UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

(Mark One)
[_]         REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

[X]              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2003

                                       OR

[_]            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to

                         Commission file number 0-_____

                          ULTRAPETROL (BAHAMAS) LIMITED

             (Exact name of Registrant as specified in its charter)

                           COMMONWEALTH OF THE BAHAMAS

                 (Jurisdiction of incorporation or organization)

                          Ultrapetrol (Bahamas) Limited
                          H & J Corporate Services Ltd.
                                  Shirlaw House
                                87 Shirley Street
                               P. O. Box SS-19084
                                 Nassau, Bahamas

                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
None

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: 101/2% First Preferred Ship Mortgage Notes due 2008

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

Common Shares, $0.01 par value                      2,134,451 Shares Outstanding

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes |X| No |_|

Indicate by check mark which financial statement item the Registrant has elected
to follow.

                             Item 17 |_| Item 18 |X|
<PAGE>

                          INDEX TO REPORT ON FORM 20-F

Part I

     Item 1.   Identity of Directors, Senior Management and Advisors           1

     Item 2.   Offer Statistics and Expected Timetable                         1

     Item 3.   Key Information                                                 2

     Item 4.   Information on the Company                                     12

     Item 5.   Operating and Financial Review and Prospects                   27

     Item 6.   Directors, Senior Management and Employees                     37

     Item 7.   Major Shareholders and Related Party Transactions              39

     Item 8.   Financial Information                                          41

     Item 9.   The Offer and Listing                                          41

     Item 10.  Additional Information                                         41

     Item 11.  Quantitative and Qualitative Disclosures about
               Market Risk                                                    45

     Item 12.  Description of Securities                                      45

Part II

     Item 13.  Defaults, Dividend Arrearages and Delinquencies                45

     Item 14.  Material Modifications to the Rights of
               Security Holders and Use of Proceeds                           45

     Item 15.  Controls and Procedures                                        45

     Item 16A. Audit Committee Financial Expert                               46

     Item 16B. Code of Ethics                                                 46

     Item 16C. Principal Accountant Fees and Services                         46

Part III

     Item 17.  Financial Statements                                           46

     Item 18.  Financial Statements                                           47

     Item 19.  Exhibits                                                      A-1

<PAGE>

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

     Matters discussed in this document may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements in order to encourage
companies to provide prospective information about their business.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance, and underlying assumptions and
other statements, which are other than statements of historical facts.

     Ultrapetrol (Bahamas) Limited desires to take advantage of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and is
including this cautionary statement in connection with this safe harbor
legislation. This document and any other written or oral statements made by us
or on our behalf may include forward-looking statements, which reflect our
current views with respect to future events and financial performance. When used
in this document, the words "anticipate," "estimate," "project," "forecast,"
"plan," "potential," "will," "may," "should," and "expect" reflect
forward-looking statements.

     The forward-looking statements in this document are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, managements examination of historical operating
trends, data contained in our records and other data available from third
parties. Although we believe that these assumptions were reasonable when made,
because these assumptions are inherently subject to significant uncertainties
and contingencies which are difficult or impossible to predict and are beyond
our control, we cannot assure you that we will achieve or accomplish these
expectations, beliefs or projections.

     In addition to these assumptions and matters discussed elsewhere herein and
in the documents incorporated by reference herein, important factors that, in
our view, could cause actual results to differ materially from those discussed
in the forward-looking statements include the strength of world economies and
currencies, general market conditions, including fluctuations in charterhire
rates and vessel values, changes in demand in the tanker market, as a result of
changes in OPEC's petroleum production levels and world wide oil consumption and
storage, changes in the company's operating expenses, including bunker prices,
drydocking and insurance costs, changes in governmental rules and regulations or
actions taken by regulatory authorities, potential liability from pending or
future litigation, general domestic and international political conditions,
potential disruption of shipping routes due to accidents or political events,
and other important factors described from time to time in the reports filed by
Ultrapetrol (Bahamas) Limited with the Securities and Exchange Commission.
<PAGE>

                                     PART I

ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

     Not Applicable.

ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE

     Not Applicable.

ITEM 3 - KEY INFORMATION

A.   SELECTED FINANCIAL DATA

     The following summary financial information set forth below for Ultrapetrol
(Bahamas) Limited (the "Company") is for the years ended December 31, 2003,
2002, 2001, 2000, and 1999 and has been derived from the Company's Financial
Statements.

<TABLE>
<CAPTION>
                                                                   For the year ended December 31
                                                      2003         2002         2001         2000         1999
                                                    ---------    ---------    ---------    ---------    ---------
                                                                        (dollars in thousands)
<S>                                                 <C>          <C>          <C>          <C>          <C>
Statement of Operations Data:
Revenues (a)
   Freight revenues                                   $26,487      $24,743      $73,667      $97,577      $72,474
   Hire revenues                                       48,746       48,381       37,541        6,814       11,784
                                                    ---------    ---------    ---------    ---------    ---------
   Total Revenues                                      75,233       73,124      111,208      104,391       84,258
   Voyage expenses(b)                                 (12,644)     (10,185)     (26,889)     (38,719)     (28,282)
   Running costs(c)                                   (28,659)     (27,397)     (33,615)     (28,586)     (24,682)
   Amortization of drydock expense                     (7,232)      (8,839)      (7,246)      (5,589)      (4,017)
   Depreciation of property and equipment             (15,335)     (15,968)     (16,197)     (15,572)     (14,889)
   Management fees to related parties(d)               (2,863)      (3,176)      (3,250)      (3,780)      (3,748)
   Administrative expenses                             (4,955)      (3,642)      (4,520)      (4,269)      (3,249)
   Loss on involuntary conversion Arg.Receivable                    (2,704)
   Financial expense -Gain extinguisment debt
                                                      (14,425)     (16,763)     (17,698)     (16,646)     (15,064)
   Financial income                                       201          326          296          282          207
   Investment in subsidiaries                           3,140          (45)        (692)      (1,646)
   Other net income (expenses)(e)                      (2,461)       1,698        1,408        4,351        1,175
                                                    ---------    ---------    ---------    ---------    ---------
Earnings before income tax and minority interest      (10,000)     (13,571)       2,805       (5,783)      (8,291)
   Minority interest                                   (1,333)        (132)                                  (104)
   Income tax                                            (185)        (150)        (390)        (284)        (303)
                                                    ---------    ---------    ---------    ---------    ---------
Net earnings (losses) for the year                   $(11,518)    $(13,853)      $2,415      $(6,067)     $(8,698)
                                                    =========    =========    =========    =========    =========
Balance Sheet Data:
Cash, cash equivalents and time deposit                $8,248       $4,724       $5,872       $4,225       $2,730
Fixed assets                                          120,803      134,797      135,289      148,946      126,836
Total assets                                          208,161      213,546      225,576      232,894      170,684
Current Portion other financials payable               10,462       12,209       15,745       19,649        7,074
Long-term debt, net of current portion                128,341      135,000      135,000      135,000      135,000
Other financial payable, net of current portion        17,011       21,785       14,700       23,120          665
Stockholders' equity                                   23,793       35,089       47,838       42,235       22,098
Other Financial Information:
Net cash provided by operating activities              20,471       14,395       24,814        9,293        8,369
Net cash used in investing activities                  (6,285)     (21,428)     (14,133)     (69,032)     (15,453)
Net cash provided (used in) financing activities      (10,662)       5,885       (9,034)      61,234        7,549
EBITDA(f)                                             $25,659      $27,867      $43,946      $32,024      $25,575
Ratios
Ratio of EBITDA to interest expense                      1.6x         1.7x         2.5x         1.9x         1.7x
Ratio of total debt to EBITDA                            6.1x         6.1x         3.8x         5.4x         5.4x
Ratio of earnings to fixed charges(g)                    0.3x         0.2x         1.2x         0.7x         0.4x
Vessels wholly owned at end of period                       9           14           13           14           12
</TABLE>

(a)  Freight revenues arise from arrangements whereby we have agreed to
     transport cargoes between ports and bear all voyage and vessel operating
     expenses, whereas hire revenues arise from our vessel time or voyage
     chartering operations.

(b)  Voyage expenses, which are incurred when a vessel is operating under a
     contract of affreightment (as well as any time when they are not operating
     under time or bareboat charter), comprise all costs relating to a given
     voyage, including port charges, canal dues and fuel (bunkers) costs, are
     paid by the vessel owner and are recorded as voyage expenses. Voyage
     expenses also include charter hire payments made by us to owners of vessels
     that we have chartered in.

(c)   Running costs, or operating expenses, include the cost of all ship
      management, crewing, repairs and maintenance, spares and stores, insurance
      premiums and lubricants and certain drydocking costs.

(d)  Management fees to related parties include payments to our affiliates
     Ravenscroft Miami and Oceanmarine. See "Interest of Management in Certain
     Transactions."

(e)  In 1999 other net income included $ 0.8 as a gain corresponding to the
     Bareboat Charter - Purchase of the Abbeydale to a third party. In 2000,
     other net income included $3.2 million received as compensation from
     insurers in respect of loss of hire claims related to the Princess Eva
     ($0.6 million), Princess Marina ($0.4 million) and the Princess Pia (2.6
     million). In 2001, other net income included $1.5 million received as
     compensation from insurers in respect of loss of hire claims related to the
     Princess Veronica ($0.8 million) and the Princess Marina (0.7 million). In
     2002, other net income included $1.8 million received as compensation from
     insurers for loss of hire claims related to the Alianza G-3, Princess
     Marisol and Princess Pia partially offset by the loss related to the
     Princess Fatima sale. ). In 2003, other net income included $1.5 million
     received as compensation from insurers for loss of hire claims related to
     the Alianza G-1, Princess Eva and Princess Pia partially offset by the loss
     related to the vessels sales.

(f)  EBITDA consists of income prior to deductions for interest expense, income
     taxes, depreciation and amortization of drydock expense. EBITDA is not
     intended to represent cash flows from operations, as defined by GAAP
     ("GAAP" means generally accepted accounting principles in the United States
     of America in effect as of the date hereof) and should not be considered as
     an alternative to net income as an indicator of our operating performance
     or to cash flows from operations as a measure of liquidity. This definition
     of EBITDA may not be comparable to similarly titled measures disclosed by
     other companies Generally, funds represented by EBITDA are available for
     management's discretionary use.

<TABLE>
<CAPTION>
                                                          For the year ended December 31
Reconciliation between EBITDA and Net income
(loss) for the years
                                              2003         2002         2001        2000         1999
                                            ---------    ---------    ---------   ---------    ---------
                                                               (dollars in thousands)
<S>                                         <C>          <C>          <C>         <C>          <C>
EBITDA
Net earnings (losses) for the year            (11,518)     (13,853)       2,415      (6,067)      (8,698)
   Plus
   Financial expense                           16,207       16,763       17,698      16,646       15,064
   Extraordinary (Gain) losses (h)             (1,782)
   Income tax                                     185          150          390         284          303
   Depreciation of property and equipment      15,335       15,968       16,197      15,572       14,889
   Amortization of drydock expense              7,232        8,839        7,246       5,589        4,017
                                            ---------    ---------    ---------   ---------    ---------
   EBITDA                                     $25,659      $27,867      $43.946     $32,024      $25,575
                                            =========    =========    =========   =========    =========
</TABLE>

(g)  The ratio of earnings to fixed charges is computed by aggregating income
     before taxes and fixed charges and dividing the total by fixed charges.
     Fixed charges comprise interest on all indebtedness including capital
     leases and amortization of debt expense (see Exhibit 12.1).

(h)  Under the Company's Indenture and for the purposes of computing the EBITDA
     the GAAPs are frozen in time as of the date of execution of the Indenture
     (i.e. March 30, 1998) Also, as defined in the Company's Indenture the
     "Consolidated net income" is defined as "the net income of the Company and
     its consolidated subsidiaries" less the extraordinary gains, among other
     things. Under the GAAP applicable in 1998 the gain on acquisition of the
     bond would be treated as an extraordinary income. So the Company excluded
     this gain for purposes of computing the EBITDA

<PAGE>

B.   CAPITALIZATION AND INDEBTEDNESS

     Not Applicable.

