Eitzen Chemical ASA2nd Quarter and 1st Half Report 2012

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Highlights

In August, Eitzen Chemical entered into an agreement in principle, in the form of a term sheet, with a steering committee established by the Company’s bank syndicates for the restructuring of the Company’s bank debt. The steering committee comprises the largest banks in Eitzen Chemical’s bank syndicates. The agreement is an important milestone for the Company, and is expected to safeguard liquidity throughout 2014 when consummated.

Eitzen Chemical reported EBITDA of USD 10.3 million for the 2nd

quarter of 2012, compared to USD 11.9 million in the 1

st quarter of 2012, and USD 6.7 million in the 2

nd quarter of 2011.

For the first half of 2012 Eitzen Chemical reported EBITDA of USD 22.2 million, compared to USD 12.8 million in EBITDA in the first half of 2011.

The average time-charter rate for the 2nd

quarter 2012 was 10,247 per day, compared with 10,640 per day in the 1

st quarter. Although the rate was down from the previous quarter, it represents a positive

development from 2011. The average time-charter rate for the 2nd

quarter 2011 was 9,714 per day.

The City Class Pool has been discontinued, and all pool partner vessels were redelivered during first half of 2012. It is expected that the Company’s earnings will increase as a result of improved utilization within this ship class.

Eitzen Chemical expects the 3rd

quarter to be in line with the 2nd

quarter of 2012.

Financial review

Eitzen Chemical reported total Freight revenue of USD 103.4 million in the 2

nd quarter of 2012, compared to USD

105.6 million in the 1st

quarter of 2012, following a 3.7% decrease in the average time-charter rate for the Company’s fleet from the previous quarter. Falling bunker prices in the quarter resulted in Voyage expenses of USD 53.9 million in the 2

nd quarter, down USD 0.7 million from 1

st quarter. Freight income on T/C basis was USD 49.6 million, down

USD 1.4 million from the previous quarter (USD 52.0 million in Q2 2011). Ship operating expenses were USD 29.6 million in the 2

nd quarter (USD 29.2 million in Q1 2012). Charterhire expenses

decreased by USD 0.4 million to USD 4.9 million mainly due to a decrease in short term charter commitments compared to the previous quarter. General and administrative expenses were USD 5.3 million in the 2

nd quarter (USD

6.1 million in Q1 2012). EBITDA (earnings before interest, taxes, depreciation and amortization) ended at USD 10.3 million in the 2

nd quarter compared to USD 11.9 million in the previous quarter (USD 6.7 million in Q2 2011).

Depreciation amounted to USD 16.5 million (USD 16.2 million in Q1 2012). The Operating result (EBIT) for the 2

nd

quarter was negative USD 6.2 million, compared to negative USD 4.3 million in the 1st

quarter of 2012 (negative USD 10.8 million in Q2 2011). Net interest expenses were slightly reduced to USD 10.5 million in the 2

nd quarter. Other financial items were net

positive USD 3.9 million in the quarter (negative USD 1.8 million in Q1 2012). This comprises an unrealized currency gain on the NOK denominated bond loan of USD 4.1 million, which was partly offset by an unrealized currency loss of USD 1.4 million related to JPY denominated purchase options included in the finance lease obligations. Further, net foreign exchange difference on cash and cash equivalents was negative USD 0.5 million in the quarter and other financial income was net USD 1.6 million. This includes a reversal of a withholding tax accrual of USD 2.7 million. Net loss in the 2

nd quarter was USD 12.8 million compared to a loss of USD 16.8 million in the previous quarter (loss

of USD 27.4 million in Q2 2011). Total book value for the Company’s vessels was USD 969.9 million as at 30 June 2012 (USD 982.8 million in Q1 2012). Total interest bearing debt including finance lease obligations was USD 969.4 million at the end of the 2

nd quarter

(USD 974.6 million in Q1 2012). The current portion of the long-term interest bearing debt including finance lease obligations was USD 85.5 million in total, whereof USD 40.8 million is related to bank debt and USD 44.8 million to

