                                                                        Timing of volume recovery

   Financial health of
liners under scrutiny
                                                    Collapse in f reight rates

                                                                                          Financial health of shipping lines

                                                     Fleet supply pressures

                                                                                            Consolidation – where f rom?

                                       Shipping lines incurring heavy losses

                                            Recapitalisations/restructurings                          Financing

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Industry landscape and key players                               Section 2

Section 2
Industry landscape and key players

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                           Industry landscape and key players                                                                                                Section 2

                           Industry landscape

       Major operators                                                                      Key players                           Comments
     focused internally
          and deferring                                                                                      Cutting back substantial development pipelines
       expansion plans
                                  ‘Big four’                                                                 Portfolio rationalisations currently under consideration
      Regional players                                                                                       Scope for outright disposal of small assets and/or
       under pressure                                                                                         sale of minority stakes in strategic investments

   Shipping lines may                                                                                        Strong regional market positions
       need to divest
                                                                                                             Lack global scale
 High profile (and high       niche players                                                                  Corporate activity completed (Asciano) or under way
priced) acquisitions by
     financial investors                                                                                     Consolidation opportunities?
   suffering in industry
               downturn                                                                                      Active investors in ports until recently

                               Container                                                                     Sale of port assets now on the radar
                             shipping lines                                                                  Substantial exposure to transhipment traffic

                                                                                                             Single customer revenue concentration risk

                                                                                                             Overpaid for acquisitions
                                                                                                             Internal focus/need for refinancing
                                                                                                             Limited interest in further acquisitions

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Industry landscape and key players                                                                                                                                  Section 2

Freight rates

                                                                 Tanker, dry bulk and containerships rates


  (US$kpd/day)                                                     2010E                                   2011E                                      2012E

  VLCC                                                              44,213                                  42,693                                     44,740

  Suezmax                                                           29,977                                  30,578                                     32,046

  Aframax                                                           18,589                                  19,500                                     19,500

  Panamax (LR1)                                                     17,685                                  18,500                                     18,500

  Handymax (MR)                                                     12,811                                  16,625                                     17,063

  Capesize                                                          33,802                                  39,000                                     39,000

  Panamax                                                           26,490                                  26,000                                     26,000

  Supramax                                                          22,954                                  22,100                                     22,100

  Handysize                                                         16,926                                  16,120                                     16,120


  VLCC                                                              37,526                                  37,526                                     45,332

  Suezmax                                                           32,119                                  32,119                                     38,669

  Aframax                                                           14,205                                  14,205                                     18,279

  Capesize                                                          27,656                                  27,656                                     25,888

  Panamax                                                           20,044                                  20,044                                     18,097

  Handysize                                                         13,663                                  13,663                                     12,650

  Source: CRS; Imarex; Company data, Morgan Stanley Research. MS dry bulk estimates are for 2-year T/C for Panamax/Handymax and 4-year TC for Capesize. N/A: Rates not
          available from IMAREX.Tanker rate forecast is a blended average of spot and time charter rates

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Industry landscape and key players                                                                                                                Section 2

Valuation summary and estimates

                                                                         P/E           EV/EBITDA     Dividend yield   DPS/CEPS      Net debt/EV   P/NAV

                                                                 10E           11E     10E    11E     10E     11E     10E    11E    10E    11E    Current

  Tankers                                             Average    65.5x         54.8x   9.8x   9.0x    6.3%    6.4%    44%    43%    45%     46%     123%

  Dry Bulkers                                         Average    19.9x         18.2x   8.9x   7.8x    2.6%    3.2%    15%    17%    49%     51%     126%

  Containers & Conglomerates                          Average    27.0x         51.7x   7.1x   5.4x    0.4%    2.9%     0%     1%    47%     47%     112%

  Shipbuilders                                        Average     7.0x          7.7x   5.5x   6.0x    2.2%    2.2%     n/a    n/a    2%     2%      165%

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Port sector outlook                                              Section 3

Section 3
Port sector outlook

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                        Port sector outlook                                                                                                                                                                                                                               Section 3