C.   REASONS FOR THE OFFER AND USE OF PROCEEDS

     Not Applicable.

D.   RISK FACTORS

     Please note: In this section, "we", "us" and "our" all refer to the Company
and its subsidiaries.

Industry Specific Risk Factors

The cyclical nature of the tanker industry may lead to volatile changes in
   charter rates and vessel values which may adversely affect our earnings

     If the shipping market, which has been cyclical, is depressed in the future
when our vessels' charters expire or when we want to sell a vessel, our earnings
and available cash flow may decrease. Our ability to recharter our vessels on
the expiration or termination of their current spot and time charters and the
charter rates payable under any renewal or replacement charters will depend
upon, among other things, economic conditions in the tanker market. Fluctuations
in charter rates and vessel values result from changes in the supply and demand
for tanker capacity and changes in the supply and demand for the major
commodities internationally carried by water.

     The factors affecting the supply and demand for vessels are outside of our
control, and the nature, timing and degree of changes in industry conditions are
unpredictable. The factors that influence demand for vessel capacity include:

          o    demand for oil and oil products as well as other main commodities
               internationally carried by water;

          o    global and regional economic conditions;

          o    the global supply of crude oil to the world markets by crude
               producing nations;

          o    the distance oil and oil products are to be moved by sea; and

          o    changes in seaborne and other transportation patterns.

     The factors that influence the supply of vessel capacity include:

          o    the number of newbuilding deliveries;

          o    the scrapping rate of older vessels;

          o    the number of vessels that are out of service; and

          o    national or international regulations that may effectively cause
               reductions in the carrying capacity of vessels or early
               obsolescence of tonnage.

Our revenues experience seasonal variations that may affect our earnings and
   financial performance

     We operate our vessels in markets that have historically exhibited seasonal
variations in demand and, therefore, charter rates. Tanker markets are typically
stronger in the winter months in the northern hemisphere due to increased oil
consumption. In addition, unpredictable weather patterns in the winter months
tend to disrupt vessel scheduling. The oil price volatility resulting from these
factors has historically led to increased oil trading activities.

If we violate environmental laws or regulations, the resulting liability may
   adversely affect our earnings and financial condition

     Our operations are subject to extensive regulation designed to promote
tanker safety, prevent oil spills and generally protect the environment. Local,
national and foreign laws, as well as international treaties and conventions,
can subject us to material liabilities in the event that there is a release of
petroleum or other hazardous substances from our vessels.

     For example, the United States Oil Pollution Act of 1990, or OPA, provides
that owners, operators and bareboat charterers are strictly liable for the
discharge of oil in U.S. waters, including the 200 nautical mile zone off the
U.S. coasts. OPA provides for unlimited liability in some circumstances, such as
a vessel operator's gross negligence or willful misconduct. However, in most
cases OPA limits liability to the greater of $1,200 per gross ton or $10 million
per vessel. OPA also permits states to set their own penalty limits. Most states
bordering navigable waterways impose unlimited liability for discharges of oil
in their waters. The International Maritime Organization, or IMO, has adopted a
similar liability scheme that imposes strict liability for oil spills, subject
to limits that do not apply if the release is caused by the vessel owner's
intentional or reckless conduct.

     Under OPA, with certain limited exceptions, all newly built or converted
tankers operating in United States waters must be built with double hulls
conforming to particular specifications. Tankers that do not have double hulls
are subject to structural and operational measures to reduce oil spills and will
be precluded from operating in United States waters between 1995 and 2015
according to size, age, hull configuration and place of discharge unless
retrofitted with double hulls. In addition, OPA specifies annual inspections,
vessel manning, equipment and other construction requirements that are in
various stages of development by the U.S. Coast Guard, or USCG, applicable to
new and to existing vessels.

     Under OPA, our vessels will be precluded from operation in United States
waters as follows: (dates shown correspond to date issuance)

     Name                        OPA phase-out date*          Tvel / COC date**
     ----                        ------------------           -----------------
     Princess Katherine                  N/A                  March 26, 2003
     Princess Eva                      Jun-2003               August 18, 1998
     Princess Laura                    Feb-2010               March 19, 2003
     Princess Nadia                    Jan-2014               August 26, 2001
     Princess Susana                   Nov-2014               February 18, 2003
     Princess Marina                   Mar-2014               August 29, 2002

                                 * As per tvel/COC
     Notes:

     ** The United States Coast Guard inspects vessels annually and determines
     when such vessels will be phased out under OPA, the dates of which are
     recorded in the Certificate of Compliance or COC. On April 30 2001, the
     USCG replaced the Tank Vessel Examination Letter (TVEL) with a newly
     generated document called Certificate of Compliance. The COC is issued for
     each tanker by the USCG, if /when the vessel calls at a U.S. port and is
     valid for a period of two years, with mid period examination.

     There is no phase out date for Princess Katherine. Configuration meets the
     US double hull standards.

     Princess Nadia, Princess Marina and Princess Susana are double hull
     vessels. However, due to configuration requirements under the US double
     hull standards the phase out dates indicated above are applicable.

     These requirements can affect the resale value or useful lives of our
vessels. We believe that regulation of the tanker industry will continue to
become more stringent and more expensive for us and our competitors. More
stringent maritime safety rules are also more likely to be imposed worldwide as
a result of the recent oil spill in November 2002 relating to the loss of the
M.T. Prestige, a 26-year old single-hull tanker owned by a company not
affiliated with us. Additional laws and regulations may also be adopted that
could limit our ability to do business or increase the cost of our doing
business and that could have a material adverse effect on our operations.
Government regulation of tankers, particularly in the areas of safety and
environmental impact may change in the future and require us to incur
significant capital expenditure on our vessels to keep them in compliance.

Because the market value of our vessels may fluctuate signifcantly, we may incur
   losses when we sell vessels which may adversely affect our earnings

The fair market value of vessels may increase and decrease depending on the
following factors:

          o    general economic and market conditions affecting the tanker
               industry;

          o    competition from other shipping companies;

          o    types and sizes of vessels;

          o    other modes of transportation;

          o    cost of newbuildings;

          o    governmental or other regulations;

          o    prevailing level of charter rates; and

          o    technological advances.

Company Specific Risk Factors

We are a holding company, and we depend on the ability of our subsidiaries to
   distribute funds to us in order to satisfy our financial and other
   obligations

     We are a holding company, and our subsidiaries conduct all of our
operations and own all of our operating assets. We have no significant assets
other than the equity interests of our subsidiaries. As a result, our ability to
make required payments on our Notes depends on the performance of our
subsidiaries and their ability to distribute funds to us. The ability of our
subsidiaries to make distributions to us may be restricted by, among other
things, restrictions under our debt facilities and applicable laws of the
jurisdictions of their incorporation or organization. If we are unable to obtain
funds from our subsidiaries, we will not be able to service our debt unless we
obtain funds from other sources. We cannot assure you that we will be able to
obtain the necessary funds from other sources.

Restrictive covenants in our indenture and financing agreements could hinder our
   ability to grow and service our debt

     The indenture for our Notes and our financing agreements impose operating
and financial restrictions that limit or even prohibit our ability to incur
additional indebtedness, grant liens, make certain investments, sell assets,
engage in mergers and acquisitions or make capital expenditures. These
restrictions also limit our ability to respond to market conditions or meet
extraordinary capital needs. We are also required to maintain specified cash
liquidity levels, financial ratios and vessel values relative to our
indebtedness. If we do not meet these tests we may be in default under our
indenture and other loan agreements. These defaults may allow our lenders to
accelerate the maturity of our indebtedness and foreclose on collateral securing
that indebtedness, which could materially and adversely affect our ability to
service our debt.

We have substantial leverage and debt service obligations that could affect our
   ability to grow and service our debt

     We are highly leveraged and have incurred substantial indebtedness. As of
December 31, 2003, we had $156 million in total indebtedness outstanding with
$23.8 million of shareholders' equity. Subject to restrictions in our Notes
indenture and depending on the results of any restructuring that we may pursue,
we may incur additional indebtedness in the future. The amount of leverage that
we have has important consequences for us and holders of our Senior Notes, which
include:

     o    We may not be able to obtain additional financing for shipping
          activities, working capital, capital expenditures, or general
          corporate purposes;

     o    We may need to dedicate a substantial portion of our cash flow from
          operations to paying interest on our Notes and any other future
          indebtedness, reducing funds available to us for other purposes;

     o    We may not be able to withstand competitive pressures and respond to
          changing business conditions; and

     o    We may be more vulnerable than our competitors to a downturn in
          general economic conditions or in our business.

A  decline in the market value of our vessels could lead to a default under our
   loan agreements and the loss of our vessels

     If the market value of our fleet declines, we may not be able to obtain
future financing. Also, declining vessel values could cause us to breach
covenants under some of our financing agreements. If we are unable to pledge
additional collateral, our lenders could accelerate that debt and foreclose on
our fleet, which would result in a default on our indenture and other financing
agreements.

Our earnings may be adversely affected if we do not successfully employ our
   vessels

     We seek to deploy our vessels both on time charters and under contracts of
affreightment with clients of the Company for periods of three months to three
years or on spot voyages. As of December 31, 2003, six of our vessels were
employed under time charter with remaining terms of 14months on average.
Although time charters provide steady streams of revenue, vessels committed to
time charters may not be available for spot voyages during an upswing in the
shipping industry cycle, when spot voyages might be more profitable. If the
finalization of our term employment coincides with a low point of the cycle our
earnings could be adversely affected.

In the highly competitive international shipping market, we may not be able to
   compete for charters with new entrants or established companies with greater
   resources

     We employ our vessels in a highly competitive market. Competition arises
primarily from other shipowners, including major oil companies as well as
independent companies, some of whom have substantially greater resources than we
do. Competition for the transportation of oil and oil products as well as other
major bulk commodities can be intense and depends on price, location, size, age,
condition and the acceptability of the vessel and its operators to the
charterers.

We depend on a few significant customers for a large part of our revenues. The
   loss of one or more of these customers could adversely affect our financial
   performance

     We derive a significant part of our revenue from a small number of
charterers. In 2003, Petrobras, the government-controlled gas and oil company of
Brazil, accounted for 26% of total revenues , including the revenues of
Petrobras Energia S.A. ex Pecom Energia S.A., an Argentinian energy company
subsidiary of Petrobras, while Cargill International S.A. accounted for 12% of
total revenue. During the same period, UABL Limited, a company that is
affiliated with us, accounted for approximately 14% of total revenues. The
occurrence of any problems with these charterers may adversely affect our
revenues. Additionally, if our vessels do not meet the chartering standards set
forth by certain oil majors this could have an adverse affect on our financial
performance.

We may be unable to attract and retain key management personnel and other
   employees in the shipping industry, which may negatively impact the
   effectiveness of our management and our results of operations

     Our success depends to a significant extent upon the abilities and efforts
of our management team. Although we intend to negotiate agreements, we do not
currently have long term employment contracts with any of our senior executives,
including Felipe Menendez R., Ricardo Menendez R., James F. Martin, Katherine A.
Downs, and Leonard J. Hoskinson. Our success will depend upon our ability to
hire and retain key members of our management team. The loss of any of these
individuals could adversely affect our business prospects and financial
condition. Difficulty in hiring and retaining personnel could adversely affect
our results of operations. We do not maintain "key man" life insurance on any of
our officers.

Because most of our employees are covered by industry-wide collective bargaining
   agreements, failure of industry groups to renew those agreements may disrupt
   our operations and adversely affect our earnings

     We employ 17 land-based employees. Our manager employs approximately 305
seafarers who are covered by industry-wide collective bargaining agreements that
set basic standards. We cannot assure you that these agreements will prevent
labor interruptions. Any labor interruptions could disrupt our operations and
harm our financial performance.