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finance lease obligations. The increase in current portion of obligations under finance leases is related to the expiry of two time charter contracts in the first half of 2013. The current portion of the finance lease obligations includes purchase option rights of USD 31.6 million. Total cash and cash equivalents amounted to USD 46.1 million as of 30 June 2012 (USD 65.8 million end of Q1 2012). The decrease in cash and cash equivalents in the quarter compared to 1

st quarter is mainly due to a negative working

capital development. Subsequent quarter end, the banks have granted a waiver in respect of the current minimum cash covenant (a reduction from the current level of USD 40 million to USD 25 million until 30 September 2012). Total equity as of 30 June 2012 was USD 74.5 million and the book equity ratio was 7 %. The total number of shares outstanding was at 1,128,022,323 and the share price ended the 2

nd quarter at NOK 0.05, down from NOK 0.09 at the

end of the 1st

quarter 2012.

Earnings development Both COA and spot volumes remained stable throughout the 2

nd quarter of 2012 compared with the previous

quarter. Freight rates were somewhat weaker, but the effects on earnings were partly offset by the decrease in bunker prices. The bunker price decreased in the 2

nd quarter of 2012 to an average of USD 635 per MT, compared to

USD 696 per MT in the 1st

quarter of 2012. The average TCE (time-charter equivalent rate) for the Eitzen Chemical fleet was USD 10,247 per day for the 2

nd quarter of 2012, down by 3.7% from USD 10,640 per day in the previous

quarter. Although there is a reduction in rates from the previous quarter, it follows a positive development from 2011.

Eitzen Chemical Index The Eitzen Chemical Index (ECI) is based on the company’s sailed in time charter equivalent (TCE) earnings per day. All the company’s vessels in the relevant period are included. Hence, the average size and age of the vessels vary over time. The ECI is calculated using the days the vessels are available to earn revenue (Revenue Days), and includes revenue earned from CoA’s, vessels fixed in on T/C and bunkers hedges. ECI100 is based on the TCE in 4th Quarter 2006.

As of the 1st

quarter 2012 the Company started reporting TCE without including inter-company commission costs to better reflect the weighted average rate of consolidated Freight income on T/C basis. The historic rates have been updated for comparability.

Market conditions The market came under pressure in the 2

nd quarter. Falling product prices resulted in less trading and buying activity

and therefore lower shipping volumes. Freight rates peaked at the end of the 1st

quarter and developed negatively throughout the 2

nd quarter, most noticeable in the deep sea trades. As the effect of the falling bunker prices

materialized, time charter earnings improved towards the latter part of the quarter. COA volumes were stable and COAs negotiated in the quarter were concluded at higher freight rates. The closure of the City Class Pool was completed during the quarter and is expected to lead to higher fleet utilization in this ship class.

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60

70

80

90

100

110

Q4 06 Q2 07 Q4 07 Q2 08 Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12

Eitzen Chemical Index (ECI)

5,5 6,0

10,7

4,9

6,1 6,7 7,1

5,7

11,9

10,3

-2

0

2

4

6

8

10

12

14

16

Q1 Q2 Q3 Q4

EBITDA development

2010 2011 2012

ECHEM Fleet Q4 11 Q1 12 Q2 12

Average dwt 17 779 18 000 18 000

No. of vessels EOP 53 53 53

TCE - $/day 9 675 10 640 10 247

ECI 70 77 74

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The intra Atlantic market experienced sluggish spot volume and rate developments through the quarter, while the short sea European market held up relatively well supported by strong COA nominations. The US Gulf to Asia export market decreased in both volumes and freight rates through the quarter and is now back at the dismal levels from mid 2011. The intra Asia market although still depressed saw better COA volumes helping improve utilization, while the long haul palm and bio fuels market was weak through the quarter. The Middle East was steady starting the quarter but came later under pressure.

