Concordia Maritime - Oil should always travel first class

Concordia Maritime has entered into agreements to sell its two V-MAX vessels Stena Vision and Stena Victory to Arlington Tankers Ltd., a newly formed Bermuda company. Arlington Tankers is currently owned by Concordia Maritime and a company within the Stena group. The purchase price for the vessels will consist of cash and shares in Arlington Tankers. Simultaneously with the sale of the V-MAX vessels Concordia will enter into agreements to time charter the two vessels for five years at fixed daily rates with options for Concordia for three one year extensions. Arlington Tankers intends to pay the purchase price for the two Concordia vessels and four vessels it has agreed to purchase from the Stena group from the net proceeds of its initial public offering in the US market, bank borrowings and by issuing additional shares to Concordia and Stena. Arlington Tankers has applied to have its shares of Arlington Tankers listed on the New York Stock Exchange. The consummation of the sale of the two Concordia vessels and the other four vessels is conditioned on the completion by Arlington Tankers of its public offering and bank financing. POTENTIAL GAIN ON SALE OF ASSETS IN CONCORDIA MARITIME If the sale of the shares in Arlington Tankers is completed at the midpoint of the range set forth in the Arlington Tankers preliminary prospectus, the purchase price for the two V-MAX tankers will be MUSD 220, consisting of approximately MUSD 170 in cash and approximately MUSD 50 in shares in Arlington Tankers. Upon completion of the sale, based on the price set forth above the gain on sale from the two vessels is estimated to be MSEK 500 based on today’s USD/SEK exchange rate. CONCORDIA´S SHAREHOLDING IN ARLINGTON TANKERS After completion of the sale of the two vessels, Concordia Maritime is expected to hold approximately 2.7 million shares of the total 15.5 million shares in Arlington Tankers. If the underwriters exercise their over allotment option in the offering to purchase additional shares from Concordia, Concordia’s holding would be reduced to 1.5 million shares. In such case, the cash received by Concordia would increase by a corresponding amount. CONCORDIA´S TIME CHARTER BACK OF THE VESSELS AND OTHER COMMITMENTS Time charter hire For the period up until mid 2007, the two V-MAX vessels are time chartered to a subsidiary of the American oil company Sunoco. The revenues from this time charter will cover the time charter expenses. As a result, Concordia Maritime is only exposed to the spot market for approximately 2.5 years, from mid 2007 until the end of 2009. Concordia has options to extend the charter three additional one year terms. Commitments related to the operation of the vessels Stena owned Northern Marine located in Glasgow is currently handling the technical operation and crewing of the two V-MAX vessels and will continue to do so on behalf of the new owners. Concordia has agreed to compensate Northern Marine for the vessels’ operating expenses to the extent they exceed a predetermined amount. Concordia has also agreed to pay compensation to Northern Marine for every day under 355 days that the vessels are not available for trading due to technical problems. Off hire insurance is in place that will cover the cost for off hire with a deductible of 14 days off hire. These agreements may lead to costs for Concordia Maritime. BACKGROUND TO THE DEAL The transaction makes it possible for Concordia Maritime to realize gains from the sale of two vessels in the VLCC segment of the tanker market. At the same time, the chartering arrangements with Arlington Tankers will provide Concordia the opportunity to maintain its long standing business relationship with Sunoco. In addition, the interest in Arlington Tankers will permit Concordia to maintain a small foothold i