Our vessels may suffer damage and we may face unexpected drydocking costs which
   could affect our cash flow and our ability to service our debt

     If our vessels suffer damage, they may need to be repaired at a drydocking
or other type of ship repair facility. The costs of drydock and/or repairs are
unpredictable and can be substantial. We may have to pay drydocking and repair
costs that our insurance does not cover. This would decrease earnings. Repairs
may involve long periods of inactivity which may have a negative effect on
earnings and our ability to service our debt.

Purchasing and operating secondhand vessels may result in increased operating
   costs which could adversely affect our earnings and our ability to service
   our debt

     All of our vessels were purchased secondhand from other owners. Our current
business strategy includes additional growth through the acquisition of
secondhand vessels. While we inspect secondhand vessels prior to purchase, this
does not normally provide us with the same knowledge about their condition that
we would have had if these vessels had been built for and operated exclusively
by us. Also, we do not receive the benefit of builders' warranties.

     In general, the costs to maintain a vessel in good operating condition
increases with the age of the vessel. In some instances charterers may prefer
newer vessels that are more fuel efficient than older vessels. Cargo insurance
rates increase with the age of a vessel, making older vessels less desirable to
charterers as well. Governmental regulations, safety or other equipment
standards related to the age of vessels may require expenditures for
alterations, or the addition of new equipment, to our vessels and may restrict
the type of activities in which the vessels may engage. We cannot assure you
that, as our tankers age, market conditions will justify those expenditures or
enable us to operate our vessels profitably during the remainder of their useful
lives. If we sell vessels, we cannot be certain that the price for which we sell
them will equal at least their carrying amount at the time of such sale. If
charterers no longer charter our vessels due to their age it could adversely
affect our earnings and we may not be able to generate sufficient revenue to
service our debt.

Risks involved with operating ocean going vessels could affect our business and
   reputation, which would adversely affect our revenue and our ability to
   service our debt

     The operation of an ocean-going vessel carries inherent risks. These risks
include the possibility of:

          o    marine disaster;

          o    piracy;

          o    environmental accidents;

          o    cargo and property losses or damage; and

          o    business interruptions caused by mechanical failure, human error,
               war, terrorism, political action in various countries, labor
               strikes, or adverse weather conditions.

     Any of these circumstances or events could increase our costs or lower our
revenues. The involvement of our vessels in an oil spill or other environmental
disaster may harm our reputation as a safe and reliable tanker operator which
could adversely affect our revenues and our ability to service our debt.

We may not have adequate insurance to compensate us if our vessels are damaged
   or lost

     We procure insurance for our fleet against those risks that we believe the
shipping industry commonly insures against. These insurances include hull and
machinery insurance, protection and indemnity insurance, which includes
environmental damage and pollution insurance coverage, and war risk insurance.
We carry insurance against loss of hire covering a percentage of the hire value
on some of our oceangoing vessels, which is business interruption coverage
following a loss under our hull and machinery policy or other business
interruption however, such insurance does not cover the entire period a vessel
may have been unemployed as a consequence of an accident nor does it cover all
incidents which may render a vessel inoperative. There is no guarantee that we
shall be able to renew this policy upon its expiry. The current hull and
machinery policy was renewed on 30th June 2003 and it will expire on 30th June
2004 when new terms will be renegotiated. There is no guarantee that we will be
able to renew it on the same terms at all now or in the future. We can give no
assurance that we are adequately insured against all risks. We may not be able
to obtain adequate insurance coverage at reasonable rates for our fleet in the
future. The insurers may not pay particular claims. Our insurance policies
contain deductibles for which we will be responsible, limitations and exclusions
which, although we believe are standard in the shipping industry, may
nevertheless increase our costs or lower our revenue.

Maritime claimants could arrest our vessels, which could interrupt our cash flow

     Crew members, suppliers of goods and services to a vessel, shippers of
cargo and other parties may be entitled to a maritime lien against that vessel
for unsatisfied debts, claims or damages. In many jurisdictions a maritime
lienholder may enforce its lien by arresting a vessel through foreclosure
proceedings. The arrest or attachment of one or more of our vessel could
interrupt our cash flow and require us to pay very large sums of money to have
the arrest lifted.

     In addition, in some jurisdictions, such as South Africa, under the "sister
ship" theory of liability, a claimant may arrest both the vessel which is
subject to the claimant's maritime lien and any "associated" vessel, which is
any vessel owned or controlled by the same owner. Claimants could try to assert
"sister ship" liability against one vessel in our fleet for claims relating to
another of our ships.

Governments could requisition our vessels during a period of war or emergency,
   resulting in loss of earnings

           A government could requisition for title or seize our vessels.
Requisition for title occurs when a government takes control of a vessel and
becomes her owner. Also, a government could requisition our vessels for hire.
Requisition for hire occurs when a government takes control of a vessel and
effectively becomes her charterer at dictated charter rates. Generally,
requisitions occur during a period of war or emergency. Government requisition
of one or more of our vessels may negatively impact our revenues.

Our operations outside the United States expose us to global risks that may
   interfere with the operation of our vessels

     We are an international company and primarily conduct our operations
outside of the United States. Changing economic, political and governmental
conditions in the countries where we are engaged in business or where our
vessels are registered affect us. Hostilities or other political instability in
regions where our vessels trade could affect our trade patterns and adversely
affect our operations and performance.

We may have to pay tax on United States source income, which would reduce our
   earnings

     Under the United States Internal Revenue Code of 1986, or the Code, a
portion of the gross or net shipping income of a vessel owning or chartering
corporation, such as ourselves and our subsidiaries, may be subject to a 4%
United States federal income tax on 50% of its gross shipping income that is
attributable to transportation that begins or ends, but that does not both begin
and end, in the U.S., unless that corporation is entitled to a special tax
exemption under the Code which applies to the international shipping income
derived by some non-United States corporations. We believe that we and each of
our subsidiaries qualify for this statutory tax exemption for the year ended
December 31, 2003 and continue to so qualify.

     However, there are several risks that could cause us to become taxed on our
U.S. source income. Due to the absence of final Treasury regulations or other
definitive authority concerning some aspects of this tax exemption under the
relevant provisions of the Code and to the factual nature of the issues
involved, we can give no assurances that our tax-exempt status or that of any of
our subsidiaries will continue indefinitely.

     If we or our subsidiaries are not entitled to this statutory tax exemption
for any taxable year, we or our subsidiaries could be subject for those years to
an effective 4% United States federal income tax on the portion of the income
these companies derive during the year from United States sources. The
imposition of this taxation would have an adverse effect on our profitability.

Because we are a foreign corporation, you may not have the same rights that a
   creditor of a U.S. corporation may have

     We are incorporated under the laws of the Commonwealth of the Bahamas. Our
articles of incorporation and bylaws and the International Business Companies
Act, 1989 govern our affairs. Investors may have more difficulty in protecting
their interests in the face of actions by the management, directors or
controlling stockholders than would stockholders of a corporation incorporated
in a United States jurisdiction. In addition, the executive officers and
administrative activities and assets of the Company are located outside the
United States. As a result, it may be more difficult for investors to effect
service of process within the United States upon the Company, or to enforce both
in the United States and outside the United States judgments against the Company
in any action, including actions predicated upon the civil liability provisions
of the federal securities laws of the United States.

Enforcement of mortgages against our vessels may result in judgments which could
   negatively impact our cash flow and our ability to service our debt

     Each of our mortgaged vessels is registered under either the Panamanian
flag, or another jurisdiction with similar procedures. Under these laws, our
mortgages may be enforced by the mortgagee in an action in admiralty against the
mortgaged vessel. Although the largest proportion of the deadweight tonnage of
our vessels is or will be separately owned by single purpose subsidiaries, under
certain circumstances, a parent company and their shipowning affiliates could be
considered as a group under common control or engaged in a joint venture, and
could be held liable for damages or debts owed by one of their affiliates.
Therefore, it is possible that all of our assets, and those of our subsidiaries,
could be subject to execution upon a judgment against us or any of our
subsidiaries or affiliates. Moreover, although we currently maintain insurance
coverage for certain third party liabilities for each of our vessels, there can
be no assurance that this insurance will continue to be available on favorable
terms or at all.

If a court were to find that we were engaged in a fraudulent conveyance the
   rights of our noteholders would be impaired

     Our Notes are secured by mortgages granted by, and guarantees made by, our
subsidiaries. Accordingly, the making of guarantees, the granting of mortgages
and any payments made under the guarantees by our subsidiaries may be subject to
review under relevant federal and state fraudulent conveyance laws if a
bankruptcy, reorganization or rehabilitation case or a lawsuit (including
circumstances in which bankruptcy is not involved) were commenced by, or on
behalf of, unpaid creditors of the subsidiary guarantors in the future. These
laws differ among various jurisdictions. In general, under these laws, if a
court were to find that, at the time an obligation was incurred, it was done
with the intent of hindering, delaying or defrauding creditors, or the entity
incurring the obligation received less than reasonably equivalent or fair value
consideration in exchange for the incurrence of the obligation, a court could
impose legal and equitable remedies or other action detrimental to the interests
of the holders of our Notes.

     We believe that at the time of, or as a result of, the issuance of the
subsidiary guarantees and mortgages, each of our subsidiary guarantors was not
considered insolvent or rendered insolvent under fraudulent conveyance
standards, was not engaged in a business or transaction for which its remaining
assets would constitute unreasonably small capital, and does not intend to incur
debts beyond its ability to pay such debts as they mature. These beliefs are
based in part on our operating history and our analysis of internal cash flow
projections and estimated values of assets and liabilities. We cannot assure
you, however, that a court passing on these issues would adopt or utilize the
same methodology or assumptions, or arrive at the same conclusions.

Our failure to make or consummate an offer to purchase our notes following a
   change of control may result in the acceleration of our debt

     In the event of a change of control under our indenture, we will be
required to make an offer to purchase all outstanding Notes at a price equal to
101% of the principal balance thereof, plus accrued but unpaid interest to the
date of purchase. We can not assure you that we would be able to obtain such
funds through a refinancing of the Notes to be repurchased or otherwise. Under
these circumstances, our failure to purchase all of the Notes would result in a
default under our indenture and the trustee or the holders of at least 25% in
aggregate principal amount of the outstanding Notes may accelerate the maturity
of all of the Notes. Also, the requirement that we offer to repurchase the Notes
in the event of a change of control may deter a third party from effecting a
transaction that would constitute a change of control for purposes of the
indenture.

Our exposure to the economies of countries in which we do business may have
   negative effects for our results

     A portion of the Company's business occurs in Argentina and the revenues
obtained from customers in that country may be negatively affected because of
reductions of the volumes consumed and carried for these customers as well as
exchange losses which may result from the difference between our current assets
and our current liabilities exposed to devaluation in that country at any
particular point in time.

ITEM 4 - INFORMATION ON THE COMPANY

A.   HISTORY AND DEVELOPMENT OF THE COMPANY

     Ultrapetrol (Bahamas) Limited, a Bahamas corporation, was formed on
December 23, 1997. We are a holding company, with no independent operations of
our own, other than ownership of the shares of our subsidiaries. We were formed
to consolidate the ownership of Princely International Finance Corp., a
Panamanian corporation, Ultrapetrol S.A., an Argentinean corporation, and their
respective subsidiaries ("Ultrapetrol"). The first of the companies that are now
our subsidiaries was formed in 1992. Our business has developed primarily by
acquiring vessels and employing them in transportation service for our
customers. On December 31, 1993 the company owned three vessels. Currently we
own and operate nine oceangoing vessels, one of which is owned by Ultracape
(Holdings) Ltd. ("Ultracape"), an affiliate company that was formed through an
association between us and the AIG-GE Capital Latin America Infrastructure Fund
L.P. ("LAIF") in 2002 of which we own 60%. We also charter three push boats and
89 wet and dry barges to UABL Limited ("UABL"), a company that we formed in a
joint venture with ACBL Hidrovias, Ltd. in October 2000 and of which we own 50%.
The aggregate cargo carrying capacity of our ocean-going fleet is approximately
0.9 million dwt. "Dwt" is an abbreviation for "deadweight tons." The "dwt"
capacity of a cargo vessel is roughly the maximum weight of cargo it can carry,
in metric tons. We employ our trading fleet worldwide, but our vessels trade
primarily in South America with additional operations between Caribbean, United
States, Mediterranean and West African coast ports.