Fleet development At the end of June 2012, the Eitzen Chemical fleet consisted of 53 vessels, of which 49 are owned or on financial lease and 4 are on operational lease. The process of discontinuing the City Class Pool and the withdrawal of the 19 vessels owned by our partners was completed this quarter. 4 vessels were dry-docked during the 2

nd quarter of 2012,

and 3 dry-dockings are scheduled to be completed in the 3rd

quarter of 2012.

Strategy and capital resources In August, Eitzen Chemical entered into an agreement in principle, in the form of a term sheet, with a steering committee established by the Company’s bank syndicates for the restructuring of the Company’s bank debt. The steering committee comprises the largest banks in Eitzen Chemical’s bank syndicates. The agreement is an important milestone for the Company, and is expected to safeguard liquidity throughout 2014 when consummated. The main elements in the term sheet with the bank syndicates include:

Extension of bank debt maturities to May 2016, provided the maturity date for the bond loan is extended to

June 2016. If the bond maturity date is not extended, the maturity date for the existing bank debt will be

September 2014.

Extended grace period for the existing bank loans with no fixed debt instalments until the earlier of final

maturity (as described above) and April 2015.

Payment of interest under a pay-as-you-can structure where the margin is only payable to the extent it can

be paid with excess cash (until the earlier of final maturity and January 2015).

New mechanism for a sweep of excess cash and potential variable debt amortisation depending on the

Company’s financial performance.

Existing financial covenants will be suspended until January 2015, with the exception of the introduction of a

minimum liquidity covenant of USD 25 million.

A new term and revolving facility agreement ranking ahead of the existing bank loans in the amount of USD

36 million to support liquidity and refinance a USD 6 million loan.

The agreement in principle is subject to approval by the syndicate banks’ credit committees and customary conditions, including definitive documentation. In anticipation of the agreement, the banks have granted a waiver in respect of the current minimum cash covenant (a reduction from the current level of USD 40 million to USD 25 million until 30 September 2012). The Company will continue its dialogue with representatives of the largest holders of the unsecured bond loan with the aim to secure a long term agreement with the bondholders in a timely manner.

Outlook

Subject to moderate global GDP growth, the Company expects the supply/demand balance for chemical tankers to improve, although at a slow pace for the remainder of 2012. The remaining orderbook

[1] for chemical tankers (tankers below 54,000 dwt) is about 7 % of the fleet and the

orderbook of smaller stainless steel vessels are at a low level compared to the current fleet. In 2011, total deliveries of newbuildings were 4 million dwt, with scrapping of 1 million dwt, i.e. a net fleet growth of 3 million dwt, or 3.8 %, compared to 6.0 % in 2010 and 12.8 % in 2009. The industry expects a net annual fleet growth of approximately 4 %

[1]

Source: Eitzen Chemical based on industry sources

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in 2012 and 1 % in 2013, depending on scrapping. Industry sources estimate that the tonne-mile demand for seaborne chemical transportation will increase with 5-8 % in 2012, depending on the world’s GDP growth. Hence, the development of the supply/demand balance is expected to continue being positive. When the remaining oversupply of chemical tankers has been absorbed, the chemical tanker market should see a significant recovery, both in rates and second hand values. During 2012 the Company has renewed and entered into several longer term contracts of affreightment with major international oil and chemical companies at higher freight rate levels than has been the case in recent years prior to 2012.

Forward looking statement

This report contains forward looking statements. These statements are based upon various assumptions. Although Eitzen Chemical believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control. Eitzen Chemical cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions. No assurance can be given that the Company will be able at all times to be in compliance with all of its financial covenants towards its finance providers or to agree such necessary arrangements to timely secure full compliance with the terms of the agreements with its lenders. Such arrangements might require discussions with, amongst others, the Company’s lenders and such discussions might not be concluded and agreed in a timely manner, if at all.

