Klaveness Combination Carriers — Investor Presentation 2016

Sep 5, 2016

DIGITIZATION

Key events

	EGD joined as 50% partner in two combination newbuilds o
2016	o Secured financing for three combination newbuilds with delivery in 2018/2019
	The KMAX vessel, MV Bavang, was delivered in February o
	Agreed to sell its fleet of five selfunloading vessels for \$190M to Marbulk/CSL/Algoma o
	o Three 83,500 DWT combination carriers ordered from Jiangsu New Yangzi Shipbuilding Co., Ltd
2015	o Canceled one of two KMAX newbuilds ordered at Jiangsu New Yangzi Shipbuilding Co., Ltd
	Secured financing for three combination carrier newbuilds with delivery in 2016/2017, two existing combination carriers and o the KMAX newbuild
	o Refinanced one combination vessel in Q3 2014
2014	o Issued NOK 400 million bond (KSH02) and repurchased NOK 100 million in KSH01
	Container vessels MV Baleares, MV Bardu and MV Banak were delivered o
	Three combination carriers ordered from Zhejiang Ouhua Shipbuilding Co. Ltd. o
	o Ordered two KMAX dry bulk vessels and sold options for six vessels
	Klaveness and Alba reached a settlement agreement and entered into a new freight contract o

Actions taken to align business with strategy and risks

Sale of selfunloader vessels

• The five selfunloader vessels sold for USD 190 mn in January 2016
• The sales price was well in line with the company's valuation of the vessels as specialized vessels
• The vessels were not commercially operated by Klaveness
• As a result of the sale the exposure to a weak dry bulk market was reduced

Partner in combination vessels

• EGD joined as partner in two combination newbuilds with delivery in 2016/2017
• Continuation of long tradition of investing with partners
• Risk sharing both on the upside and down-side
• Ability to increase the size of the combination segment

Bavang marketed for sale

• The kamsarmax vessel Bavang has been marketed for sale
• Ability to take positions in dry bulk market without owning vessels and with limited use of balance sheet capacity
• Reduction of overall dry bulk exposure in weak markets
• The vessel has been written down and a sale will not trigger losses
• Options for six sister vessels sold with profit in 2014

Introduction – Torvald Klaveness

• Torvald Klaveness is a global shipping company operating around 120 vessels in the dry bulk and container markets with a strong presence within specialized dry bulk.
• Since the foundation of the company in 1946, growth has been achieved through seeking new and innovative ways of providing costefficient and predictable transportation services to customers.
• Klaveness is one of the leading service providers and dry bulk operators in the world and carries around 60 million tons cargo and makes more than 1,100 vessel fixtures each year.

Issuer – Klaveness Shipholding AS

• The Issuer is the holding company of the ship owning arm of Torvald Klaveness and is 100% directly owned by Rederiaksjeselskapet Torvald Klaveness
• The Issuer has consistently delivered a strong and stable cash flow due to its strategic focus on attractive niches
• Strong market positions in key niche shipping segments and solid contract coverage for combination carriers
• Klaveness reorganized the vessel owning arm in 2013 to gather the ship owning entities under one corporate umbrella, Klaveness Ship Holding, to simplify as well as strengthen the corporate structure

Combi	Container	Bulk
MV Banasol Newbuildings 2001 / 72 562 DWT MV Balbao	MV Baro 2004 / 1 740 TEU	MV Bavang 2016 / 82 000 DWT
2016 / 80 500 DWT
MV Barcarena	MV Barry
2001 / 72 562 DWT MV Baffin 2016 / 80 500 DWT	2004 / 3 091 TEU
MV Banastar	MV Balao
2001 / 72 562 DWT MV Ballard 2017 / 80 500 DWT	2013 / 2 500 TEU
MV Bangor	MV Ballenita
2002 / 72 562 DWT Newbuilding # 4 2018 / 83 500 DWT	2013 / 2 500 TEU
MV Bantry	MV Balsa
2005 / 72 456 DWT Newbuilding # 5 2018 / 83 500 DWT	2013 / 2 500 TEU
MV Bakkedal	MV Baleares
2007 / 72 456 DWT Newbuilding # 6 2018 / 83 500 DWT	2014 / 2 500 TEU
	MV Banak 2014 / 2 500 TEU

MV Bardu 2014 / 2 500 TEU

Strong and stable cash flow in weak shipping markets

used to give the most accurate description of the EBITDA created by the ships that constitute the Issuer's current fleet. Klaveness Ship Holding consolidated pro-forma numbers are used for 2011-2012 and T. Klaveness Shipping consolidated actual numbers are used for 2007-2010. Minority interests are included.

