Pareto World Wide Shipping II AS Kvartal 1

Transkript

1 Pareto World Wide Shipping II AS 2010 Kvartal 1

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3 Pareto er en uavhengig og ledende aktør i det norske markedet for finansielle tjenester. Selskapet har kontorer i Oslo, Stavanger, Bergen, Trondheim, Kristiansand, Bryne, Singapore og New York. Pareto ble stiftet i 1986, og har utviklet seg til å bli et konsern med et omfattende produktspekter. Selskapet har mer enn 400 ansatte. Den sterke utviklingen er muliggjort gjennom dedikerte og dyktige medarbeidere, skarpt fokus på å utvikle gode produkter, kontrollert vekst og ikke minst ved at våre kunder og forretningsforbindelser har vist oss tillit. Pareto Project Finance AS Pareto Business Management AS Pareto Securities AS Pareto Forvaltning AS Pareto Eiendom AS Pareto Bassøe Shipbrokers AS Pareto Bank ASA Pareto Universal Fonds AS Pareto Offshore AS Pareto Dry Cargo AS Pareto PPN AS JGO Shipbrokers AS

4 Forvalters kommentar Gjennom første kvartal har vi sett en positiv utvikling innenfor de fleste shipping- og offshoresegmentene. Mye tyder på at vi kan ha passert bunnen verdimessig for denne gang. I følge ClarkSea Index har den gjennomsnittlige inntjening i segmentene bulk, tank, gass og container i første kvartal 2010 vært på USD per dag mot et snitt på USD , og per dag i henholdsvis fjerde, tredje og andre kvartal Ser vi på markedsverdiene av skip, så har de fleste segmentene utviklet seg positivt gjennom første kvartal Blant annet har tank- og containerverdier, som har vært i kontinuerlig fall siden finanskrisen inntraff, begynt å stige igjen og vi ser stadig flere kjøpere av tonnasje. Det som imidlertid kan legge en demper på shippingsektoren fremover er den store ordreboken. Ordreboken er i de fleste segmentene et sted mellom % av dagens flåte. Følgelig er shippingsektoren avhengig av en betydelig etterspørselsvekst for å kunne absorbere ordreboken og fortsatt se økning i rater og verdier. Per i dag er det Kina som er den store driveren på etterspørselsiden, og således er shippingsektoren utsatt dersom Kina skulle redusere sin vekst fremover. Innenfor offshore- og oljeservice segmentet har vi sett en aktivitetsøkning gjennom første kvartal 2010 med økning i antall kontraktstildelinger sammenlignet med tidligere kvartaler. Oljeprisen har også utviklet seg positivt og har den siste tiden stabilisert seg på over USD 80 per fat. Når det gjelder investeringen i Mosvold Middle East Jack-up Ltd («MMEJU»), er dette selskapet fortsatt i en voldgiftsprosess med verftet i forhold til mulig kansellering av riggene. MMEJU har p.t. full fokus på denne prosessen. Avhengig av endelig utfall i voldgiftssaken kan det være behov for ytterligere kapital i selskapet, men hovedmålet for MMEJU vil være å få fullt medhold i at selskapet kan kansellere riggene og derav søke erstatning og tilbakebetaling av selskapets (helt eller delvis) innbetalte beløp. I forrige rapport ble det orientert om Indian Chemical Tankers II DIS (ICT II) og utfordringene til befrakter West Asia Maritime Ltd (WAM). WAM står fortsatt overfor store likviditetsutfordringer, og er i disse dager svært nære en mulig konkurs. ICT II har vært i stadige forhandlinger med WAM i løpet av første kvartal, og i februar ble partene enige om å selge skipene til WAM for skraping og kansellering av certepartiet. Som en del av avtalen skulle ICT II få en fordring mot WAM pålydende ca. USD 5 millioner, som skulle nedbetales med månedelig avdrag over en 5 års periode. Fordringen skulle løpe med en årlig rente på 1 måneders Libor punkter. Den 5. april 2010 misligholdt WAM sin forpliktelse av første delinnbetaling under fordringen. ICT II følger situasjonen nøye, og vurderer ulike sanksjonsmuligheter og muligheter for konkursbegjæring. Dersom ICT II ikke klarer å drive inn noe av fordringen mot WAM, og i verste fall taper resterende fordring, vil dette ha en negativ effekt på kursen i Fondet tilsvarende NOK 2 per aksje sammenlignet med verdivurderingen fra 1. november Utover hendelsen i ICT II er det ingen vesentlige hendelser å rapportere om i Fondets underliggende investeringer. Både styret og forvalter tror at 2010 bør kunne by på flere interessante investeringsmuligheter for Fondet. Kapitalsituasjonen i Fondet er god og ved utgangen av første kvartal 2010 hadde Fondet ca. 151 millioner i tilgjengelig likviditet. Dette gir Fondet fleksibelt til både å følge opp eksisterende portefølje og eventuelt foreta nye investeringer. Fondet har gjennom første kvartal kjøpt seg opp i annenhåndsmarkedet i Partankers V IS, Pareefers II KS og River Cruise KS. Totalt har Fondet gjort nye investeringer for NOK 1,8 millioner i første kvartal 2010.