B.   BUSINESS OVERVIEW

     In our ocean business we concentrate on providing specialized
transportation services for an identified group of customers through direct
contracts. This approach enhances customers' ability to transport cargoes at
agreed upon rates generally without regard to the uncertainties associated with
the spot, or single voyage charter markets. In 2003, approximately 20% of our
revenues were derived from operations in the spot charter markets. In UABL's
Hidrovia project (Hidrovia is the 3,442 km of navigable waters on the Parana and
Paraguay Rivers between Argentina, Bolivia, Brazil, Paraguay and Uruguay), our
river barges transport oil products and agricultural products as well as
minerals and other products.

Our Trading Fleet

     We own three Suezmax tankers, two of which have a carrying capacity of
approximately 152,000 dwt and one of approximately 164,000 dwt. these three
vessels are "OBO" types meaning that they are designed to carry oil as well as
ores and other bulk commodities. The Aframax tanker we own has with a cargo
carrying capacity of approximately 84,000 dwt. The two Panamax tankers we own
have a cargo carrying capacity of approximately 64,000 each . These six
ocean-going tanker vessels have an average age of approximately 19.5 years. We
also own the Alianza G3 and Alianza G2 Tug-Barge Units, which are
semi-integrated tug and barge units capable of service in shallow waters and
have cargo carrying capacities of approximately 44,000 dwt and 37,000 dwt
respectively. We also have a cargo carrying capacity of approximately 151,000
dwt with the bulkcarrier Cape Pampas built in 1990 owned through our subsidiary
Ultracape (Holdings) Ltd. Additionally we own three push boats, the Cavalier I,
Cavalier II and Cavalier III, three port tugs, the Jupiter, Mercurio and Marte,
eleven Mississippi River-type tanker barges with a cargo carrying capacity of
31,500 dwt and 78 Mississippi River-type dry cargo barges with a cargo carrying
capacity of 120,600 dwt. The total deadweight capacity of the above described
fleet all above exceeds 1 million tons.

Our Wholly Owned Vessels

     Set forth below is certain information regarding our wholly owned vessels:

<TABLE>
<CAPTION>
                                                                       Year
Vessel                                                     dwt         Built     Vessel Type            Current Employment
------                                                     ---         -----     -----------            ------------------
<S>                                                       <C>          <C>       <C>                    <C>
Princess Laura ......................................      67,069      1982      Panamax Tanker         U.S.A., Caribes, Far East.

Princess Eva ........................................      60,961      1980      Panamax Tanker         Argentina

Princess Nadia ......................................     152,329      1987      Suezmax Tanker         Brazil, Far East, Europe

Princess Susana .....................................     152,300      1986      Suezmax Tanker         Brazil,  Far East, Europe

Princess Marina .....................................      83,930      1986      Aframax Tanker         Chile, Argentina

Princess Katherine ..................................     164,100      1986      Suezmax Tanker         Brazil, Far East, Europe

Alianza G2 Tug-Barge Unit(1) ........................      37,532(2)   1982(3)   Semi-integrated         River Plate/Parana
                                                                                 Tug/Barge Unit

Alianza G3 Tug-Barge Unit(1) ........................      43,813(2)   1993(4)   Semi-integrated        Brazil
                                                                                 Tug/Barge Unit

Cape Pampas .........................................     151,380      1990      Bulkcarrier Capesize   Brazil, Far East, Europe.

Cavalier I Tug & (2) ................................      11,000                Tug/Barge Unit         Paraguay
Gaucho I to IV barges

Cavalier II Tug & (2) ...............................      20,565                Tug/Barge Unit         Paraguay
Gaucho V to XI barges

Cavalier III Tug & (2) ..............................      87,800                Tug/Barge Unit         Paraguay
58 Matador barges

20 Iguazu barges ....................................      32,800                Barge Unit             Paraguay
</TABLE>

(1)  Currently qualified for Argentine cabotage trading.

(2)  As the tugs carry no cargo, they are not considered in the calculations of
     aggregate dwt or age.

(3)  The barge, Alianza G2, was initially built in Spain in 1982 and was
     refurbished and converted to its current service in Argentina in 1994 and
     it is currently engaged as a transfer station in the lower Parana river.
     The tug, Alianza Rosario, was built in the United Kingdom in 1976.

(4)  The barge, Alianza G3, was initially built in 1982 and was refurbished and
     converted to its current service in 1993. The tug, Alianza Campana, was
     built in 1976.

Argentine Cabotage Qualified Vessels

     Our vessels, Alianza G2/G3 Tug-Barge Units aggregating approximately 81,345
dwt, are permitted to engage in cabotage trading in Argentina in compliance with
Argentinean laws and regulations. Cabotage trading in Argentina is the
transportation of passengers or goods by sea or river between ports and cargo
transfer zones in Argentina. This commerce is reserved for Argentinean flag
vessels and vessels with a temporary deletion from the Argentine registry (dual
flag).

     From October 2000 we employed under a long-term time charter with UABL, an
affiliated company, the Alianza G2, the 69 wet and dry river barges and the
push-boats Cavalier I, Cavalier II, Cavalier III and the tug Alianza Rosario and
the port tugs Jupiter, Mercurio and Marte. From October 2003 we add further 20
barges to our fleet which were similarly chartered by UABL.

Vessel Management

     For the day to day management of our operations, we (or our subsidiaries)
have entered into administrative agreements to provide specific services for our
operations.

     For administrative services the respective vessel owning/operating
subsidiary pays Oceanmarine S.A. ("Oceanmarine"), an affiliate of ours, a
monthly fee of $ 9,000 per vessel. Oceanmarine provides all general
administration and accounting services, including financial reporting,
preparation of tax returns, invoicing and accounts payable, office premises, a
computer network, secretarial assistance, payroll and other general duties.

     Through the respective owning/operating subsidiaries, we have contracted to
Ravenscroft Ship Management, Ltd., which has sub-contracted to Ravenscroft
Shipping Inc., a Miami based affiliate of Ravenscroft Ship Management, Ltd.
("Ravenscroft Miami"), the operational management of our vessels. Ravenscroft
Miami earns $12,500 per vessel per month for management services. Ravenscroft
Miami provides technical and communication services for our vessels and serves
as a contact with clients and shipping agencies. Ravenscroft Miami also manages
a number of vessels for third party owners not affiliated with us. On a per
vessel basis, the fees earned by Ravenscroft Miami from such third party owners
are substantially equivalent to the fees paid by us. In the case of our river
barges chartered to UABL we have contracted the shipmanagement responsibilities
to Lonehort Inc., an affiliate of UABL

Customers

     For our most recently completed fiscal year, service for Petrobras, the
government-controlled gas and oil company of Brazil, accounted for 26% of total
revenues, service for Cargill International S.A.accounted for 12% of total
revenue. During the same period UABL, a Bahamian company, accounted for 14% of
total revenue.

Competition

     We face competition in the transportation of crude oil and petroleum
products as well as other bulk commodities from other independent ship owners
and from vessel operators who primarily charter-in vessels to meet their cargo
carrying needs. The charter markets in which our vessels compete are highly
competitive. Competition is primarily based on prevailing market charter rates,
vessel location and vessel manager reputation. Our primary competitor in crude
oil and petroleum products transportation within Argentina, and between
Argentina and other South American countries, is Antares Naviera S.A. and its
affiliated companies including Ultragas, Lauderdale Tankers Corp., Sonap S.A.,
an independent tanker owner and operator. The other major participant in the
Argentina/Brazil trade is Transpetrol. Transpetrol is a subsidiary of Petrobras,
our primary customer in Brazil. In other South American trades our main
competitors are Heidmar Inc., Naviera Sur Petrolera S.A., Naviera El Cano
(through their various subsidiaries) and Sonacol S.A. These companies, and other
smaller entities, are regular competitors of ours in our primary tanker trading
areas.

     From time to time, charter rates available for the carriage of crude oil in
our primary areas of operations (i.e., South America and the Caribbean) may be
higher than those prevailing in other regions. In such event, operators who
typically transport refined products may shift their vessels to the
transportation of crude oil, and vessel operators active in other regions may
shift their vessels into areas serviced primarily by us. We believe that during
such periods our ongoing relationships with customers will be an important
factor in maintaining our competitive position. Competition that we face from
these operators/owners varies greatly from time to time in accordance with
vessel trading patterns and general market activity. We are also affected by
other competitive forces, which impact the supply of crude oil imported to the
United States. When we trade some of our ships as dry cargo vessels we face the
competition of other large shipowners such as The Ofer Group, Docenave and
others.

Industry Conditions

     Certain statistical and graphical information contained in this document
has been supplied by Doll Shipping Consultancy ("DSC"), an independent U.
K.-based company providing market analysis and strategic planning services to
the shipping industry. DSC bases its analysis on information drawn from
published and private industry sources. For purposes of this Industry
discussion, Latin America includes Central America, South America, and the
Caribbean Basin islands. Consistent with revised International Energy Agency
definitions, North America includes the United States, Canada, and Mexico.

     We operate in the international tanker market, which is a global industry
and is affected by many factors throughout the world. Important industry
conditions for our operations are world oil production and demand, oil
production and demand in the Western Hemisphere, the size of the international
tanker fleet, the new production and scrapping of oceangoing tankers and freight
rates. We also operate combination carriers which have been employed in the dry
bulk shipping markets recently to take advantage of high earnings in the sector.
Important industry conditions for dry bulk shipping include world dry bulk
commodity production and demand, the size of the international dry bulk and
combination carrier fleet, the new production and scrapping of oceangoing dry
bulk carriers and freight rates. Doll Shipping Consultancy, an independent
company providing market analysis and strategic planning services to the
shipping industry, furnished the following information regarding industry
conditions in the international tanker and dry bulk markets:

World Oil Overview

     World oil demand increased from about 77.0 million barrels per day, or MBD,
in 2002 to 78.6 MBD in 2003, an increase of approximately 2.1%. Oil demand
decreased in Latin America; increased in North America, China and other non-OECD
Asian countries, OECD Pacific countries, Europe, the Middle East, and the Former
Soviet Union; and was stable in Africa. Specifically, Latin American oil demand
decreased from 4.8 MBD to about 4.7 MBD.

     World oil supply increased from about 76.5 MBD in 2002 to 79.3 MBD in 2003.
OPEC crude oil production increased by about 1.7 MBD in 2003 to 26.8 MBD
(including Iraqi production, which decreased by about 0.7 MBD to approximately
1.3 MBD.) Non-OPEC production increased by 0.9 MBD to about 48.9 MBD. Oil prices
were on average higher at historically high levels in 2003, with benchmark West
Texas Intermediate, or WTI, crude averaging $31.08 per barrel in 2003 compared
with $26.18 per barrel in 2002. WTI prices increased in early 2004, reaching an
average of about $36.74 per barrel in March 2004 due to high demand and market
reaction to actual or potential oil supply reductions.

Western Hemisphere crude oil trades

     U.S. oil demand increased from about 19.8 MBD in 2002 to about 20.1 MBD in
2003, while U.S. crude oil production decreased from approximately 8.1 MBD to
7.9 MBD over the same period.

     Arabian Gulf OPEC producers exported about 2.4 MBD of crude oil to the
United States during 2003, an increase of about 0.2 MBD versus 2002. Exports
from Saudi Arabia increased by about 0.2 MBD while exports from Iraq were
stable. Short haul Mexican and Latin American crude oil exports to the United
States increased to about 3.3 MBD during 2003, an increase of nearly 0.1 MBD.
Venezuelan exports were stable at about 1.2 MBD. Mexico exported about 1.6 MBD
during 2003, an increase of 0.1 MBD. U.S. imports from Colombia were stable at
about 0.2 MBD.