Oslo, 13 August 2012

The Board of Directors of Eitzen Chemical ASA

/ Bjørn J. Sjaastad / Bjørn J. Sjaastad

Chairman of the Board

/ Carl E. Steen / Carl E. Steen

/ Helene Jebsen Anker / Helene Jebsen Anker

/ Heidi Marie Petersen / Heidi Marie Petersen

/ Aage R. B. Figenschou / Aage R. B. Figenschou

/ Per Sylvester Jensen / Per Sylvester Jensen

Chief Executive Officer

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See accompanying notes that are an integral part of these condensed consolidated financial statements.

2012 2012 2011 2012 2011

Q2 Q1 Q2 6m 6m

(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)

Freight revenue 103 425 105 598 110 334 209 023 211 655

Voyage expenses (53 851) (54 586) (58 336) (108 437) (110 218)

Freight income on T/C basis 49 574 51 012 51 998 100 586 101 437

Management fees and other income 573 1 361 1 501 1 933 2 524

Gross profit 50 147 52 373 53 499 102 519 103 961

Ship operating expenses (29 583) (29 161) (31 836) (58 744) (62 009)

Charterhire expenses (4 889) (5 252) (8 289) (10 142) (16 134)

General and administrative expenses (5 331) (6 092) (6 672) (11 423) (13 006)

EBITDA 10 344 11 868 6 702 22 210 12 812

Depreciation and amortization (16 538) (16 173) (19 497) (32 710) (39 512)

Gain/(loss) on sale of assets - - 1 951 - 1 951

Operating result (EBIT) (6 194) (4 305) (10 844) (10 500) (24 749)

Interest income 29 47 140 76 269

Interest expense (10 538) (10 742) (11 065) (21 280) (21 869)

Other financial items 3 851 (1 838) (5 624) 2 013 (8 112)

Profit/(loss) before tax (12 852) (16 838) (27 393) (29 691) (54 461)

Income tax expense 13 - (9) 13 (27)

Net profit/(loss) (12 839) (16 838) (27 402) (29 678) (54 488)

Earnings per share (basic/diluted) (USD) (0.01) (0.01) (0.03) (0.03) (0.06)

Weighted average number of shares 1 128 022 323 1 128 022 323 954 912 900 1 128 022 323 855 099 883

2012 2012 2011 2012 2011

Q2 Q1 Q2 6m 6m

(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)

Net profit/(loss) (12 839) (16 838) (27 402) (29 678) (54 488)

Foreign currency translation differences (51) 40 (624) (11) (519)

Other comprehensive income (loss), net of tax (51) 40 (624) (11) (519)

Total comprehensive income (12 890) (16 798) (28 026) (29 689) (55 007)

Attributable to owners of the parent (12 890) (16 798) (28 026) (29 689) (55 007)

Condensed Consolidated Income Statement(USD '000, except per share data)

Condensed Consolidated Statement of

Comprehensive Income (USD '000)

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See accompanying notes that are an integral part of these condensed consolidated financial statements.

2012 2012 2011

30.06 31.03 31.12

(USD '000) Note (unaudited) (unaudited) (audited)

Assets

Vessels 2 740 409 750 362 759 500

Vessels held under finance leases 2 229 447 232 486 235 637

Other non current assets 2 652 2 727 2 419

Total non-current assets 972 508 985 575 997 555

Trade and other receivables 55 268 50 396 62 376

Other current assets 21 475 25 083 22 861

Cash and cash equivalents 3 46 087 65 801 66 826

Total current assets 122 830 141 280 152 063

Total Assets 1 095 338 1 126 855 1 149 618

Equity and Liabilities

Equity 74 572 87 465 104 262

Treasury shares (116) (116) (116)