5 «Siste verdijusterte egenkapital er NOK 132 per aksje» NOK 230 Kursutvikling Pareto World Wide Shipping II Emisjon I (USD/ NOK 5,65) Emisjon II (USD/ NOK 5,47) Emisjon III (USD/ NOK 5,09) Emisjon IV (USD/ NOK 5,10) VEK (USD/NOK 5,95) VEK (USD/NOK 7,01) VEK (USD/NOK 6,60) VEK (USD/NOK 5,74) Omfatter ikke omsetning i annenhåndsmarkedet. Verdi- og kapitalutvikling Kursutvikling Kursutviklingen som rapporteres for Fondet er basert på verdijustert egenkapital («VEK»). Verdivurderingen av Fondets investeringer er basert på innhentede markedsverdier fra megler(e)/tilrettelegger(e) hvor anerkjente verdivurderingsprinsipper og bransjemessig standarder blir lagt til grunn. Vi gjør oppmerksom på at i dagens urolige marked er det betydelig usikkerhet knyttet til verdivurderingene da det gjennomføres få transaksjoner. Siste kurs basert på verdijustert egenkapital ble fastsatt 1. november, og er NOK 132 per aksje. Fondet gjør halvårlige verdivurderinger av selskapet, og rapporterer således VEK to ganger per år. Fra og med 2010 har Fondet besluttet å foreta denne verdivurderingen per og 31.12, og ikke og som tidligere. Følgelig vil neste offisielle VEK foreligger per og rapporteres til investorene i kvartalsrapport for andre kvartal Direkteavkastning Utbetaling av kapital til investorene skjer innenfor aksjelovens regler. Fondet vil tilstrebe en årlig utbetaling til aksjonærene på 5 12 % av innbetalt kapital fra det tidspunkt Fondet er tilnærmet fullt investert. Utbetaling til aksjonærene kan skje i form av utdeling av utbytte eller ved nedsettelse av aksjekapitalen. Forvalter og styret vil evaluere markedssituasjonen gjennom Dersom utviklingen i underliggende prosjekter og kapitalsituasjonen tillater det, vil styret vurdere en utbetaling til investorene i 2010.

6 MNOK 450 Kapitalutvikling Kommitert kapital VEK Fond Utbetalt Fri kapital Gjenstående innbetalinger VEK prosjekter* * korrigert for latent skatt/skattefordel Investeringstakt og kapitalutvikling Kommittert kapital i Fondet var opprinnelig NOK 388 millioner. Fondet har en portefølje bestående av andeler i totalt 25 skip, og har en kontantbeholdning per på ca. NOK 151 millioner. Av dette er NOK 18 millioner planlagte innbetalinger på allerede kommitterte investeringer, mens resterende NOK 133 millioner er kapital som vil brukes til en kombinasjon av nye investeringer og oppfølging av eksisterende prosjekter. Porteføljen til Fondet gjennomgås jevnlig av forvalter med tanke på å evaluere risikoen for ytterligere kapitalbehov i prosjektene. Prosjektene rangeres kontinuerlig fra forvalters side basert på følgende parametere: Befrakters soliditet Markedsverdi av skip Betingelser i låneavtaler Certeparti betingelser (ratenivå etc.) Markedssituasjon i det respektive segment Basert på overnevnte parametere blir alle prosjekter klassifisert i en risikokategori fra 1 til 4, hvor kategori 1 er prosjekter med lavest risiko og der vi anser det som lite sannsynlig at ytterligere egenkapital må kalles inn, mens kategori 4 er prosjekter der vi anser det som sannsynlig at det vil bli nødvendig med tilførsel av ytterligere egenkapital. Denne rangeringen danner så grunnlaget for våre simuleringer av totalt kapitalbehov i porteføljen innenfor Fondets restansvar. Forvalters og styrets vurdering tilsier at Fondet på nåværende tidspunkt bør holde av ca. NOK millioner for å kunne møte sine forpliktelser i eksisterende prosjekter fremover. Følgelig er forvalter og styret enig om at Fondet bør ha en tilgjengelig investeringskapital på i overkant av NOK 50 millioner. Styret og forvalter er av den oppfatningen at Fondets avsetninger for mulige innkallinger av egenkapital sannsynligvis har passert et toppnivå, og at disse vil reduseres i takt med en eventuell bedring i markedet. Annenhåndsomsetning Per utgangen av 1. kvartal 2010 er det utstedt totalt aksjer i fondet. Pareto Project Finance AS («PPF») legger til rette for aktiv annenhåndsomsetning av aksjer. Siste omsetningskurs er NOK 150 per aksje (omsatt ). Investorer som ønsker å kjøpe eller selge sine aksjer kan ta kontakt med sin rådgiver.

