FOR IMMEDIATE RELEASE

(May 25, 2007)

“To those who finance a ship or who rely upon its continual ability to engage in international commerce, the choice of flag is an extremely important decision,” Theo Xenakoudis, Managing Director of International Registries, Inc.’s (IRI) Piraeus office, told delegates at the Lloyd’s Shipping Economist Ship Finance Conference in Athens yesterday. “Banks may not be willing to advance funds to a shipowner utilizing a flag where the vessel registration and mortgage recordation systems under the laws of that flag state present obstacles to the enforcement of lender security,” he warned.

Mr. Xenakoudis, whose company administers the Marshall Islands Registry – now the fourth largest maritime registry in the world with a combined fleet of more than 36 million gross tons – stressed that the selection of a quality flag is vital to shipowners wishing to obtain vessel finance. He said that flag states should not be considered as “only a regulator, a policeman or a bureau from which a ship gets its paperwork. The flag state, for me, is a partner to the shipowner, a partner to the class society and a partner to the lenders.”

In terms of raising capital, the most important function of a flag state is the recordation of the mortgage/security interest of the bank or financier, according to Mr. Xenakoudis. “A flag state needs to ensure that mortgages are properly recorded in a public mortgage registry insulated from political instability or other incidents so that the lender has a lien enforceable in a court of law,” he said. “Political instability may lead to international sanctions that could affect a flag state’s reputation and inhibit a vessel’s ability to trade.”

A flag state’s Port State Control record is also crucial to financing. “A quality owner should always choose a white listed flag,” explained Mr. Xenakoudis. “Bankers, oil majors and charterers rely heavily on Port State Control indicators when they decide to charter a ship…I’m sure no bank would be happy with the idea of a ship that is detained in port for a long period of time, while its owner is losing substantial earnings daily and then failing to pay the loan installments.”

In light of the growing number of Greek companies using international business corporations (IBCs) to go public on worldwide stock exchanges as a means to raise capital, Mr. Xenakoudis also spoke of the importance of a quality flag state in the “one ship-one company” model. “It is crucial for the flag state to maintain a clear, modern and flexible corporate law in order to allow international business corporations to own ships, receive finance, make contracts, sign charter party agreements, hire crew and undertake other important functions,” he said.

When selecting a jurisdiction for an initial public offering, Mr. Xenakoudis urged delegates to look for a number of key characteristics, including a modern and secure corporate law based on the law of a highly respected onshore corporate jurisdiction; flexible rules governing the operation, structure and maintenance of an IBC; and ease of formation, including the ability to incorporate an IBC the same day.

Mr. Xenakoudis also spoke of the need for registries to offer a high level of service and technical advice to their shipowners, communicated via a decentralised global network of offices with local expertise on a 24-hour a day basis. A proactive presence at the International Maritime Organization (IMO) is also crucial to a flag state’s ability to keep shipowners informed of all new and potential regulations, and to instill quality across its fleet.

The Marshall Islands Registry is currently white listed by the Paris and Tokyo MoUs, as well as the US Coast Guard Qualship 21 program.