On April 26, 2006, Standard & Poor's Ratings Services revised its outlook on Wan Hai Lines Ltd. (Wan Hai) to negative from stable, and at the same time affirmed its 'BBB' corporate credit rating on Wan Hai. The 'BBB' issue ratings on the company's overseas convertible bonds and the unsecured corporate bonds of Wan Hai Lines (Singapore) Pte. Ltd., its fully owned subsidiary, were also affirmed. The subsidiary's unsecured corporate bonds are irrevocably and unconditionally guaranteed by Wan Hai. The outlook revision is based on a weaker-than-expected financial performance in 2005 and concerns that an increasingly challenging operating environment, coinciding with large planned capital expenditures in 2007, are likely to weaken the operator's strong cash flow protection measures. Due to