7 Shippingporteføljen Fondet vurderer porteføljen til å være relativt solid, der hovedtyngden av prosjektene løper med bareboat certepartikontrakter i henhold til Fondets investeringsmandat. Gjennomsnittlig vektet certepartilengde er 5,0 år. Porteføljen inneholder andeler i totalt 25 enheter, og fordelt på segmentene bulk, tank, kjemikalie, offshore, reefer og container. Finansiering Fondets finansieringssituasjon er gunstig gitt rådende markedsbetingelser. Hovedvekten av lånene er inngått da utlånsmarkedet fungerte vesentlig bedre, slik at marginer og gjeldsgrad i prosjektene i Fondet er betydelig bedre enn hva man kan forvente å oppnå i dagens marked. Utfordringene på finansieringen knytter seg imidlertid til å opprettholde denne strukturen. Dersom prosjektene kommer i brudd med betingelser i låneavtalene, kan man risikere at banken vil kreve et betydelig marginpåslag på lånet. Fondet har kun investert i et selskap som ikke er fullfinansiert. Dette gjelder Mosvold Middle East Jack-up Ltd. Imidlertid går det, som nevnt i forrige kvartalsrapport, mot en voldgift mellom verftet og selskapet og følgelig har selskapet full fokus på denne prosessen. Avhengig av endelig utfall i voldgiftssaken, kan det være behov for ytterligere kapital i selskapet. Dog er hovedmålet for Mosvold Middle East Jack-up Ltd å få fullt medhold i at selskapet kan kansellere riggene og derav søke erstatning og tilbakebetaling av selskapets (helt eller delvis) innbetalte beløp. Valuta/valutarisiko Som presisert i prospekt (og Informasjonsmemorandum) er investeringer som gjøres i valuta utsatt for svingninger mellom den underliggende valutaen og NOK. Fondet foretar ingen valutasikring, og dette innebærer at endringer i valutakurser påvirker den verdijusterte egenkapitalen i de underliggende investeringene. Ca. 41 % av verdijustert egenkapital i Fondet eksponert mot USD og ca. 4 % mot EUR. Ved verdifastsettelsen per 1. november 2009 ble følgende valutakurser benyttet: USD/NOK 5,7448 EUR/NOK 8,4542

8 Shippingfondets prosjekter Kjøpsdato Prosjekt / selskap Antall skip Segment Byggeår Certeparti slutt Type kontrakt Parbulk II IS 0 Bulk 1996 N/A Partankers V IS 2 Tank Timecharter Indian Cheimical Tankers II IS 2 Kjemikalie Bareboat Vestland Seismic IS 1 Offshore Bareboat Neptune Subsea IS 2 Offshore 2010 Spot/Asset play Brøvig Stainless Steel II IS 2 Kjemikalie Spot/Asset play Partankers IV IS 1 Tank Bareboat ParBarge IS 2 Offshore Bareboat Mosvold Middle East Jackup Ltd 2 Offshore 2010 Spot/Asset play Bukit Timah Offshore DIS 3 Offshore Bareboat Pareefers II KS 4 Reefer Bareboat Partankers VI IS 1 Kjemikalie Bareboat ParChem IS 2 Kjemikalie Bareboat Parchem II IS 1 Kjemikalie Bareboat Total 25 5,0 *VEK på de underliggende prosjektene er presentert før eventuell latent skatt. Den presenterte VEK har tatt utgangspunkt i forrige verdivurdering med tillegg/fratrekk fra kapital som har blitt innbetalt/utbetalt av selskapet siden sist verdivurdering. Fondets transaksjoner i løpet av første kvartal Kjøp Forvalter og styret så at markedet tok seg opp i løpet av første kvartal 2010 og vurderte tidspunktet til å gjøre nye investeringer som gunstig. Fondet kjøpte derfor andeler i enkelte prosjekter i annenhåndsmarkedet. Totalt gjorde Fondet investeringer i annenhåndsmarkedet for ca. NOK 1,8 millioner i første kvartal Målet til Fondet var dog å investere et større beløp enn det som ble investert, men som følge av for stor avstand mellom selgere og kjøpere ble ikke flere transaksjoner gjennomført. Investeringene som ble gjort er følgende: Partankers V IS, kjøpt 1 % til kurs USD Pareefers II KS, kjøpt 1 % til kurs USD River Cruise KS, kjøpt 3 % til kurs USD Av investeringene over, er kjøpet i Partankers V IS og Pareefers II KS oppkjøp i prosjekter som Fondet allerede er investert i. Når det gjelder River Cruise KS er dette en ny investering for Fondet. River Cruise KS: River Cruise KS eier to elvebåter som leies ut på en 6 års gjenværende kontrakt til Viking River Cruises S.A. Skipene inngår i Viking River Cruise sin flåte, som operer på ulike destinasjoner i Europa. Investeringen er forventet å gi en høy løpende avkastning og lavt korrelert med øvrige tradisjonelle shippingsegmenter. Totalt har Fondet investert ca. NOK 0,8 millioner i River Cruise KS. Innbetaling av uinnkalt kapital Fondet har i løpet av første kvartal 2010 måttet innbetale totalt ca. NOK 5,9 millioner i uinnkalt kapital (ytterligere egenkapital). Innkallingen har vært relatert til prosjektet Partankers IV IS og er i henhold til det som ble estimert i rapporten for fjerde kvartal Selskapet måtte kalle på kapitalen for å nedregulere gjelden ettersom selskapet var i brudd med minimum verdi klausulen i låneavtalen. Skipet i Partankers IV IS går imidlertid på en 4 års gjenværende bareboat kontrakt til en solid motpart, og følgelig bør det være stor sjanse for at Fondet vil kunne gjenvinne den innskutte kapitalen. Siden Fondets oppstart har Fondet totalt måtte innbetale ca. NOK 35,3 millioner i uinnkalt kapital. Store deler av dette er knyttet til prosjekter der befrakter har misligholdt sine betalingsforpliktelser og etter all sannsynlighet er en stor del av denne innskutte egenkapitalen tapt i disse prosjektene. Fondet har hittil innbetalt uinnkalt kapital i følgende prosjekter: Glory Container IS, Parbulk II IS, Indian Chemical Tankers II og Partankers IV. I april ble Fondet varslet om innkalling av uinnkalt kapital på USD 2 millioner i Partankers VI grunnet brudd med betingelser i låneavtalene. Dette utgjør NOK ca. NOK 4,8 millioner for Fondet. Salg Indian Chemical Tankers II DIS (20 %): I februar solgte Indian Chemical Tankers II DIS (ICT II) skipene til West Asia Maritime Ltd (WAM) for skraping og kansellering av certepartiet. Skipene ble solgt til WAM til en pris marginalt over skrapverdier,