     Latin American oil demand decreased from about 4.8 MBD in 2002 to about 4.7
MBD in 2003. Brazilian oil demand decreased from about 2.2 MBD in 2002 to about
2.1 MBD in 2003. Latin American oil production (excluding Venezuela) was stable
at approximately 3.9 MBD. Venezuelan conventional crude oil production was about
2.0 MBD in 2003, a decrease of about 0.3 MBD from 2002, which followed a 0.4 MBD
decrease from 2001. Brazilian oil production increased by nearly 0.1 MBD to 1.8
MBD, while Colombian and Argentine oil production were unchanged at about 0.6
and 0.8 MBD, respectively.

     Crude oil markets in 2003 were affected by hostilities in Iraq and
continuing production losses in Venezuela. Venezuelan conventional crude
production reached about 2.0 MBD in March after starting the year in January at
only about 0.6 MBD due to a prolonged strike. Production increased to about 2.4
MBD in May and June before settling at about 2.2 MBD since then. Non
conventional oil has returned to prestrike production levels of nearly 0.4 mbd.
Iraqi production (about 2.5 MBD January-February 2003) was lost in March when
hostilities began but has increased from below 0.2 MBD in April to about 1.4 MBD
in September to about 2.0 MBD in December.

     2003 non-OPEC crude oil production increases were 0.9 mbd, led by a 0.9 mbd
increase in Former Soviet Union production. For non-OPEC producers in 2004,
production increases of an additional 1.4 MBD are projected by the International
Energy Agency, or IEA, including about 0.7 MBD from the Former Soviet Union, 0.4
MBD from West Africa, 0.1 MBD from Canada, 0.1 MBD from Ecuador and 0.1 MBD from
the United States.

     Early in 2003 OPEC members produced crude oil at or near capacity to
compensate for lost Iraqi production and continuing Venezuelan production
losses. Later in the year, production losses in Venezuela, Nigeria, and
Indonesia resulted in below target production for some countries and above
target production for others with varying production relative to OPEC targets.
In September 2003, OPEC agreed upon a crude oil production target of 24.5 MBD
for OPEC countries excluding Iraq (OPEC-10) effective November 1, 2003,
theoretically a cut of 0.9 MBD from the June 1 production target. Production in
December 2003 through February 2004 averaged 25.9 MBD, about 1.4 MBD over
target. Although WTI prices averaged $33.69 per barrel, high by historical
standards, OPEC agreed in February to further reduce OPEC 10 crude oil
production to 23.5 MBD effective April 1. OPEC countries continue to produce at
levels above their quotas for commercial reasons and to ensure security of
supply in a high demand, high price oil market.

     The IEA projects an increase in year 2004 global oil demand of about 1.6
MBD to a total 80.2 MBD, consistent with continued economic growth in China,
other Asian countries, and the United States. Increased demand is projected for
China (+0.6 MBD), non-OECD Asia (+0.4 MBD) and the United States (+0.2 MBD),
with stable demand forecast in Latin America. As noted, forecast oil production
is to increase by approximately 0.1 MBD in Canada, 0.1 MBD in Ecuador, and 0.1
MBD in the United States, while remaining stable in elsewhere in non-OPEC Latin
America.

     The IEA projects growing oil demand in 2004, consistent with ongoing
economic recovery in the United States and most of Asia. High and volatile oil
prices in year to date 2004 indicates that oil markets overall remain finely
balanced. Eventual demand growth, normal seasonality, and replenishment of
industry inventories are consistent with increased OPEC production later in the
year. Uncertainty continues in Venezuela. Any combination of normal seasonality,
increased demand, reduction in expected non-OPEC production increases, supply
disruptions, and replacement of short haul Venezuelan crude with longer haul
substitutes would be positive factors for tanker demand.

Tanker Fleet

     Ultrapetrol operates tankers in the Suezmax (120,000 to 200,000 dwt),
Aframax (80,000 to 120,000 dwt), and Panamax (50,000 to 80,000 dwt) sectors.

                    Industry Tanker Fleet as of March 1, 2004

--------------------------------------------------------------------------------
               Cargo Carrying    Total No.   Total    % of Total    % of Fleet
              Capacity (in dwt)   Vessels     Mdwt   Tanker Fleet   over 20 Yrs
                                                       (by dwt)     Old (by dwt)
--------------------------------------------------------------------------------
  Handy      10,000 to 49,999      1,913      57.4        19%           31%
--------------------------------------------------------------------------------
 Panamax     50,000 to 79,999       292       19.0        6%            41%
--------------------------------------------------------------------------------
 Aframax     80,000 to 119,999      614       60.6        20%           19%
--------------------------------------------------------------------------------
 Suezmax    120,000 to 199,999      297       44.0        14%           14%
--------------------------------------------------------------------------------
VLCC/ULCC        200,000+           444      129.1        42%           15%
--------------------------------------------------------------------------------

    Source: Doll Shipping Consultancy based on industry sources and estimates

     In 2003, 1.9 million dwt, or Mdwt, of Suezmaxes were scrapped, while 3.7
Mdwt were delivered. As of March 1, 2004, 0.6 Mdwt have been scrapped, while 1.3
Mdwt have been delivered. The current orderbook is 12.0 Mdwt (77 vessels) with
3.4 Mdwt due for delivery this year, 4.5 Mdwt next year and 3.1 Mdwt in 2006.

     In the Aframax sector, 8.0 Mdwt were delivered in 2003, while 3.1 Mdwt were
scrapped. Through March 1, 2004, 0.5 Mdwt has been scrapped, and 2.0 Mdwt have
been delivered. The orderbook is 15.2 Mdwt (141 vessels) with 3.6 Mdwt due for
delivery this year, 6.5 Mdwt next year and 3.9 Mdwt in 2006.

     In 2003, 1.6 Mdwt of Panamax vessels were delivered, while 2.0 Mdwt were
scrapped. Through March 1, 2004, 0.3 Mdwt have been scrapped, while 0.9 Mdwt
have been delivered. The Panamax orderbook totaled 10.1 Mdwt (148 vessels), with
2.7 Mdwt set for delivery this year, 4.0 Mdwt next year, and 2.5 Mdwt in 2006.

     The International Maritime Organisation adopted accelerated phaseout
regulations for single hull tankers in December 2003 which are expected to enter
into force in April 2005. The regulations are a complex set of requirements that
accelerate the phaseout of pre-MARPOL "Category 1" tankers without protectively
located segregated ballast to 2005. Single hull tankers with protectively
located segregated ballast are to be phased out in 2010. Flag States may make
exceptions for certain single hull, double bottom, or double sided vessels
meeting determined quality and/or structural requirements that allow the vessels
to continue in service until age 25 or 2015, whichever is earlier. Single hull
vessels are also to be banned from carriage of certain heavy oils, with some
exceptions allowed for double bottom or double sided vessels meeting certain
quality criteria. Certain crude oils have been exempted. Port states may
recognize the Flag State exemptions or may choose to enforce the earlier
phaseout dates. The effects of the regulations are complex but will tend to
accelerate the phaseout of single hull vessels. Actual scrapping behavior will
depend upon many variables including the state of the market and future Flag
State and Port State implementation.

Vessel Earnings

     From November 2002 through March 2003, the concurrence of a number of
positive factors resulted in high tanker earnings. Tanker demand increased while
the industry fleet grew moderately. Winter seasonality further increased demand
and resulted in weather delays in Baltic and Black Sea trades. Substitution of
long haul oil for short haul Venezuelan oil and precautionary liftings in
expectation of war in Iraq were also positive factors. The result was strong
tanker earnings.

     Tanker earnings gradually decreased through the second and third quarters
of 2003, but remained well above earnings prevailing in 2002. Oil demand was
lower than first quarter demand, due to seasonality, but was higher than the
corresponding quarter in 2002. Once again, earnings improved beginning in
November 2003 and have remained at high levels through early April 2004 due to
high oil demand and moderate fleet growth.

     Similar to 2003, it is expected that the current high vessel earnings will
decrease later in 2004. Many of the positive factors noted are by their nature
temporary. Oil demand in the second quarter of 2004 is projected to decrease by
2.4 MBD versus the first quarter due to normal seasonality. Vessel deliveries
scheduled for 2004 will increase the supply of vessels and tend to offset
effects of increased tanker demand on vessel earnings.

     However, ongoing positive factors remain in the market. Year on year growth
in oil demand is expected to continue in 2004. Both oil and tanker markets are
starting from a position of tight balance, as shown by recent price and earnings
volatility. Oil and petroleum product inventories are low. Transportation
requirements can grow quickly, as seen this year. Recent history has shown high
scrapping during periods of low vessel earnings, consistent with International
Maritime Organization regulations requiring phase out of single hull vessels
starting in 2003. Market concerns about regulatory changes could strengthen this
tendency.

     Continuation and strength of economic growth in the United States and Asia
are key elements for oil demand. If economic growth continues, oil demand growth
could absorb non-OPEC production increases and increased OPEC production,
resulting in increased tanker demand. If Venezuelan production is low relative
to expectations, substitution of long haul oil for short haul Venezuelan
supplies would be a positive factor for tanker demand. High vessel deliveries
clearly remain a cautionary factor and high earnings levels of early 2004 are
not expected to continue. However, ongoing economic recovery and improved oil
demand could result in equilibrium earnings at attractive levels versus
historical averages.

World Dry Bulk Overview

     Combination carriers have a built-in design flexibility allowing them to
operate in either dry cargo or oil trades. When trading dry, Ultrapetrol
operates combination carriers in the Capesize sector (cargo carrying capacity of
80,000 tonnes or more), which primarily carry iron ore and coal.

     2003 seaborne iron ore trade was estimated at approximately 516 million
tonnes (Mt) , an increase of about 42 Mt from 2002. High demand for steel in
China and elsewhere has led to high iron ore trade. 2003 Chinese iron ore
imports were about 148 Mt, an increase of about 37 Mt over 2002 . Japanese iron
ore imports reached about 132 Mt in 2003, an increase of about 3 Mt. The top
exporters are Australia (189 Mt in 2003, 23 Mt higher than 2002) and Brazil (181
Mt in 2003, 22 Mt higher than 2002.)

     World seaborne iron ore trade is forecast to grow to 558 Mt in 2004, an
increase of 42 Mt from 2003. Chinese iron ore imports in 2004 are projected to
grow to 179 Mt, an increase of 31 Mt, based on high forecast steel production
and demand.

     Coal trade is made up thermal coal (steam coal), burned for its heat value
primarily in power generation, and metallurgical coal (coking coal, met coal),
used in steelmaking. Estimated total 2003 seaborne steam coal trade was about
416 Mt, an increase of some 36 Mt from 2002. Asian steam coal imports reached
approximately 235 Mt, an increase of about 18 Mt from 2002. European Union
imports were about 131 Mt, an increase of about 11 Mt, while United States
imports totalled about 19 Mt, an increase of some 6 Mt. . Leading 2003 exporters
are Australia (about 106 Mt, up 6Mt from 2002), China (about 73 Mt, with 9 Mt of
growth from 2002), and Indonesia (about 90 Mt, up 16 Mt from 2002). World steam
coal trade is forecast to grow to 430 Mt in 2004, an increase of 14 Mt from
2003.

     World coking coal trade was about 172 Mt in 2003, an increase of about 5 Mt
from 2002. 2004 coking coal trade is forecast to grow by about 4 Mt.

Capesize dry bulk vessels and combination carriers.

     Capesize dry bulk vessels and combination carriers have a cargo carrying
capacity of 80,000 dwt or greater. As of March 1, 2004, there were 637 Capesize
dry bulk vessels comprising about 100.9 million dwt. Capesizes primarily
transport iron ore and coal on trade routes where lack of port or Canal
constraints allow realization of economies of scale.