Total equity 4 74 456 87 349 104 146

Interest bearing debt 5 735 901 753 908 761 665

Obligations under finance leases 5 147 932 180 979 186 587

Other non-current l iabilities 166 609 562

Total non-current liabilities 883 999 935 496 948 814

Trade and other payables 45 454 54 870 70 786

Short term debt and current portion of long-term debt 5 40 783 26 099 11 668

Current portion of obligations under finance leases 5 44 756 13 587 13 407

Other current l iabilities 5 890 9 454 797

Total current liabilities 136 883 104 010 96 658

Total liabilities -2417 1 020 882 1 039 506 1 045 472

-2633

Total Equity and Liabilities 1 095 338 1 126 855 1 149 618

Condensed Consolidated

Balance Sheet

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* USD 2.6 million of total cash is restricted at 30 June 2012, reference is made to note 3.

See accompanying notes that are an integral part of these condensed consolidated financial statements.

Condensed Consolidated

Cash Flow Statement (USD '000)

2012

Q2

(unaudited)

2012

Q1

(unaudited)

2012

6m

(unaudited)

2011

6m

(unaudited)

Operating activities

Profit (loss) before tax (12 852) (16 838) (29 691) (54 461)

Depreciation and amortization 16 538 16 173 32 710 39 512

Net interest expenses 10 508 10 695 21 204 21 600

Foreign currency (gain) loss, net (2 306) 1 553 (752) 9 141

Working capital and other adjustments (14 029) 2 065 (11 963) (16 859)

Net cash flow from operating activities (2 140) 13 648 11 508 (1 067)

Investing activities

Proceeds from sales of vessels - - - 295

Payments on vessels (mainly upgrading and docking) (3 557) (3 862) (7 419) (5 794)

Interest received 2 4 6 66

Net cash flow from investing activities (3 555) (3 858) (7 413) (5 433)

Financing activities

Loan proceeds 74 2 064 2 139 -

Principal repayments (3 141) (3 416) (6 558) (8 440)

Interest paid (10 451) (10 092) (20 543) (19 102)

Net proceeds from share issue - - - 52 919

Net cash flow from financing activities (13 518) (11 444) (24 962) 25 377

Net change in cash and cash equivalents (19 214) (1 654) (20 867) 18 877

Cash balance at beginning of period 65 801 66 826 66 826 72 121

Net foreign exchange difference on cash (500) 629 129 (151)

Cash and cash equivalents at end of period * 46 087 65 801 46 087 90 847

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Employee benefit reserve The employee benefits reserve is used to record the value of the company’s share-based incentive program. Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of subsidiaries in foreign currencies. Treasury shares The treasury shares is used to record purchase of own shares. The Company has 1 010 000 treasury shares. Revaluation reserve The revaluation reserves are used to record step by step revaluation in connection with purchase of subsidiary.

See accompanying notes that are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statement of Changes in Equity(USD '000)

2012 (unaudited) Attributable to equity holders of the parent company

Paid in capital

Share Share Employee Treasury Other Retained Reva- Trans- Total Total

capital premium benefit shares paid in earnings luation lation other

Figures in USD '000 reserve equity reserve reserves reserves

At 1 January 2012 148 037 20 550 1 591 (116) 629 849 (705 365) 3 406 6 194 9 600 104 146

Profit (loss) for the period - - - - - (29 678) - - - (29 678)

Other comprehensive income - - - - - - - (11) (11) (11)

Total comprehensive income - - - - - (29 678) - (11) (11) (29 689)

At 30 June 2012 148 037 20 550 1 591 (116) 629 849 (735 043) 3 406 6 183 9 589 74 456

2011 (unaudited) Attributable to equity holders of the parent company

Paid in capital

Share Share Employee Treasury Other Retained Reva- Trans- Total Total

capital premium benefit shares paid in earnings luation lation other

Figures in USD '000 reserve equity reserve reserves reserves

At 1 January 2011 128 279 19 458 1 145 (155) 597 818 (551 336) 3 406 6 819 10 225 205 434