9 Befrakter Disponent Eierandel VEK' N/A Skips AS Tudor 20 % - SBM Offshore N.V. Camillo Eitzen & Co ASA 17 % West Asia Maritime Ltd. Arne Blystad AS 20 % Albatross Shipping Ltd. Klaveness Corporate Services AS 15 % N/A Neptune Offshore AS 11 % N/A Brøvigtank AS 25 % Lavin Ltd. / BW Shipping Ltd. Bergshav Shipping AS 10 % Marine Subsea AS Camillo Eitzen & Co ASA 10 % N/A Mosvold Shipping Group 4 % - Swiber Offshore Marine Pte. Seabulk AS 8 % Lavinia Corporation P. D. Gram & Co AS 6 % STX Europe Camillo Eitzen & Co ASA 40 % Heung-A Shipping Ltd Brøvigtank AS 50 % Eitzen Chemical ASA J B Ugland Shipping AS 13 % Certeparti- og segmentfordeling (basert på VEK) Offshore 43 % Spot/Asset Play 33 % Bareboat 57 % Reefer 2 % Tank 18 % Timecharter 10 % Kjemikalie 37 % og som gjorde at ICT II kunne innfri selskapets lån. Som en del av avtalen og betaling for tapt certeparti skulle ICT II få en fordring mot WAM pålydende ca. USD 5 millioner (se forvalters kommentar for ytterligere detaljer). Utover fordringen mot WAM har ikke ICT II andre eiendeler av verdi, og således står verdien av ICT II og faller på hvor mye av fordringen fra WAM selskapet klarer å inndrive. Fondet har p.t. fått utbetalt NOK 4 millioner av en investering på NOK 15 millioner i ICT II. Utbetalinger fra underliggende investeringer Det siste året har Fondet mottatt minimalt med utbetalinger fra underliggende prosjekter. Dette forbedret seg noe i fjerde kvartal 2009 hvor Fondet mottok totalt NOK 7,1 millioner i ubytte fra underliggende investeringer. Som et resultat av forbedret marked er det forventet at Fondet vil begynne å se at ytterligere kapital utbetales fra de underliggende investeringene i løpet av I løpet av første kvartal 2010 har Fondet mottatt totalt NOK 10,4 millioner i utbetalinger fordelt på følgende prosjekter: Indian Cheimical Tankers II IS Bukit Timah Offshore DIS Partankers V IS NOK 0,6 millioner NOK 0,9 millioner NOK 8,8 millioner

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11 Markedskommentar Kilde: Pareto Project Finance AS Pareto World Wide Shipping II AS har bygget opp en diversifisert portefølje innenfor de ulike shipping og offshoresegmenter. I hver kvartalsrapport vil vi oppdatere Fondets investorer på shipping og offshoremarkedet. Under følger en oppdatering på de ulike segmentene Fondet er eksponert mot. Shipping The ClarkSea Index below, which mirrors the earnings in the different shipping markets, gives a good illustration of the overall market development. After a turbulent 18 months the market seems to have bottomed out and the last months we have witnessed that charter rates and values have started to rise again. Average earnings so far in 2010 have been about USD 15,600/day, quite a lot stronger than the average for 2009 of USD 11,300/day, but still weaker than the average the last ten years of USD 21,200/day. (source: Clarksons) This shows that the recovery has continued over last six months and the market is starting to normalize. There has been a dramatic turnaround in both GDP and industrial production, but it is important to remember that we are recovering from a bottom level. In January 2010 the index of world industrial production was still 14 % below its previous peak in January Hence, it is important to see beyond the single year on year growth figure to understand the real shape of he current global economy. Although it is still too early to say that we are now in good shape the economy certainly seems to be on a fairly well established recovery trend. Asia has been the main driver of the global recovery. China seems to be on full throttle but India, South-Korea, Taiwan, Thailand and Singapore has also experienced strong growth in industrial production the last 12 months. Japan s industrial output also finally turned positive in December So far recovery in the OECD area has been quite modest. In the United States industrial production got into positive growth in January 2010, recording a y-o-y increase of 0.9 %, compared with minus 10 % in Europe is also improving, with industrial production in December 2009 down -5 %, compared with -21 % in April It may well move into positive growth during 1H All in all the world economy has recovered lost ground, but it still has some way to go before it generates new growth. Turning to seaborne trade, Clarksons statistics show that during 2009 seaborne trade declined by almost 5 %, substantially more than previously anticipated. The fall was spread across all commodities, with oil down by 3.9 %, dry bulk down by 3 % and the container trade down by 9.6 %. Looking ahead it is broadly expected a modest recovery in shipping demand as the world economy has started on a recovery trend and world industry and seaborne trade are both expected to grow in But this growth will still leave trade volumes below the previous 2008 peak.