     In 2003, 1.0 Mdwt of Capesizes were scrapped, while 5.6 Mdwt were
delivered. As of March 1, 2004, none have been scrapped, while 1.9 Mdwt have
been delivered. The current orderbook is 19.1 Mdwt (128 vessels) with 6.6 Mdwt
due for delivery this year, 6.7 Mdwt next year and 4.5 Mdwt in 2006.

     Total Capesize combination carrier dwt is 8.2 million, with an estimated
5.0 Mdwt (61%) currently employed in dry bulk trades. 0.2 Mdwt were delivered in
2003, while 0.4 Mdwt were scrapped. None were delivered this year or are
currently on order. 0.1 Mdwt have been scrapped to March 1, 2004.

Capesize dry bulk vessel earnings.

     Throughout 2003, there were large increases dry bulk trade and tonnage
demand while fleet growth remained moderate. Capesize vessel earnings were at
historically high levels from January through September. From October 2003 to
the present, Capesize vessel earnings more than doubled from these already high
historical levels prevailing in earlier in 2003, led by high Chinese steel
demand and strong coal markets.

     Capesize earnings are at very high levels. Any decrease in demand due to
seasonality or a slowdown in Chinese iron ore imports would be expected to
result in lower earnings. Vessel deliveries scheduled for 2004 will increase the
supply of vessels and tend to offset effects of high tonnage demand on vessel
earnings.

     However, ongoing positive factors remain in the market. The Chinese economy
is continuing to perform strongly, while the Japanese and United States
economies are also performing well.

     Dry bulk vessel and combination carrier markets are starting from a
position of tight balance, as shown by recent price and earnings volatility.
Continued strong economic growth in China and other Asian countries could keep
earnings at or near current levels. Additionally, earnings could decrease
significantly and still remain at high levels historically.

     DSC has advised us that (i) some industry data included in this discussion
is based on estimates or subjective judgements in circumstances where data for
actual market transactions either does not exist or is not publicly available,
(ii) the published information of other maritime data collection experts may
differ from this data, and (iii) while we have taken reasonable care in the
compilation of the industry statistical data, graphs and tables and believe them
to be correct, data collection is subject to limited audit and validation
procedures.

Environmental and Other Regulations

     We are required by various governmental and quasi-governmental agencies to
obtain certain permits, licenses and certificates with respect to our
operations. Subject to the discussion below and to the fact that the kinds of
permits, licenses and certificates required for the operations of the vessels we
own will depend upon a number of factors, we believe that we have been and will
be able to obtain all permits, licenses and certificates material to the conduct
of our operations, although there can be no assurance that we will be successful
in our attempts to do so. Failure to maintain necessary permits, licenses or
certificates could require us to incur substantial costs or temporarily suspend
operations of one or more of our vessels.

     We believe that the heightened environmental and quality concerns of
insurance underwriters, regulators and charterers will impose greater inspection
and safety requirements on all vessels in the tanker market. Our vessels are
subject to both scheduled and unscheduled inspections by a variety of
governmental and private interests, each of whom may have a different
perspective or standards from the others. These interests include the local port
state authority (such as the United States Coast Guard or local equivalent),
vessel classification society, underwriters, flag state administration (country
or registry) and charterers, particularly major oil companies which conduct
vetting inspections and load and discharge terminal operators.

International Regulation

     In 1992, the International Maritime Organization, or IMO (the United
Nations agency for maritime safety and the prevention of marine pollution by
ships) adopted regulations that set forth pollution prevention requirements
applicable to tankers. These regulations, which have been adopted by over 150
nations, including many of the jurisdictions in which our tankers operate,
provide, in part, that:

     o    tankers between 25 and 30 years old must be of double hull
          construction or of a mid-deck design with double sided construction,
          unless (1) they have wing tanks or double-bottom spaces not used for
          the carriage of oil, which cover at least 30% of the length of the
          cargo tank section of the hull or bottom; or (2) they are capable of
          hydrostatically balanced loading (loading less cargo into a tanker so
          that in the event of a breach of the hull, water flows into the
          tanker, displacing oil upwards instead of into the sea);

     o    tankers 30 years old or older must be of double hull construction or
          mid-deck design with double sided construction; and

     o    all tankers are subject to enhanced inspections.

     Also, under IMO regulations, a tanker must be of double hull construction
or a mid-deck design with double sided construction or be of another approved
design ensuring the same level of protection against oil pollution if the
tanker:

     o    is the subject of a contract for a major conversion or original
          construction on or after July 6, 1993;

     o    commences a major conversion or has its keel laid on or after January
          6, 1994; or

     o    completes a major conversion or is a newbuilding delivered on or after
          July 6, 1996.

     As of December 31, 2003, we owned 2 single-hull tankers. Under the current
regulations, starting in 2004, and thereafter, such vessels will not be in
compliance with the configuration requirements of the IMO. Accordingly, we will
be required to either adopt hydrostatically balanced loading or structurally
modify such vessels' design or scrap such vessels. The cost of retro-fitting a
tanker with a double-hull may be prohibitive. Other methods of complying with
the IMO regulations and extending the useful life of a tanker to 30 years may be
cost-effective. Such modifications could reduce a tanker's lifting capacity by
10% to 30%.

     Effective September 2002, the IMO accelerated its existing timetable for
the phase-out of single hull oil tankers. These regulations require the
phase-out of most single hull oil tankers by 2015 or earlier, depending on the
age of the tanker and whether it has segregated ballast tanks. After 2007, the
maximum permissible age for single hull tankers will be 26 years. Under current
regulations, retrofitting will enable a vessel to operate until the earlier of
25 years of age and the anniversary date of its delivery in 2017. However, as a
result of the oil spill in November 2002 relating to the loss of the m.t.
Prestige, which was owned by a company not affiliated with us, in December 2003
the Marine Environmental Protection Committee of the IMO adopted a proposed
amendment to the International Convention for the Prevention of Pollution from
Ships to accelerate the phase out of single hull tankers from 2015 to 2010
unless the relevant flag states extend the date to 2015. This proposed amendment
will come into effect in April 2005 unless objected to by a sufficient number of
member states. Moreover, the IMO may still adopt regulations in the future that
could adversely affect the remaining useful lives of single hull tankers.

     The IMO has also negotiated international conventions that impose liability
for oil pollution in international waters and a signatory's territorial waters.
In September 1997, the IMO adopted Annex VI to the International Convention for
the Prevention of Pollution from Ships to address air pollution from ships.
Annex VI is expected to be ratified by the end of 2003, and will become
effective 12 months after ratification. Annex VI, when it becomes effective,
will set limits on sulfur oxide and nitrogen oxide emissions from ship exhausts
and prohibit deliberate emissions of ozone depleting substances, such as
chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content
of fuel oil and allows for special areas to be established with more stringent
controls on sulfur emissions. Compliance with these regulations could require
the installation of expensive emission control systems and could have an adverse
financial impact on the operation of our vessels.

     The requirements contained in the International Safety Management Code, or
ISM Code, promulgated by the IMO, also affect our operations. The ISM Code
requires the party with operational control of a vessel to develop an extensive
safety management system that includes, among other things, the adoption of a
safety and environmental protection policy setting forth instructions and
procedures for operating its vessels safely and describing procedures for
responding to emergencies. We intend to rely upon the safety management system
developed by our affiliate Ravenscroft The ISM Code requires that vessel
operators obtain a safety management certificate for each vessel they operate.
This certificate evidences compliance by a vessel's management with code
requirements for a safety management system. No vessel can obtain a certificate
unless its manager has been awarded a document of compliance, issued by each
flag state, under the ISM Code. Ravenscroft Miami, which manages our vessels, is
certified as an approved ship manager under the ISM Code. As of December 31,
2003 all of our oceangoing wholly owned vessels are ISM certified. As of July 1,
2002 our tugs exceeding 500 gross tons are ISM certified. This certification
does not apply to the equipment used in the river business.

     Noncompliance with the ISM Code and other IMO regulations may subject the
shipowner or bareboat charterer to increased liability, may lead to decreases in
available insurance coverage for affected vessels and may result in the denial
of access to, or detention in, some ports. For example, the U.S. Coast Guard and
European Union authorities have indicated that vessels not in compliance with
the ISM Code will be prohibited from trading in U.S. and European Union ports.

     Although the United States is not a party to these conventions, many
countries have ratified and follow the liability plan adopted by the IMO and set
out in the International Convention on Civil Liability for Oil Pollution Damage
of 1969. Under this convention and depending on whether the country in which the
damage results is a party to the 1992 Protocol to the International Convention
on Civil Liability for Oil Pollution Damage, a vessel's registered owner is
strictly liable for pollution damage caused in the territorial waters of a
contracting state by discharge of persistent oil, subject to certain complete
defenses. Under an amendment to the Protocol that became effective on November
1, 2003, for vessels of 5,000 to 140,000 gross tons (a unit of measurement for
the total enclosed spaces within a vessel), liability will be limited to
approximately $6.5 million plus $907 for each additional gross ton over 5,000.
For vessels of over 140,000 gross tons, liability will be limited to
approximately $122.5 million. The current maximum amount under the 1992 protocol
is approximately $86.98 million. As the convention calculates liability in terms
of a basket of currencies, these figures are based on currency exchange rates on
April 14, 2004. The right to limit liability is forfeited under the
International Convention on Civil Liability for Oil Pollution Damage where the
spill is caused by the owner's actual fault and under the 1992 Protocol where
the spill is caused by the owner's intentional or reckless conduct. Vessels
trading to states that are parties to these conventions must provide evidence of
insurance covering the liability of the owner. In jurisdictions where the
International Convention on Civil Liability for Oil Pollution Damage has not
been adopted, various legislative schemes or common law govern, and liability is
imposed either on the basis of fault or in a manner similar to that convention.
We believe that our P&I insurance will cover the liability under the plan
adopted by the IMO.

U.S. Oil Pollution Act of 1990 and Comprehensive Environmental Response,
Compensation and Liability Act

     The United States regulates the tanker industry with an extensive
regulatory and liability regime for environmental protection and cleanup of oil
spills, consisting primarily of the U.S. Oil Pollution Act of 1990, or OPA, and
the Comprehensive Environmental Response, Compensation and Liability Act, or
CERCLA. OPA affects all owners and operators whose vessels trade with the United
States or its territories or possessions, or whose vessels operate in the waters
of the United States, which include the U.S. territorial sea and the 200
nautical mile exclusive economic zone around the United States. CERCLA applies
to the discharge of hazardous substances (other than oil) whether on land or at
sea. Both OPA and CERCLA impact our operations.

     Under OPA, vessel owners, operators and bareboat charterers are
"responsible parties" who are jointly, severally and strictly liable (unless the
spill results solely from the act or omission of a third party, an act of God or
an act of war) for all containment and clean-up costs and other damages arising
from oil spills from their vessels. These other damages are defined broadly to
include:

     o    natural resource damages and related assessment costs;

     o    real and personal property damages;

     o    net loss of taxes, royalties, rents, profits or earnings capacity;

     o    net cost of public services necessitated by a spill response, such as
          protection from fire, safety or health hazards; and

     o    loss of subsistence use of natural resources.

     OPA limits the liability of responsible parties to the greater of $1,200
per gross ton or $10 million per tanker that is over 3,000 gross tons (subject
to possible adjustment for inflation). The act specifically permits individual
states to impose their own liability regimes with regard to oil pollution
incidents occurring within their boundaries, and some states have enacted
legislation providing for unlimited liability for discharge of pollutants within
their waters. In some cases, states that have enacted this type of legislation
have not yet issued implementing regulations defining tanker owners'
responsibilities under these laws. CERCLA, which applies to owners and operators
of vessels, contains a similar liability regime and provides for cleanup,
removal and natural resource damages. Liability under CERCLA is limited to the
greater of $300 per gross ton or $5 million.