EBITDA (left axis)

70 years of shipping industry experience and innovation

Purpose & values

Experienced management team

Lasse Kristoffersen (b. 1972) – CEO

Appointed CEO of Torvald Klaveness in September 2011 after four years as Head of the Specialized Dry Bulk activities.

Worked 11 years for Det Norske Veritas prior to joining Klaveness.

Holds a Master of Science in Naval Architecture and Marine Engineering from NTNU.

Aleksander M. Stensby (b. 1984) – CDO

Appointed Chief Digital Officer in January 2016 after leading the Klaveness Innovation Lab since March 2015. CEO at Monokkel AS prior to joining Klaveness. Co-founded and worked 10 years at Integrasco AS. Holds a Master of

Computer Science from University of Agder.

Rebekka Glasser Herlofsen (b. 1970) – CFO

Board member of Torvald Klaveness 2009 - 2011 and CFO from January 2012. 10 years experience from BW Gas including position as EVP Business Development. 5 years Corporate Finance

experience from Enskilda Securities. Member of Board of Directors in Statoil and DNV GL. Holds a Master of Science

from NHH.

Engebret Dahm (b. 1965) – Head of Combination Carriers

Appointed Head of Combination Carriers in January 2015.

CEO of Norwegian Car Carriers AS prior to joining Klaveness.

Held various positions in Klaveness 1990- 2006 amongst others as head of the transloader and beltunloader business.

Holds a Master of Science from NHH.

Niels Josefsen (b.1962) - Head of Dry Bulk

Has been with Torvald Klaveness since 2003. Started up the Klaveness office in Beijing and between 2006-2015 President of Klaveness Asia, Singapore.

Held various positions in A.P. Moller Maersk and moved to Beijing in 1999 to establish their Dry Bulk activities in China. Master Mariner from the A.P. Moller Maersk supplemented with INSEAD Executive

Program.

Morten Skedsmo (b. 1969) – Head of Ship Owning &

Service Development Appointed Head of

Ship Owning & Projects in September 2012. From 2016 Head of Ship Owning and Service Development.

Started working for Klaveness in 1990 and has held a wide range of positions within chartering, marketing and business development.

EVP of Klaveness Asia in Singapore from 2009-2011.

Bent Martini (b. 1967) – COO

Has been with Torvald Klaveness since 2006 and was appointed COO in January 2012.

COO in HSD Sjø AS prior to joining Klaveness.

11 years experience from the Norwegian Navy, amongst other as Commanding Officer.

Holds a degree from the Norwegian Naval Academy.

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Our goal is to make the life of our customers easier, more efficient and better informed

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Combination carriers: Value generation on several levels ⁰

The design allows for trade pattern optimization

• The Issuer currently owns six combined caustic soda and dry bulk carriers. Three other vessels with similar features exist.
• A subsidiary of the Issuer has six additional combination carriers under construction on two different yards in China with delivery in 2016(2), 2017(1), 2018(2) and 2019(1).
• The vessels are Klaveness' own concept, mainly designed to service the alumina industries. Klaveness has a unique position in the caustic soda trade to Australia due to the efficient trading pattern and logistics system.
• One external investor (Taiship) owns 50% in two vessels and 19% in one vessel (in addition Trond Harald Klaveness owns 5% of on vessel through an entity outside the Torvald Klaveness group). Another external investor, EGD Shipholding AS, will own 50% in each of two newbuilds.

Reduced freight costs due to	Reduced demurrage costs due to
larger lot sizes and optimal trading	fewer port calls and optimization
patterns with minimal ballast.	of scheduling.
Reduced environmental footprint: Minimum ballast implies reduction in emissions per transported ton of CSS.	Operational excellence: Dedicated tonnage with experienced crew gives cargo and trade familiarity.