12 Tankers The last six months have showed two very different situations for crude and product tankers. Crude tanker earnings picked up from the bottom last year, and VLCCs reached a peak of USD 75,000/ day in January 2010 and fluctuating around $50 60,000/day thereafter. For product tankers the situation was quite different as the market had its worst hammering since the 1980s. MR earnings bottomed at USD 3,000/day in October Some recovery has been seen since then, but MRs are still struggling to get more than USD 10,000/day. 7.6m dwt of Aframaxes are due for delivery in 2010 and the single hull fleet is 5.3m dwt. Demand growth is expected to resume for all crude tankers. Deliveries of 45.2m dwt must be balanced against a similar amount of single hull tonnage due for phase-out. If both are realised the tanker fleet will end the year at 444m dwt which is only an increase of 1 % from today. On deliveries there have been clear signs of slippage and, with pressures on the shipyards, we will have to wait on how many ships get delivered. Against this background, 2010 looks like a re-run of 2009, with volatility and earnings depending very much on trends in storage and slippage. (source: Pareto Securities) It is interesting to see that crude tanker earnings could be so strong in a year when tanker demand fell by 2.8 % and the fleet grew by 7 %. Chemical Tanker The deepsea chemical tanker market is seeing good volumes from Europe and US to the Far East on the back of low gas prices (low chemical production cost), but low volumes going back which is hurting margins. The nominal chemical tanker orderbook stands at 23 % of the current fleet. However, slippage was high in 2009 at 31 % of the orderbook as per the start of the year, and continues at an even higher pace into 2010 with 51 % slippage reported by Worldyards year to date. On top of this 12 % of the orderbook was cancelled last year and the figure is 3 % so far this year. So far in 2010, scrapping of chemical tonnage has already surpassed the whole of Taking this in to account we may se negative fleet growth in 2010 followed by a modest fleet growth of 3 % in 2011 before a further fleet reduction of more than 4 % in There is therefore reason to be optimistic for the chemical rates going forward after we have seen bottom levels the last year. (source: Pareto Securities) Looking a head, 2010 should be quite an interesting year for tankers. So far the VLCC fleet has increased only about 0.5 % since September. Slippage and the declining performance of single hull tankers do much to explain the firming of the market. Over the next three years deliveries of VLCCs will average about 18m dwt. There are 22.6m dwt of single hull tankers due for phase-out, and in 2010 we may in the extreme see negative fleet growth if slippage continues at 50 % and all single hulls are phased out. In the Suezmax and Aframax segment the fleet growth so far in 2010 has been somewhat higher. Remaining Suezmax deliveries for 2010 is about 6.5 mdwt compared to a single hull fleet of 4.5 mdwt. Phase-out would therefore neutralize much of the deliveries but not as much as for VLCCs. (source: Pareto Securities) Demand for chemicals is closely correlated with industrial production, and we have seen PMI indices recover significantly from bottom levels. Demand in the East is good whilst Western demand is still weak, causing disruption to trading patterns and utilization. Given a rebound in Western demand and continued demand in the East, the chemical market will recover significantly.

13 Bulk Carrier The bulk market started to recover as we entered the summer last year, and it only strengthened as we entered At the end of last year Capesize earnings had risen to $80,000/day and Panamaxes to $27,000/day. The rally lasted a few weeks before falling again, but we still saw profitable levels before the year ended. The fall in trade was limited to 3 %, thanks to China, but the fleet grew by 9.9 %, so in theory a supply/demand gap of 13 % opened up during the year. In global shipping market terms, this is a relatively small surplus and it is not altogether surprising that rates were volatile during the year and managed one or two periods when earnings were reasonably profitable, even for modern ships, and well above expectations. The drybulk orderbook is threatening, especially for Capesize vessels where the outstanding orderbook still is about 80 % of the existing fleet. Capesize deliveries have already started to increase and 2010 and 2011 will expectedly increase the fleet by 30 %. So far in 2010 only one Capesize have been scrapped. The Panamx orderbook is equal to 53 % of the fleet, so although it is very large it is more manageable than for Capesizes. The Panamax fleet is expected to grow by 9 % a year until 2012 so there is definitely a need for China to keep full steam a head. (source: Pareto Securities) For Handysized vessels, the orderbook is a little less threatening although it represents 35 % of the existing fleet. The Handysize fleet is however characterized by many old vessels and it is expected that this segment of the fleet will face demolition to a large extent, and because of this fleet growth is projected at 3.9 % in 2010 and 4.8 % in Looking ahead to 2010, provided China continues to expand as rapidly as it did in 2009 we expect bulk trade to grow by 7 % and the fleet by around 12 %. The bulk market is as dependant on China as ever, and except for the smaller vessels, the market will heavily depend on further slippage from the yards and hopefully we will also see some cancellations. Otherwise it looks tough for the larger dry bulk vessels in the years to come. Container Volumes on most container trades dived sharply in 2009, with global container trade estimated to have declined (for the first time on record) by 9.0 % according to Clarksons. This compares to average annual growth of over 10 % in the period Today the market remains under extreme pressure, but some positive signs are starting to appear. Volumes on many container trades are now at least registering y-o-y growth. Newbuilding contracting has completely stopped and deliveries have slowed, reducing some of the supply side pressure on the sector. Following deliveries of 1.5m TEU in 2008, 2009 saw a total of 1.1m TEU of new deliveries. Non-delivery of capacity scheduled to join the fleet stood at 45 % in 2009, and slippage and cancellation are expected to remain significant in 2010, when 0.9m TEU is projected to actually be delivered. Container vessel demolition has also increased. With demand growth potentially set to outpace supply expansion in 2010, the extreme pressure on the container markets may gradually ease. Still, at this stage, any improvements are relatively fragile. There is a long way to go to recover the ground lost in 2009, and as liner companies re-activate idle tonnage, recent positive trends will be tested. Reefer After sustaining a mixed year in 2008, 2009 proved to be an extremely bad year for the reefer spot market. Initial signs for the opening part of the 2010 peak season have been none too optimistic either. In 2009, the traditional peak season was effectively entirely suppressed by the after-effects of the economic crisis limiting consumption. Usually, large volumes of bananas begin to move from Ecuador and Chile into Northern Europe, the Mediterranean and Russia during the first quarter, and this tends to translate into cyclically higher rates at this point in the year. However, this did not happen in 2009, and so far this year, signs have not been promising. Global demand is still suffering and the unpredictable impact of occurrences like the recent massive earthquake in Chile and the onset of El Nino are likely to have hit fruit harvests and thus exports. On the positive side, the specialized reefer fleet has been in continuous decline since the mid-nineties, and the fact that there are now just twelve vessels left on the orderbook demonstrates the lack of enthusiasm for the sector which has persisted throughout the last decade. More than half the fleet is now more than 20 years old. The specialized reefer fleet continues to receive competition from container lines, which have increasingly penetrated into traditional reefer cargoes in recent years.