     These limits of liability do not apply, however, where the incident is
caused by violation of applicable U.S. federal safety, construction or operating
regulations, or by the responsible party's gross negligence or willful
misconduct. These limits do not apply if the responsible party fails or refuses
to report the incident or to cooperate and assist in connection with the
substance removal activities. OPA and CERCLA each preserve the right to recover
damages under existing law, including maritime tort law. We believe that we are
in substantial compliance with OPA, CERCLA and all applicable state regulations
in the ports where our tankers call.

     OPA also requires owners and operators of vessels to establish and maintain
with the U.S. Coast Guard evidence of financial responsibility sufficient to
meet the limit of their potential strict liability under the act. The U.S. Coast
Guard has enacted regulations requiring evidence of financial responsibility in
the amount of $1,500 per gross ton for tankers, coupling the OPA limitation on
liability of $1,200 per gross ton with the CERCLA liability limit of $300 per
gross ton. Under the regulations, evidence of financial responsibility may be
demonstrated by insurance, surety bond, self-insurance or guaranty. Under OPA
regulations, an owner or operator of more than one tanker is required to
demonstrate evidence of financial responsibility for the entire fleet in an
amount equal only to the financial responsibility requirement of the tanker
having the greatest maximum strict liability under OPA and CERCLA. We have
demonstrated our financial responsibility by purchasing evidence of insurance
from special purpose insurers approved by the USCG. We believe that our vessels
which call within United States waters comply with these USCG requirements.

     We insure each of our tankers with pollution liability insurance in the
maximum commercially available amount of $1.0 billion. A catastrophic spill
could exceed the insurance coverage available, in which event there could be a
material adverse effect on our business under OPA, with certain limited
exceptions, all newly-built or converted vessels operating in U.S. waters must
be built with double-hulls, and existing vessels that do not comply with the
double-hull requirement will be prohibited from trading in U.S. waters over a
20-year period (1995-2015) based on size, age and place of discharge, unless
retrofitted with double-hulls. Notwithstanding the prohibition to trade
schedule, the act currently permits existing single-hull and double-sided
tankers to operate until the year 2015 if their operations within U.S. waters
are limited to discharging at the Louisiana Offshore Oil Port or off-loading by
lightering within authorized lightering zones more than 60 miles off-shore.
Lightering is the process by which vessels at sea off-load their cargo to
smaller vessels for ultimate delivery to the discharge port. . The Princess Eva
was precluded from operating in U.S. water in 2003. The Princess Laura will be
precluded from operating in U.S. water in 2010, whereas the Princess Marina,
Princess Nadia and Princess Susana will be precluded from operating in U.S.
water in 2014. The Princess Katherine will not be precluded, all based on their
current authorizations from the United States Coast Guard, known as certificate
of compliance, or COC's.

     OPA also amended the Federal Water Pollution Control Act to require owners
or operators of tankers operating in the waters of the United States must file
vessel response plans with the U.S. Coast Guard, and their tankers are required
to operate in compliance with their U.S. Coast Guard approved plans. These
response plans must, among other things:

     o    address a "worst case" scenario and identify and ensure, through
          contract or other approved means, the availability of necessary
          private response resources to respond to a "worst case discharge";

     o    describe crew training and drills; and

     o    identify a qualified individual with full authority to implement
          removal actions.

     OPA does not prevent individual states from imposing their own liability
regimes with respect to oil pollution incidents occurring within their
boundaries. In fact, most U.S. states that border a navigable waterway have
enacted environmental pollution laws that impose strict liability on a person
for removal costs and damages resulting from a discharge of oil or a release of
a hazardous substance. These laws may be more stringent than U.S. federal law.

European Union Tanker Restrictions

     In July 2003, in response to the m.t. Prestige oil spill in November 2002,
the European Union adopted legislation that prohibits all single hull tankers
from entering into its ports or offshore terminals by 2010. The European Union
has also banned all single hull tankers carrying heavy grades of oil from
entering or leaving its ports or offshore terminals or anchoring in areas under
its jurisdiction. Commencing in 2005, certain single hull tankers above 15 years
of age will also be restricted from entering or leaving European Union ports or
offshore terminals and anchoring in areas under European Union jurisdiction. The
European Union is also considering legislation that would: (1) ban manifestly
sub-standard vessels (defined as those over 15 years old that have been detained
by port authorities at least twice in a six month period) from European waters
and create an obligation of port states to inspect vessels posing a high risk to
maritime safety or the marine environment; and (2) provide the European Union
with greater authority and control over classification societies, including the
ability to seek to suspend or revoke the authority of negligent societies. The
sinking of the m.t. Prestige and resulting oil spill in November 2002 has lead
to the adoption of other environmental regulations by certain European Union
nations, which could adversely affect the remaining useful lives of all of our
tankers and our ability to generate income from them. For example, Italy
announced a ban of single hull crude oil tankers over 5,000 dwt. from most
Italian ports, effective April 2001. Spain has announced a similar prohibition.
It is impossible to predict what legislation or additional regulations, if any,
may be promulgated by the European Union or any other country or authority.

Vessel Security Regulations

     Since the terrorist attacks of September 11, 2001, there have been a
variety of initiatives intended to enhance vessel security. On November 25,
2002, the Maritime Transportation Security Act of 2002 (MTSA) came into effect.
To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard
issued regulations requiring the implementation of certain security requirements
aboard vessels operating in waters subject to the jurisdiction of the United
States. Similarly, in December 2002, amendments to the International Convention
for the Safety of Life at Sea (SOLAS) created a new chapter of the convention
dealing specifically with maritime security. The new chapter is scheduled to go
into effect in July 2004 and will impose various detailed security obligations
on vessels and port authorities, most of which are contained in the newly
created International Ship and Port Facilities Security (ISPS) Code. Among the
various requirements are:

     o    on-board installation of automatic information systems, or AIS, to
          enhance vessel-to-vessel and vessel-to-shore communications;

     o    on-board installation of ship security alert systems;

     o    the development of vessel security plans; and

     o    compliance with flag state security certification requirements.

     The U.S. Coast Guard regulations, intended to align with international
maritime security standards, exempt non-U.S. tankers from MTSA vessel security
measures provided such vessels have on board, by July 1, 2004, a valid
International Ship Security Certificate (ISSC) that attests to the vessel's
compliance with SOLAS security requirements and the ISPS Code.
<PAGE>

Risk of Loss and Liability Insurance

General

     The operation of any cargo vessel includes risks such as mechanical
failure, collision, property loss, cargo loss or damage and business
interruption due to political circumstances in foreign countries, hostilities
and labor strikes. In addition, there is always an inherent possibility of
marine disaster, including oil spills and other environmental mishaps, and the
liabilities arising from owning and operating vessels in international trade.
OPA, which imposes virtually unlimited liability upon owners, operators and
demise charterers of any vessel trading in the United States exclusive economic
zone for certain oil pollution accidents in the United States, has made
liability insurance more expensive for ship owners and operators trading in the
United States market. While we believe that our present insurance coverage is
adequate, there can be no guarantee that all risks will be insured, that any
specific claim will be paid, or that we will always be able to obtain adequate
insurance coverage at reasonable rates or at all.

Hull and Machinery Insurance

     As of December 31, 2003 we obtained marine hull and machinery and war risk
insurance, that includes the risk of actual or constructive total loss, for our
wholly owned vessels. The vessels are each covered to at least fair market
value, with deductibles currently ranging from $7,500 to $325,000 per vessel per
incident. We have also arranged increased value coverage where applicable. This
increased value coverage will entitle us, in the event of total loss of a
vessel, to some recovery for amounts not recoverable under the hull and
machinery policy by reason of any under-insurance.

Loss of Hire

     We maintain loss of hire insurance for Cape Pampas, Princess Susana,
Princess Katherine, Princess Nadia and Princess Marina. Loss of hire insurance
covers lost earnings resulting from unforeseen incidents or breakdowns that are
covered by the vessel's hull and machinery insurance and result in lengthy stays
in port or slow steaming at sea. Although loss of hire insurance will cover up
to ninety days of lost earnings, we must bear the first twenty one days' loss,
which is in line with industry practice. We intend to renew these insurance
policies or replace them with other similar coverage if rates comparable to
those on our present policies remain available. There can be no assurance that
we will be able to renew these policies at comparable rates or at all. Future
rates will depend upon, among other things, our claims history and prevailing
market rates.

Protection and Indemnity Insurance

     Protection and indemnity insurance covers our legal liability for our
shipping activities. This includes the legal liability and other related
expenses of injury or death of crew, passengers and other third parties, loss or
damage to cargo, claims arising from collisions with other vessels, damage to
other third-party property, pollution arising from oil or other substances and
salvage, towing and other related costs, including wreck removal. Coverage is
limited to about $4.25 billion with the exception of oil pollution liability,
which is limited to $1.0 billion per vessel per incident.

     This protection and indemnity insurance coverage is provided by protection
and indemnity clubs, or P&I Clubs, which are non-profit mutual assurance
associations made up of members who must be either ship owners or ship managers.
The members are both the insured parties and the providers of capital. Most P&I
Clubs, including the P&I Clubs in which our wholly owned vessels and the
Cavalier Barge Convoys are entered, are members of the International Group of
P&I Associations (the "International Group"). By a pooling agreement among the
International Group, we are subject to calls payable based on the claims records
of (i) ours, (ii) the other members of the P&I Clubs of which we are a member
and (iii) the members of the International Group.

Legal Proceedings

Ultrapetrol S.A. Vs. Province of Tierra Del Fuego
-------------------------------------------------

     On September 17th, 1999, the "Direccion Distrito Buenos Aires de la
Direccion General de Rentas de la Provincia de Tierra del fuego" issued
Resolution D.G.R. (DBA) No. 012/99. The Company was notified of the Resolution
by Letter D.G.R. (DBA) No. 409/99 as of the same date.

     The Resolution announced the intention of the Tax Authority of the Province
of Tierra del Fuego (the "Tax Authority") to determine unilaterally a debt of
the Company for an "Impuesto sobre los Ingresos Brutos" (Gross Income Tax)
accruing as of March 1994, May to September and December 1995; 1996; 1997; May
to December 1998; and February to June 1999 in connection with the operation and
loading of the Company's vessels at the port of Rio Cullen. The debt amounted to
a total of $1,059,836.36 ($769,694.58 tax, $211,635.39 in interest up to
September 30, 1999, and $78,506.39 in fiscal charges).

     On October 1st, 1999, the Company submitted a "Recurso de Reconsideracion"
(Motion for Reconsideration) in response to the Resolution. In this document the
Company contested the position of the Tax Authority based on the following:

     o    The Tax Authority intends to exercise its jurisdiction outside of the
          "3 nautical mile limit" set forth in National Act No. 23.775 and as
          determined by the "space limit" provided for in National Act No.
          18.502.

     o    If the Tax Authority had the power to tax the international carriage
          performed by the Company (a position which is opposed by the Company),
          such jurisdiction would remain limited to that portion of the carriage
          performed within the limits of the Province and would not include that
          portion of the carriage performed outside the Province. The Company
          contends that the vessels had destinations outside of Argentina and
          were engaging in the loading of crude oil from a buoy at open sea
          located more than 8 marine miles from the coast of the Province.

     o    The tax which the Tax Authority is attempting to impose interferes
          with the National Policy on International Trade, in particular policy
          with respect to international transport.

     o    Since it is not possible to transfer the cost of the Provincial Gross
          Income Tax to freight rates, such a tax becomes a tax analogous to the
          National Income Tax. This would result in a violation of the
          compromise undertaken by the Provinces not to charge local "subject to
          distribution" taxes which may overlap with national taxes.

     On October 14th, 1999 the Company filed a declaratory action (accion
declarativa de certeza) subject to the provisions of article 322 of the
Argentine Code of Civil and Commercial Procedure, before the Argentine Supreme
Court of Justice and against the Province of Tierra del Fuego. The action sought
clarification of the existing state of uncertainty with respect to the scope of
the tax jurisdiction of the Province of Tierra del Fuego over income derived
from activities of international transportation of crude oil. It is the
Company's belief that the above-mentioned activities were fully carried out
outside the three marine mile strip counted from the base lines as set forth in
Laws No. 18502 and 23968.