Profit (loss) for the period - - - - - (54 488) - - - (54 488)

Other comprehensive income - - - - - - - (519) (519) (519)

Total comprehensive income - - - - - (54 488) - (519) (519) (55 007)

Reduction of share capital (32 070) - - 39 32 031 - - - - -

Issue of share capital 51 827 3 455 - - - - - - - 55 282

Transactions cost - (2 363) - - - - - - - (2 363)

Share-based payment - - 194 - - - - - - 194

At 30 June 2011 148 036 20 550 1 339 (116) 629 849 (605 824) 3 406 6 300 9 706 203 541

Other reserves

Other reserves

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Notes to the condensed consolidated financial statements

Note 1 – Accounting principles Eitzen Chemical is a public limited company incorporated and domiciled in Norway which shares are listed on Oslo Stock Exchange. The Company’s address is Ruseløkkveien 6, P. O. Box 1794 Vika, 0122 Oslo, Norway. Basis of preparation The interim condensed consolidated financial statements for Eitzen Chemical have been prepared in accordance with International Accounting Standard IAS 34 “Interim Financial Reporting”. Going concern assumption The financial statements are based on the going concern assumption. We refer to the 2011 annual report, the Strategy and capital resources section and note 6 in this interim report for further information. Judgments, estimates and assumptions

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis, considering the current and expected future market conditions. A change in an accounting estimate is recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Each quarter the Company assesses whether there is an indication of asset impairment and whether assumptions in the value in use model used for impairment testing should be updated. Refer to note 2. Significant accounting principles The accounting principles used to prepare these interim financial statements are consistent with those used to prepare the annual financial statements. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the annual financial statements as of 31 December 2011.

A number of new accounting standards and amendments to standards have been issued by the IASB. Information about the content, implementation dates and related requirements for the issued but not yet adopted standards and amendments is included in the Significant accounting policies note in the 2011 annual report. None of the new accounting standards that came into effect on 1 January 2012 has had a significant impact for the Company.

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Note 2 - Vessels, vessels held under finance leases and other equipment

The Company has evaluated indicators for potential impairment losses in accordance with its accounting principles. The Company performed an impairment test at 31 December 2011 and recognized an impairment of USD 62.5 million. Based on the current market conditions, the assumptions in the Company’s value in use model have been reviewed at 30 June 2012. No impairment has been recorded this quarter, as the recoverable amount of the fleet has been determined to be higher than the carrying value. However, if vessels are sold or disposed in a distressed situation before the estimated improved market rates determined in the value in use model have materialized, there is a risk that the Company might experience further losses or impairment charges on its vessels.

Note 3 - Cash and cash equivalents

Note 4 - Issued capital

The Company’s shares have a par value of NOK 0, 75 per share. The Company is evaluating measures, including a reverse stock split, in order to secure good liquidity in its shares.

Figures in USD '000

Vessels Vessels held

under finance

leases

Other fixed

assets

Total

At 1 January 2012, net of accumulated depreciation 759 500 235 637 419 995 555

Additions (mainly upgrading and docking of vessels) 7 174 203 42 7 419

Disposals - - (168) (168)

Depreciation for the period (26 265) (6 393) (53) (32 710)

At 30 June 2012, net of accumulated depreciation 740 409 229 447 240 970 096

2012 2012 2011

30.06 31.03 31.12

Figures in USD '000 (unaudited) (unaudited) (audited)

Cash at bank and in hand 43 486 58 846 65 738

Cash at bank, restricted 2 601 6 955 1 088

Total cash and cash equivalents 46 087 65 801 66 826

Authorised shares

Number of shares

outstanding

At 1 January 2012 1 128 022 323

Changes in shares and share capital in the period -

At 30 June 2012 1 128 022 323

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Note 5 - Interest bearing debt

* The Company has two time charter contracts accounted for as finance leases which expire in the first half of 2013. The current portion of the finance lease obligations includes purchase option rights of USD 31.6 million.

