ENERGY DEAL OF THE YEAR

Invincibility Lies in the Defense - Sun Tzu Lessons on Preparedness from the General

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“Strategy is not planning in the sense of working through an established list, but requires quick and appropriate response to changing conditions” - Sun Tzu

• Utilizations of OSVs are down (e.g. Upstream Decline, China,

Price of Crude)

• Unrecoverable / misallocated investment - Too many, too large,

too expensive. Some people will never recoup their

investment.

• Credit Concerns (e.g. Petrobas, Pemex)

• OSV’s last shoe to drop - owners are last in line to get haircuts

from their banks (already facing major impairments with blue-

water shipping portfolios, e.g., drybulk & liner)

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“Strategy without tactics is the slowest route to victory, but tactics without a strategy is the noise before defeat”

- Sun Tzu

• Challenge revenue assumptions and even premier client

default risk

• Suspend your dividend - save cash

• Sell assets - walk away from new build contracts

• Draw down revolvers - maximize the bank’s exposure to you

• Cut SG&A - Starting with executive comp

• Prepare for consolidation OR change of control with fresh

investor capital

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“The victorious warrior wins first and then goes to war” - Sun Tzu • Develop strategy to shore up your balance sheet BEFORE

approaching your banks

• Do not fall for the forbearance trap

• Don’t lie to your banks - your best leverage is showing

them how bad things are, not misrepresenting to them

with optimistic projections

• Never use your cash to satisfy bank covenants

• Don’t play the LTV game

• Hire an adviser - Let management focus on day-to-day

operations and remove emotion from tough decisions

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Conclusion

“Unhappy is the fate of one who tries to win his battles

without cultivating the spirit of the enterprise. The

enlightened leader plans ahead and cultivates his

resources.”

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CONTACT INFORMATION

WEB

www.DayAndPartners.com

CONTACTS

Randee DayPresident & CEOrandee@dayandpartners.com

Mark Lang Managing Director mark@dayandpartners.com

Eftychis Gregos-MourginakisDirectoreftychis@dayandpartners.com