14 However, trades remain, such as the deep-sea seafood trades out of Mauritania and Morocco, where infrastructure is not sufficient to allow for containerization, and it may be that replacement demand for new reefers eventually materializes to cover such niches. Ro-Ro The Ro-Ro fleet is typically fragmented into four main vessel types, and the fleet, though relatively aged, offers unusual flexibility, being able to carry diverse cargoes and serve ports that could otherwise be difficult to access for more conventional vessels, particularly fully cellular containerships. The average age of a Ro-Ro vessel has now reached 21.5 years, and 54 % of the fleet is more than 20 years of age. The Ro-Ro orderbook is currently extremely biased towards the larger end of the sector, and 81 % of capacity on order is for vessels of 10,000 dwt and above. The global downturn saw volumes in the sector falter, and in response, a significant proportion of the fleet was idled, while demolition activity also soared. The large proportion of the aged fleet that is still being sent to the scrap yards may give rise to some replacement demand when volumes eventually return to health. However, taking the movement of deep-sea Ro-Ro freight as one indicator of the health of the sector, transatlantic Ro-Ro volumes in February were reported to still be significantly subdued, with a slowdown in the movement of construction equipment and machine tools. Meanwhile, seaborne car trade volumes were also subject to the negative effects of the global crisis, and the downturn in the car market had a significant impact on the car-carrying sector, with volumes into the major importing economies of the US and EU estimated to have fallen by almost 30 % in Although the collapse in the industry is now easing thanks to measures such as government stimulus packages, as of February 2010, around 12.5 % of global PCC capacity was still believed to be idle, and more than 100 PCCs were scrapped in The large PCC owners may therefore have started to balance the supply/demand picture by their very rapid response to the demand fall by extensive scrapping. Newbuilding, S&P & Demolition Newbuilding activity came almost to an absolute stand still the first half of 2009, but since then contracting activity has picked up somewhat. Of the total 46 mdwt of new orders placed last year, almost 80 % was in the second half. In the first quarter of 2010 approximately 12 mdwt of new orders have been placed globally. Shipyards are still struggling to attract significant investment. The main reason for this is thought to be the fact that the global orderbook is still extremely large. Most of the existing orderbook was contracted in the boom period from when owners sought to take advantage of the exceptionally high freight rates and proportionally high second hand prices. In this period a total of 650 mdwt were placed, a yearly average of 217 mdwt, more than four time the levels of It has been a lot of rumors about cancellations of the orderbook. So far, there have not been cancellations in a large scale; however slippage was an issue last year. Korean and Chinese non-delivery rates have been 30 % and 43 % respectively. So far in 2010 slippage has been around 50 %. Although newbuilding prices have come down together with an improvement of freight rates the last six months, this has not been enough to encourage new orders. Given the current large orderbook, it seems unlikely that we will experience new orders in a large scale before the majority of the existing orderbook has been delivered or that the demand side improves drastically. Secondhand sales in 2009 totaled 1,263 ships with an estimated value of BUSD In terms of number of vessels this is about the same as in 2008, but in terms of value it is a decrease of 46 % has had a strong start in the S&P market. Tanker sales are recovering and in terms of volume, tankers sales are up 75 % year on year. In general prices are up the last weeks lead by several IPO buyers wanting to get steel on their hands to generate cashflow from day one. Several modern tankers have been sold at firm prices pushing brokers to appreciate valuations of modern vessels, especially tankers. Demolition in 2009 totaled around 30 mdwt. So far in 2010, approximately 10 mdwt is sold for scrap. The tanker phase out combined with the current strong scrap prices (measured in USD/ldt prices are up 30 % last 6 months) will probably see to that 2010 scrap levels will exceed those of Offshore After a turbulent period with a severe fall in the oilprice down to USD 35/bbl before climbing to USD 70/bbl towards the end of last year, it seems to have stabilized in the USD/bbl range. The fundamentals for the offshore markets have been positive on long term through the financial crisis and we are now beginning to see improvement also in the shorter term of events. We expect the higher oil price, easing credit markets and reduction in upstream costs to lead to higher offshore activities going forward.