                        Volumes have fallen significantly since Q4 2008

Recent stabilisation                           Sector developments                                                                                              Container throughput
      in tariffs and                                                                                                Historical avg (1991-2008): Global throughput = 10.5%; Global GDP = 3.0%
    volume growth
                             Container throughput has grown at a multiple

                                                                                         Growth (%)
      Strength and            of 3.4x GDP over the last 15 years                                        8
    sustainability of
                              – global economic growth, global trade,                                   2
 recovery uncertain               transhipment

                             Significant decline in volumes in Q4 2008 and


















                              throughout 2009

                                                                                                                                                                             Global GDP                                Throughput
                             Approximately 10% decline in 2009

                                                                                                                                            Forecast supply/demand balance
                             Volumes have recovered strongly in recent                                        79.6%                              79.5%                            78.2%                    74.3%                           60.0%                         59.0%
                                                                                                      5%                                                                                                                   4.5%
                                                                                                                                              3.7%                                        3.7%
                                                                                                      4%                                                                      3.6%
                             Uncertainty over timing and strength of                                                                                                                                                                                                      2.7%
                                                                                                      3%      2.4%                                                                                                                              2.4%

                              recovery                                                                                                                      2.3%
                                                                                                      2%                   1.5%
                              – 5.6% projected average p/a throughput                                 1%                                                                                                                                                          0.7%
                                  growth between 2009 – 2014                                          0%


                                                                                                                                                                                                                  South Asia

                                                                                                                                                   South East Asia
                                                                                                                                                     Far East &
                             Decline in M&A activity and valuations

                                                                                                                        Capacity utilisation 2014E                                         Throughput growth                            Capacity growth

                                                                                          Note: Throughput and capacity average annual growth 2008 – 2014
                                                                                          Source: Drewry

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Shipping financing considerations                                Section 4

Section 4
Shipping financing considerations

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                               Shipping financing considerations                                                                                                                                      Section 4

                               Implications for the bank/loan market

    Recent shocks to the                                                                           Limited willingness of banks to underwrite substantial amounts and to take underwriting risk
   financial system have                 Syndication and                                           Club deals will be the preferred solution until the bank sector has normalised again
fundamentally impacted                    underwriting                                             Hold amounts have fallen in general, thereby making the funding of large transactions more challenging
  the way banks assess                                                                             Strong client relationship crucial for liquidity allocation and thus ability to provide funding
      and structure credit
                                                                                                   Euribor/Libor is no longer reflecting banks’ funding costs and key assumption of banks that they can
risks. This has recently
                                                                                                    refinance themselves at any time in the interbank and money market is not valid any more
      led to difficulties in                     Pricing                                           Higher refinancing costs are passed through to borrowers, irrespective of relationship considerations.
             the raising of                                                                         Further, fundamental re-pricing of risk is taking place leading eg to margin ratchet structures
       finance for various                                                                         Dynamic pricing process based on immediate feedback from banks (book-building approach)
   transactions showing
  non standard features
                                                   Tenor                                           Strong tendency for shorter maturities leading to refinancing risk issues

                                                                                                   Lower leverage and more rigid covenant requirements
                                              Covenants                                            Reduced market liquidity and uncertain refinancing costs force banks to request market flex (for both
                                                                                                    fees and margin), MAC and clear market clauses

                                                                                                   Credit analysis has generally become more conservative
                                                                                                   Greater scrutiny of committees with regards to the underlying business case and data
                                          Credit process
                                                                                                   Outcome of banks’ credit decision currently hard to predict
                                                                                                   External rating increasingly important for borrowers

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                           Shipping financing considerations                                                            Section 4