Combination carriers: Cabu a unique ⁰ concept

Historically high coverage for caustic soda days

Name	2009	2010	2011	2012	2013	2014	2015
COA coverage for caustic soda days	100%	100%	93%	84%	85%	93%	95%
Utilisation caustic soda days	~ 100%	~ 100%	~ 100%	~ 100%	~ 100%	~ 100%	~ 100%
Average duration (years) – beginning of year	3.0 2)	2.3 2)	3.1	2.3	2.9	2.9	4.0
Average CABU fleet size 1)	6.5	7.0	7.0	7.0	7.0	6.1	6.0

1) 2009-2014: 6 Cabu + 1 LR, 2015: 6 Cabu 2) Unweighted average

Caustic soda coverage

Strong earnings and client base

• Approximately 50% of total trading days are caustic soda transportation days.
• Contract coverage on caustic soda legs are important, while being spot on the dry legs gives flexibility. In addition dry bulk volumes are higher.
• Utilization is close to 100% for both the dry and caustic soda legs.
• Due to both low dry bulk and tank markets earnings have come down to around USD 18,000 - 19,000/d in 2016.

Container: Eco-efficient vessels with gears ⁰

Container vessels with state of the art design

• Klaveness owns eight container vessels, whereof six modern vessels delivered in 2013 and 2014.
• Geographical focus is on the Intra-Asian market.
• The 2,500 TEU vessels are considered state of the art design with eco-features and gears, giving them a competitive advantage.
• The 2,500 TEU vessels are fixed at levels Klaveness considers to be a premium to standard tonnage resulting from the ecoefficiency.
• Average TC hire is at the moment USD 7,200/d.
• Klaveness has chosen to fix the vessels on short term time charters as a result of the low rates currently obtainable on longer fixtures.

High-quality charterers

Vessel	Yard	TEU	Built	Employment expiry period
MV Baleares	Yangzijiang	2,546	2014	Oct.2016-Jan.2017
MV Banak	Yangzijiang	2,546	2014	May.2017-Aug.2017
MV Bardu	Yangzijiang	2,546	2014	Nov.2016-Mar.2017
MV Balao	Yangzijiang	2,546	2013	Sep.2016-Feb.2017
MV Ballenita	Yangzijiang	2,546	2013	Sep.2016-Dec.2016
MV Balsa	Yangzijiang	2,546	2013	Jan.2017-Mar.2017
MV Barry	Szczecin	3,091	2004	Sep.2016-Nov.2016
MV Baro	Wenchong	1,740	2004	Sep.2016-Nov.2016

0 Energy, Digitization and the move towards a Sharing Economy are substantial opportunities for value creation

Ships are definitely part of the ⁰ information business…..

0 …and we believe digitization and sharing economy will fundamentally change the ecosystem

How we do it

Financials: 1H 2016 P&L Statement ⁰

Financials: 1H 2016 Balance Sheet ⁰

MUSD

1) Adjusted EBITDA for vessels delivered or sold.

Attractive terms and limited refinancing risk

The graph includes bank debt related to the six newbuilds with delivery in 2016-2019. Bank loan to part finance all vessels have been secured and will be drawn on delivery of the vessels. The loans mature in 2022 and 2023, 5-7 years after drawdown. Refinancing of the container term loans included.

• Klaveness has a strong relationship to its key banks.
• Limited refinancing risk due to well distributed maturities and manageable balloons.
• Bank loans secured for all six newbuilds.
• Bank debt of USD 46 million related to the selfunloader vessels was repaid in January 2016
• Refinancing next three years limited to three combination carriers with total balloon payments of USD 21 million, in addition to the bond loan maturing in 2018.
• All container term loans maturing in 2018 and 2019 is in the process of being refinanced into a revolving credit facility:
• Limit USD 85-90 million, drawdown expected to be USD 30-40 mill in the beginning.
• Due date for new facility in 2021.
• Other terms in line with existing facility.
• Limited drawdown will result in lower financial costs.
• Flexibility maintained.
• Average margin for bank debt is estimated to be 2.6% at year-end 2016.