Moody's Rates Mitsui O.S.K. Lines Stable

Moody's Investors Service changed to stable from negative the outlook of its Ba1 senior unsecured debt rating and (P)Ba1 Japanese shelf registration rating of Mitsui O.S.K. Lines, Ltd. (MOL) and Ba1 debt ratings of Euromol B.V. and Mitsui O.S.K. Finance plc. The latter two companies are MOL's overseas finance subsidiaries supported by keepwell agreements with MOL. This rating outlook change is based on Moody's belief that MOL's improving performance will continue to contribute to its earnings and the company's financial fundamentals will be strengthened in the near to medium term. Although MOL's debt level increased marginally after its April 1999 merger with Navix Line, Ltd., the merger has started producing economies of scale and synergy effects, which are contributing to the company's cost reduction and improved performance. In addition, the company's unprofitable liner operations have shown a good improvement, resulting from spring 1999's freight increase and MOL's various rationalization efforts. MOL has also lowered its high debt level by reducing its capital expenditures and using the proceeds of the disposal of unnecessary assets such as vessels, marketable securities, and real estate properties. Recently, MOL introduced its new management plan, "MOST21." The plan calls for further measures to reduce debt by Yen 245 billion to Yen 740 billion by March 31, 2002. Like other Japanese shipping companies, MOL's operating performance is likely to remain volatile, subject to fluctuations in freight and foreign exchange rates. In addition, the company's leverage is still very high for the Ba1 rating category. Moody's will continue to monitor the effects of foreign exchange rate volatility and freight movements as well as the progress of the company's various restructuring plans. Headquartered in Tokyo, Mitsui O.S.K. Lines, Ltd. is one of the world's largest ocean shipping companies, operating liners, tramps, tankers and gas carriers, ferries, and cruise ships. Euromol B.V. and Mitsui O.S.K. Finance plc. are both overseas finance subsidiaries of MOL, conducting financing activities for MOL and its group companies.