                           Growing role of export credit

The recent credit crisis       Export credit agencies (‘ECAs’) are government agencies that support a countries
      has significantly
     expanded the role          manufacturers, contractors and investors
              of ECAs
                               ECAs typically provide financial guarantees to banks that fund the purchase of equipment
 Deutsche Bank has a
                                from the supporting country
    strong franchise in
arranging ECA backed            –     in some instances the ECA will be the funding entity
  financing structures
                               Traditionally ECAs have stepped in when financing was difficult to obtain due to market
                                dislocation and/or political risk in emerging economies
                                –     US Exim and European ECAs have provided guarantees for over 50% of all aircraft
                                      deliveries in 2009
                                –     JBIC, KEIC/KEXIM and Sinosure providing financing for vessels built in Japan, Korea
                                      and China

                               Given current market conditions there is a growing demand to utilise ECA supported
                                financing in overseas jurisdictions such as Europe, US and Australia
                                –     important to still undertake complete project due diligence

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                         Shipping financing considerations                                                                                                                          Section 4

                         Top bank deals of 2009

 There were only three        Credit                                                       Deal value       Deal
                               date                                   Borrower              (US$m)       nationality                       Mandated arranger parent
    deals greater than
  US$1bn in 2009, with                                                                                                  Mitsubishi UFJ Financial Group, Citi, Danske Bank, HSBC, JPMorgan,
                           23 Jan 09              AP Moller – Maesk A/S                       6,500     Denmark         Nordea
           the market
                           30 Sep 09              Nippon Yusen Kaisha (NYK Line)              2,000     Japan           Mitsubishi UFJ Financial Group
characterised by large
            club deals     07 May 09              Royal Caribben Cruises Ltd                  1,050     United States   BNP Paribas, Nordea Bank AB, SEB
                                                                                                                        Arab Bank plc, BNP Paribas, Bank of China Ltd, Scotia Capital,
                                                                                                                        Mitsubishi UFJ Financial Group, Calyon, Citi,
                                                                                                                        Commercial Bank of Qatar, Credit Suisse, DBJ, Deutsche Bank,
                                                                                                                        Export-Import Bank of China, HSBC, Standard Chartered Bank,
                           12 Jun 09              Nakilat Inc                                  949      Qatar           Sumitomo Mitsui Banking Corp
                                                                                                                        BNP Paribas, Banco Espirito Santo de Investimento, Santander,
                                                                                                                        Banco do Brasil, Caylon, HSBC, SG CIB, Caixa Geral de Depositos,
                           09 Oct 09              Odebrecht Drilling Norbe VIII & IX LLC       905      Brazil          Exportfinans, KEXIM, NIBC Bank, WestLB
                           05 Jan 09              Stena AB                                     850      Sweden          BNP Paribas, Citi, Deutsche Bank, HSBC
                                                                                                                        BNP Paribas, Caylon, DnB NOR, Danske Bank, ING,
                                                                                                                        Nordea,Banque Federative du Credit Mutuel, Eksportfinans,
                           30 Jun 09              SeaDrill Ltd                                 800      Norway          NIBC Bank, Natixis
                                                                                                                        ING, UniCredit Group, Deutsche Bank, DnB NOR Bank,
                           16 Jul 09              Bluewater Holding NV                         771      Netherlands     Fortis Bank Nederland, HSH Nordbank, Lloyds Banking Group
                           28 Oct 09              Ncl Corp Ltd                                 750      United States   Commerzbank Group, DnB NOR, Nordea
                           05 Nov 09              SeaDrill Ltd                                 725      Norway          DnB NOR
                           25 Feb 09              Hapag-Lloyd AG                               660      Germany         Citi, KfW
                                                                                                                        Mitsubishi UFJ Financial Group, ING, Mizuho,
                           12 Jun 09              Etesco Drilling Services                     650      Brazil          Sumitomo Mitsui Banking Corp, SG CIB, Standard Chartered Bank
                           17 Mar 09              Krishnapatnam Port Co Ltd                    572      India           SBI Capital Markets
                           25 Sep 09              Moppon Yusen Kaisha (NYK Line)               550      Japan           Mitsubishi UFJ Financial Group
                           30 Jul 09              Canival Plc                                  546      United States   BBVA, BNP Paribas, HSBC, SG CIB, UniCredit
                           Source: Dealogic

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