Note 6 – Financial and liquidity risk In August, Eitzen Chemical entered into an agreement in principle, in the form of a term sheet, with a steering committee established by the Company’s bank syndicates for the restructuring of the Company’s bank debt. The steering committee comprises the largest banks in Eitzen Chemical’s bank syndicates. The agreement is an important milestone for the Company, and is expected to safeguard liquidity throughout 2014 when consummated. The main elements in the term sheet with the bank syndicates include:

Extension of bank debt maturities to May 2016, provided the maturity date for the bond loan is extended to

June 2016. If the bond maturity date is not extended, the maturity date for the existing bank debt will be

September 2014.

Extended grace period for the existing bank loans with no fixed debt instalments until the earlier of final

maturity (as described above) and April 2015.

Payment of interest under a pay-as-you-can structure where the margin is only payable to the extent it can

be paid with excess cash (until the earlier of final maturity and January 2015).

New mechanism for a sweep of excess cash and potential variable debt amortisation depending on the

Company’s financial performance.

Existing financial covenants will be suspended until January 2015, with the exception of the introduction of a

minimum liquidity covenant of USD 25 million.

A new term and revolving facility agreement ranking ahead of the existing bank loans in the amount of USD

36 million to support liquidity and refinance a USD 6 million loan.

The agreement in principle is subject to approval by the syndicate banks’ credit committees and customary conditions, including definitive documentation. In anticipation of the agreement, the banks have granted a waiver in respect of the current minimum cash covenant (a reduction from the current level of USD 40 million to USD 25 million until 30 September 2012). The Company will continue its dialogue with representatives of the largest holders of the unsecured bond loan with the aim to secure a long term agreement with the bondholders in a timely manner. Although no assurance can be given that definitive agreements can be concluded on a timely manner, if at all, the Company is optimistic on reaching a final restructuring agreement.

Figures in USD '000

Bond Loan Credit

facilities

Obligations

under finance

leases

Total

Balance at 1 January 2012 105 888 667 445 199 994 973 327

Additions - 2 139 - 2 139

Installments - - (6 558) (6 558)

Debt issuance cost 139 946 - 1 085

Foreign currency translation 127 - (749) (622)

Balance at 30 June 2012 106 154 670 530 192 687 969 371

Non-current 106 154 629 747 147 932 883 833

Current * - 40 783 44 756 85 538

Balance at 30 June 2012 106 154 670 530 192 687 969 371

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Note 7 – Subsequent events In August, Eitzen Chemical entered into an agreement in principle, in the form of a term sheet, with a steering committee established by the Company’s bank syndicates for the restructuring of the Company’s bank debt. The steering committee comprises the largest banks in Eitzen Chemical’s bank syndicates.

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Responsibility statement

We confirm to the best of our knowledge that the condensed set of financial statements for the period January 1 to June 30, 2012 has been prepared in accordance with IAS 34 - Interim Financial Reporting, and gives a true and fair view of Eitzen Chemical ASA’s assets, liabilities, financial position and result for the period. We also confirm to the best of our knowledge that the financial review includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the financial statements, any major related parties transactions, and a description of the principal risks and uncertainties for the remaining six months of the financial year.

Oslo, 13 August 2012

The Board of Directors of Eitzen Chemical ASA

/ Bjørn J. Sjaastad / Bjørn J. Sjaastad

Chairman of the Board

/ Carl E. Steen / Carl E. Steen

/ Helene Jebsen Anker / Helene Jebsen Anker

/ Heidi Marie Petersen / Heidi Marie Petersen

/ Aage R. B. Figenschou / Aage R. B. Figenschou

/ Per Sylvester Jensen / Per Sylvester Jensen

Chief Executive Officer

Eitzen Chemical ASARuseløkkveien 6

P.O. Box 1794 Vika0122 Oslo

Norway

eitzen-chemical.com