October 9, 2003

New company has $500 million available for vessel leases

First Ship Lease Ltd., a commercial finance company focused on diverse shipping assets, has closed on a $45 million equity financing and obtained an underwriting commitment for a $100 million mezzanine facility. This capital, combined with senior debt to be raised on a transactional basis, allows the company to invest in shipping assets, subject to lease agreements, worth in excess of $500 million.

First Ship Lease is a commercial finance company focused on diverse shipping assets and says it is the only leasing company in the maritime industry providing flexible and cost-effective non-tax driven products. The company is based in Bermuda, with the senior management team primarily operating from New York.

First Lease says it will utilize its strong capital base to provide operating and finance leases to shipping and industrial companies that meet its well-defined credit criteria. First Ship Lease's products provide companies with the ability to preserve equity capital and balance-sheet strength as well as deploy capital to projects that drive their business.

Participating in the $45 million equity investment is an impressive group of international financial institutions and shipping firms including HSH Nordbank AG of Germany, the world's largest ship mortgage lender, and Vereins- und Westbank Group, a subsidiary of Germany's second-largest bank, HypoVereinsbank. The investor group also includes Schoeller Holdings Ltd., the parent company of one of the world's leading ship management firms, Columbia Shipmanagement Ltd. The $100 million mezzanine facility is fully underwritten by BTM Capital Corporation of Boston, a subsidiary of Japan's premier bank The Bank of Tokyo-Mitsubishi Ltd.; HSH Nordbank and Vereins- und Westbank. BTM Capital Corporation is the lead arranger.

"We are very pleased to have the support of our investor and banking group, all of whom have excellent reputations in the shipping and ship finance industries," said First Ship Lease Chairman Frederick M. Gutterson.

First Ship Lease is the only leasing company exclusively focused on the maritime industry that provides flexible and cost-effective non-tax driven products. The Company will utilize its strong capital base to provide operating and finance leases to shipping and industrial companies that meet its well-defined credit criteria. First Ship Lease will draw upon its thorough understanding of the maritime industry and primarily concentrate on diverse but standardized shipping assets comprising tankers, container vessels, dry bulk carriers and offshore supply vessels. These assets, in the form of operating leases, are expected to comprise the majority of the portfolio. The balance of the portfolio will be finance leases for specialized vessels such as chemical and gas carriers, as well as roll-on roll-off vessels.

Gutterson added: "First Ship Lease is well positioned to benefit from a significant change occurring in the transportation industry. Transportation providers are increasingly realizing that ownership of assets is not a pre-requisite for success, rather it is the strategic and effective deployment of capital, particularly equity capital, that is crucial. This concept has been embraced by the container liner companies as well as industrial end-users and there is increasing demand from the broad shipping industry. First Ship Lease's differentiated offering directly addresses this demand."

Philip Clausius, President of First Ship Lease, stated, "Our lease offering allows qualifying shipping and industrial companies to preserve equity capital and balance sheet strength through 100 percent financing. Additionally, customers benefit from reasonable transaction costs, a flexible lease structure, the transfer of residual risk and the ability to retain complete operational control of the asset through our bareboat charter model."

Commenting on their investment in First Ship Lease, Michael Encke, Executive Vice President and Global Head of ship finance at HSH Nordbank, stated "Our investment speaks to the fact that we are extremely impressed with the innovative lease offering developed by First Ship Lease. They have a highly qualified and experienced management team that understands both shipping and structured finance and have the proven experience to execute on their plans to grow this burgeoning market."

Rolf Kirchfeld, member of the Management Board of Vereins- und Westbank, and a First Ship Lease non-executive Director, stated, "First Ship Lease fills a void in the 100 percent ship finance market by providing a cost-effective, flexible financing tool. Current leasing options are highly structured, inflexible and expensive to arrange, and haven't truly captured the interest of the broad shipping industry."

James Mason, BTM Capital Corporation's Shipping Portfolio Manager, commented, "We are very pleased to lead the underwriting and arrangement of this mezzanine facility, and we look forward to growing the partnership with our co-arrangers and the entire First Ship Lease team."

First Ship Lease is positioned to benefit from the growing trend in the maritime industry to lease rather than own vessels and the demand for a flexible lease product. The Company is supported by a management team, a board and an investor group that each have extensive structured finance and shipping experience. First Ship Lease's chairman and co-founder Frederick M. Gutterson has successfully founded and built container leasing companies during his 30 years in the industry. President, Philip Clausius, also a co-founder, has more than 12 years of financial and operational shipping experience primarily as a senior executive at Schoeller Holdings. Chief Financial Officer Paul S. Samett brings more than 22 years of corporate finance experience to the management team.

FSL will draw upon the experience of its four outside board members, who have deep shipping and finance experience and relationships with many of FSL's target customers. In addition to Gutterson and Clausius, the board is comprised of Kirchfeld, a management board member of Vereins- und Westbank; Ulf Gaenger, a former management board member and current advisor of HSH Nordbank; Heinrich Schoeller, chairman of Schoeller Holdings; and Peter Klopfer, President of P.M. Klopfer Shipbrokers.

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