15 (source: Clarksons) Demand for oil will continue to grow, driven by increasing population, and better living standards. According to the IEA, demand for oil is expected to grow by 1 % p.a. from 85 million barrels per day in 2008 to 105 million barrels per day in We expect this to be led by emerging regions including Asia, Middle East, and India. According to Paretos annual E&P Survey in 2009, oil companies have indicated an average investment planning price of USD 55/bbl. On this basis, it is expected to see 7 % and 15 % growth in offshore E&P spending in 2010 and 2011, respectively. This view has already been supported from recent oil companies announcements. Upstream costs have come down significantly from 08 levels. For instance, rig rates have declined by % y-o-y. Supply vessel rates, equipment cost, raw material prices and contractor prices have also come down. This also implies that we should see an even more significant growth in E&P activities which again will lead to more activity across all offshore segments. The organic reserve replacement ratio has been declining since 1999, despite oil companies increasing their E&P spending steadily over the same period. In order to meet the demand for oil going forward, and prevent significant net depletion of oil reserves, oil companies will be forced to increase production levels. The only foreseeable way of achieving this is by continued increased investments, bringing new fields into production. Drilling Rig utilization has, after a quiet period, picked up the last months as a consequence of higher offshore E&P spending from oil companies, particularly IOCs and NOCs. These companies have a significant share in the shallow and mid-water market. Re-emergence of these companies, on the back of sustained oil prices and easing credit market, will be especially positive for the Jack-Up market. The global jackup fleet currently consists of 453 jackups. There are a further 62 units planned, on order or under construction, with delivery between 2010 and 2012, and there are currently 56 jackups cold stacked. The utilization in the international jackup market has picked up from 81 % (last summer) to 86 % currently as a result of stronger demand Rates for international modern premium jackups peaked at 225 $/day in 2006 and stayed above 200 $/ day until fall of Fixtures in 2009 have been from ,000 USD/day. Recently there have been some indications of increasing dayrates, but most analysts believe we need utilization above 90 % before we see a real uptick in jackup rates which we will probably not see before (source: Pareto Securities) With the current dayrates, a lot of the older rigs that are currently cold stacked or undergoing yard stays could remain outside the market for years to come, perhaps never to return. This would help the supply/ demand balance and would benefit newer rigs and their owners. The worldwide floater fleet currently stands at 233 rigs, 186 of which are semi-submersibles, while the remaining 48 are drillships. The floater fleet consists of 113 midwater rigs, capable of drilling in water depths of up to 4,500 feet. Furthermore, there are 59 deepwater rigs, defined as being capable of drilling in water depths of between 4,500 feet and 7,500 feet. Finally, the remaining 61 floaters are classified as ultra-deepwater rigs, which are capable of drilling in water depths of over 7,500 feet and were built later than Utilization for the deepwater units has also remained high and industry players such as Transocean and Pride have expressed their continued faith in the ultra deepwater segment, indicating that they have seen several tenders and opportunities materialize.

16 (source: Pareto Securities) In the deepsea market utilization has actually staid high through the credit crisis because most units have been on longer conteracts, hence very few deepwater rigs have been subject to contract renewal the last 18 months. Lately some newbuildings have come into the market but also these rigs have been absorbed, although at lower rates. The latest UDW contracts have been closed at approximately USD 450,000/day which is significantly down from the record high levels seen 18 months ago, but still strong considering contract periods are for several years. FPSO With a very quiet period in the FPSO market having come to an end, the industry is on many accounts turning a corner. After several years of extreme cost inflation, value chain pressures, and engineering supply constraints, industry capacity is now improving. One can therefore expect increased competition on new contracts, but more importantly an eased market for sound project execution. This coincides well with the FPSO players having fewer projects to work on. However, this effect is offset by a more limited financial capability among FPSO players as debt financing is harder to obtain and several companies are more or less fully invested with their current balance sheets. Activity wise there has been a clear improvement the last 8 months, and the second half of 2009 saw 6 FPSO awards, after a year with non-existent chartering activity. With the oil price stabilizing in the USD 70 to 90/bbl band, oil companies in general struggling with production growth, and a continued healthy and increasingly active prospect list, we think that contract awards will revert to a normalized run rate of 15 to 20 annual awards over the next years. increased offshore activity. The supply and subsea sectors are in need of an increase in activity as the last year has been less than pleasant for vessel owners. There is currently a general push towards younger, greener, more effective, reliable and sophisticated PSVs and AHTS by charterers and regulators. Modern vessels do in general achieve higher utilization when the market is slow. Although the supply and subsea orderbook is quite high compared to the sailing fleet, there is a reason behind the large number vessels contracted Assuming PSVs and AHTS older than 30 years have passed their economic useful life, and vessels between 26 and 30 years are non-competitive, we expect to see minimal net fleet growth of the competitive fleet. (source: Pareto Securities) 2009 saw very few newbuilding orders as a result of the global financial crisis and market uncertainty. Further upside stems from vessel delays, conversions, and cancellations. We expect utilization and rates to improve slightly towards the end of 2010 and 2011, on the back of higher offshore activities. Although we expect a larger net fleet growth in larger PSVs (2,000 dwt and above), higher E&P activities will help PSV rates recover from their low from last year, although PSV rates are generally less sensitive to fluctuations in oil prices. (source: Pareto Securities) Supply and Subsea Oil demand fundamentals are intact, and as all other offshore sectors, supply and subsea will also benefit from Further potential upside stems from increasing demand for larger PSVs to perform cargo run work in other regions where they are not prominent yet (i.e. South East

17 Asia). Advances in dayrates will however be capped until there is sufficient demand to absorb the fleet. On the back of increased spending by oil companies world wide and the fact that the Rig market and FPSO market has also seen activity return, the pipeline of new subsea prospects is now also looking very healthy. Already subsea tender volume has increased by almost 200 % since the beginning of Given the increase in the number of ultra deepwater rigs and the number of new subsea wells, we expect sanctions, contract awards, and subsea infrastructure spending to continue picking up through Seismic The seismic sector has been through a challenging year, dominated by price pressure and financial concerns. Highend seismic vessels experienced a 25 % oversupplied market during summer 09, and day-rates have been under pressure, declining % from peak. The seismic market has turned a corner from the trough seen last year. With increased demand on higher E&P spending and in general emphasis on resource expansion, and coupled with limited fleet growth, the market balance for the higher end vessels is close to be in equilibrium. Oversupply in the market exiting 2009 was 10 %, with demand from the North Sea in Q2 expected to lead to balance. Based on announcements from some of the major players within seismic survey, we expect that prices will marginally increase in the second half of 2010, but that significant improvements will first occur going into At current, the main risk is fleet growth seen especially towards the end of 2010 and the beginning of 2011, with a lot of vessels scheduled to enter the market. However, with continued stability of the oil price, we expect that a significant amount of work will come to the market with demand seen in West Africa, Brazil, USGoM and in the Asian Pacific. The seismic market is in our opinion favorably positioned for the recovery seen in the overall oil services market. Also, with the dynamic nature of the sector, it proposes the highest exposure to continued improvement in E&P spending and increases in Oil Company planning prices. Definisjoner I denne kvartalsrapporten har nedenstående utrykk følgende betydning, med mindre annet er direkte uttalt eller fremgår av sammenheng. De nedenstående definisjonene gjelder også for de foregående sidene i denne kvartalsrapporten. Definisjoner: Fondet VEK PPF MMEJU Pareto World Wide Shipping II AS Verdijustert egenkapital Pareto Project Finance AS Mosvold Middle East Jack-up Ltd. (Source: Pareto, PGS) Kvartalsrapporten er utelukkende ment for informasjonsformål, og må ikke under noen omstendighet betraktes som et tilbud om eller en oppfordring til å handle aksjer i Fondet. Det gis ingen garantier og det aksepteres intet ansvar for tap, direkte eller indirekte, som oppstår som følge av at leseren agerer på bakgrunn av informasjon, meninger eller estimater som finnes i dette dokumentet. Informasjonen i dette dokumentet, herunder uttrykte oppfatninger eller prognoser, er innhentet fra eller basert på kilder som vi har vurdert som pålitelige. Vi kan imidlertid ikke garantere for informasjonens nøyaktighet, tilstrekkelighet eller fullstendighet. Noe av informasjonen i dokumentet kan inneholde prognoser eller fremoverskuende uttalelser vedrørende fremtidige hendelser eller fremtidige resultater i markeder eller selskaper. Faktiske hendelser og resultater kan avvike substansielt fra dette. Pareto Project Finance AS aksepterer ikke ansvar for tap som oppstår som følge av bruk av slik informasjon. Det understrekes at den historiske kursutviklingen og de avkastningsmål det er referert til ikke innebærer noen garanti for framtidig avkastning. Det understrekes også at avkastningen / kursutviklingen kan variere som følge av svingninger i valutakursene. Vi gjør oppmerksom på at i dagens urolige marked er det stor usikkerhet knyttet til verdivurderingene da det er ingen eller veldig få transaksjoner som er gjennomført. Fremgangsmåten ved beregning av VEK er nærmere beskrevet i Pareto Project Finance AS markedsrapport av november Risikofaktorer og kostnadsstruktur er nærmere beskrevet i prospektet (Informasjonsmemorandum) utarbeidet i forbindelse med emisjoner i Fondet.

18 Pareto Project Finance AS, Dronning Maudsgt. 3, P.O.Box 1396 Vika, 0114 Oslo

19 Til aksjonærene i Pareto Shippingkapital II ASA PARETO SHIPPINGKAPITAL II ASA - 1. KVARTAL 2010: Pareto Shippingkapital II ASA sitt eneste formål er å investere i Pareto World Wide Shipping II AS og eier p.t. 79 % i fondet. Pareto World Wide Shipping II AS investerer i shippingprosjekter tilrettelagt av blant annet Pareto Project Finance AS. Kvartalsrapport for Pareto World Wide Shipping II AS ligger vedlagt. Verdijustert egenkapital per 1. november 2009: Siste omsatte kurs (13. april 2010): 65,00 kr 48,00 kr Emisjon I (USD/NOK 5,65) Emisjon II (USD/NOK 5,47) Emisjon III (USD/NOK 5,09) Emisjon IV (USD/NOK 5,10) VEK (USD/NOK 5,95) VEK (USD/NOK 7,01) VEK (USD/NOK 6,60) VEK (USD/NOK 5,74)