     On October 14th, 1999, the Company paid Pesos seventy (P$70) as Court Fees
for cases involving indeterminable amounts, as provided by Law No. 23898.

     On April 11th, 2000, the Company requested the Tribunal to issue an
injunction to prohibit the Province of Tierra del Fuego from seeking collection
of the contested tax, interest and related charges during the course of the
trial.

     The Argentine Supreme Court of Justice granted the injunction ordered that
the Province of Tierra del Fuego be notified for a twenty-day term plus an
additional sixteen-day term fixed due to distance. It provided that:

     "the injunction be sustained, and therefore the defendant be informed that
     it shall refrain from seeking collection of taxes on gross income in
     connection with the adjustments made by resolution No. 012/99 issued by the
     Provincial Tax Board (Direccion Provincial de Rentas) dated September 17,
     1999, referring to advance payments for March 1994, May to September and
     December 1995, 1996, 1997, May to December 1998, and February to June of
     1999, to the extent that such advance payments would constitute tax
     activities fully carried out outside the three marine mile strip counted
     from the base lines as provided from Laws No. 18502 and 23968, as well as
     any other penalty which is based on these adjustments. A Letter Rogatory be
     filed to the Governor of the Province of Tierra del Fuego to let him know
     that the injunction requested by the Ultrapetrol is sustained."

     On August 2nd, 2000, the Company extended the declaratory action filed
against the Province of Tierra del Fuego, Antartida e Islas del Atlantico Sur,
following the terms of articles 87, 331 et seq., and related provisions of the
Argentine Code of Civil and Commercial Proceedings, in order to receive a ruling
by the Argentine Supreme Court of Justice on the scope of the tax jurisdiction
of the Province of Tierra del Fuego over water mirror located in the Area of the
San Sebastian Bay, and the North of Isla Grande from F(degree) Cabo Espiritu
Santo up to Punta de Arenas, i.e., outside the three marine mile strip counted
from the base lines as provided from Law No. 23968. Consequently, the Company
requested that the defendant be condemned to render ineffective the Resolution
of the Provincial Bureau of Ports (Direccion Provincial de Puertos) No. 227/00,
dated June 28, 2000.

     On August 23rd, 2000, the Argentine Supreme Court of Justice acknowledged
the expansion of the complaint. On October 11th, 2000, the Prosecution of the
Province of Tierra del Fuego answered the complaint and the extension thereof.
On October 12th, 2000, the Secretary of Original Trials of the Argentina Supreme
Court of Justice accepted the answer to the complaint and notified the Company
about the documentary evidence submitted by the defendant. The Company responded
to such notification on November 1st, 2000, in which opposition was expressed to
the production of informative evidence and evidence from accounting experts.

     On December 21st, 2000, the Argentine Supreme Court of Justice declared
that it was incompetent to issue a first instance resolution in connection with
the extension of the complaint due to the constitutional rejection made in
connection with Resolution No. 277/00 of the Provincial Bureau of Ports.

     On March 12nd, 2001, the Argentinian Supreme Court decided to open the
trial stage for the submission of evidence for a thirty-day term. The
Argentinian Supreme Court partially sustained the opposition duly presented by
the Company to the evidences offered by the Province of Tierra del Fuego.

     On May 2nd, 2001 the Supreme Court closed the evidence stage and issued an
order for the addition of the evidence to the main file. Likewise, such Court
issued an order for the service of notices asking the parties to file their
respective summary arguments.

     After the parties have filed their summary arguments, on May 29th, 2002 the
file was sent to the Procuracion General de la Nacion (Office of the Attorney
General) in order that the Procurador General (Attorney General) issue the
pertinent opinion.

     On December 3rd, 2002 the Attorney General, Dr. Nicolas Becerra, issued the
opinion whereby he recommended a favorable judgment for the plaintiff, stating
that the Province of Tierra del Fuego does not have jurisdiction to impose taxes
within the area beyond three marine miles.

     On December 5th, 2002 the Supreme Court sent the case to the members of the
Highest Board of Judges so that the final judgment be entered.

     On September 8th, 2003 the Argentine Supreme Court ruled against the taxing
power of the Province of Tierra del Fuego with respect to gross revenues derived
from activities in off-shore areas located in the territorial seas beyond three
nautical miles from the coast. The Supreme Court declared that the jurisdiction
of the provinces in the territorial seas is limited to three nautical miles
counted from the coast as provided by law 23. 968, and ruled that Section 81 of
the Constitution of the Province of Tierra del Fuego, which extends its
jurisdiction with respect to economic exploitation of the seas to areas subject
to the jurisdiction of the Republic of Argentina, is in conflict with the
Argentine Constitution which expressly provides that the limits of the provinces
must be determined by Congress. As Ultrapetrol made transportation of crude oil
from a point located beyond three nautical miles from the coast to destinations
outside the Province in Tierra del Fuego, its position was accepted. Therefore,
the Supreme Court dismissed the tax claim made by the province due to the lack
of taxing jurisdiction with respect to activities performed out of its
territorial limits.

     The Supreme Court dismissed the claim made by Ultrapetrol in relation with
the extension of the complaint due to the constitutional rejection made in
connection with Resolution No. 277/00 of the Provincial Bureau of Ports.

     The Tax Authority also assessed unilaterally a debt of the Company for
Gross Income Tax accruing as of July 1999 to April 2001 in connection with the
operation and loading of the Company's vessels at the port of Rio Cullen. The
debt amounted to a total of $ 243,024.66 ($193.294,76 tax, $31.728 in interests
up to August 31st, 2001, and $18.001,83 in fiscal charges).

     On September 3rd, 2001, the Company submitted a "Recurso de
Reconsideracion" (Motion for Reconsideration) in response to the Resolution
based on the same arguments originally included in the Motion for
Reconsideration filed with the Tax Authority on October 1st, 1999. The Tax
Authority has not issued a resolution so far.

Ultrapetrol S.A. VS. AFIP-DGA
-----------------------------

     By means of the Customs Import Clearance ("Despacho de Importacion")
(hereinafter, "CIC") No. 026 dated November 25, 1995, Ultrapetrol S.A.
(hereinafter "Ultrapetrol" or the "Company") registered with the Customs
Authority of Bahia Blanca the temporary importation of "Princess Pia" vessel.

     According to Decree No. 1493/92, such temporary importation was authorized
for three years.

     Besides, in compliance with CIC No. 98 003 IT 01 300083-4 also registered
with the Customs Authority of Bahia Blanca, the above mentioned term was
extended, as confirmed by the Transport Secretariat ("Subsecretaria de
Transporte") which authorized the navigation, communication and commerce of
Princess Pia as a vessel of Argentine flag up to November 21, 2001.

     On October 23, 2001 Ultrapetrol's customs agent registered the
re-exportation of Princess Pia with the Customs Authority of Bahia Blanca.

     Subsequently, as for November 22, 2001 the Transport Secretariat authorized
the navigation of Princess Pia as a vessel of Panamanian flag, allowing the
rendering of supplying services within the country.

     On November 16, 2001, customs agent Jorge H. Chaz requested the
cancellation of the vessel's temporary importation, stating that due to
operative reasons such vessel was not able to enter the jurisdiction of the
Customs Authority of Campana.

     In accordance with the aforementioned scenario, the Customs Authority of
Bahia Blanca consider that Ultrapetrol was comprised under the provisions of
Section 970 of the Customs Code and, consequently, issued a resolution claiming
the sum of Argentine $ 4,689,694.83 as import taxes and the sum of Argentine $
4,689,694.83 as fines.

     Such resolution was based in the fact that as the Company requested the
cancellation of the regime without making the vessel available to the Customs
Authority, such authority was not able to exercise its control and verifying
functions as set forth in Section 268 of the Customs Code.

     In response to said resolution, on March 16, 2004 the Company submitted an
appeal with the Argentine Tax Court ("Tribunal Fiscal de la Nacion").

     The main important arguments introduced by the Company were, among others,
that it has not caused any breach to the Customs Code since the Princess Pia has
operated within argentine territory only during the periods in which it was
expressly authorized by the competent authorities and that the issuance of the
appealed resolution was based on an undue interpretation of the customs
legislation. The value of the vessel considered by the Customs Authority in
order to establish the tax and fines claimed has also been objected by
Ultrapetrol.

     Said appeal is nowadays pending of resolution by the Argentine Tax Court.

     In accordance with the arguments put forward by the Company there is a
reasonable possibility that the Company will obtain a favorable decision in this
matter.

     The Company has submitted the case for recovery if the Company is condemned
to pay any amount in this case from its PandI insurance. This type of claim is
covered by PandI insurers subject to the discretional approval of the board.

Ursa Shipping v. Princesss Susana, et al.
-----------------------------------------

     On February 21, 2003, Ursa Shipping Ltd., or Ursa, brought suit in the
United States District Court for the District of New Jersey against our vessel,
Princess Susana and Noble Shipping Ltd. seeking damages arising out of the delay
in delivery of a cargo of Kirkuk crude oil to the Valero terminal in Paulsboro,
New Jersey. (Ursa Shipping v. Princess Susana, et al. Civil Action No.
03-CV-747(FLW).) Princess Susana was detained by the United States Coast Guard
prior to her arrival in Paulsboro when, during a routine Coast Guard tank vessel
examination, a small amount of cargo was found to have leaked from one of the
cargo tanks into one of the void spaces aboard the Princess Susana. The Princess
Susana discharged after a delay of approximately eight days. On or about
February 25, 2003, Valero Marketing and Supply Co., or Valero, commenced an
action against Noble Shipping Ltd. (Valero Marketing and Supply Co. v. Noble
Shipping Ltd., Civil Action No. 03-CV-843 (FLW). The Valero and Ursa complaints
seek damages in excess of $9 million. Noble took the position that the claims
are overstated and they have since been reduced to approximately $7.6 million.

     In connection with the above complaints, the Princess Susana was arrested.
Security was posted by the Princess Susana's owner's protection and indemnity
insurers in the amount of $11.2 million and she was released from arrest
(insurance coverage is in place). Both the Ursa and the Valero complaints have
been answered, defenses have been raised, and a counterclaim has been raised in
the Ursa action seeking, inter alia, unpaid freight and demurrage. Subsequently,
Valero impleaded the seller of the cargo, Taurus Petroleum Ltd., or Taurus, into
the action by way of an amended complaint. Noble has answered the amended
complaint, raised defenses, and brought a cross claim against Taurus for
indemnity.

     Discovery is ongoing and scheduled to conclude at the end of 2004. It is
too early in the course of the litigations to form an opinion as to their
ultimate outcome.

     We believe this claim is covered by insurance. The insurer is actively
conducting the defense through its designated counsel and has not asserted any
objections or defenses to the insurance claim. We would expect any damages
arising from this action (less our policy deductible) to be covered by the
proceeds of such insurance.

     We are party, as plaintiff or defendant, to a variety of lawsuits for
damages arising principally from personal injury and property casualty claims.
All such legal proceedings involving any material claim are ordinary, routine
litigation incidental to our business.

Dividend Policy

     It is the policy of the Company, unless the members decide otherwise, at
the annual general meeting to distribute a dividend of at least thirty percent
(30%) of the Company's net after-tax profit. However, such distributions shall
be subject to the restrictions, terms and conditions which may be imposed on the
Company by lenders, bondholders or other financial institutions, and/or those
limitations imposed by the contracts, agreements or other financial instruments,
including any trust indenture into which the Company may have entered. Also
before making distributions, the Company shall also make adequate reserves as
the Board of Directors may deem necessary for the company's commitments (even if
after giving effect to such reserves the distribution would be lower than thirty
per cent (30%)). The directors may, before recommencing any dividend, set aside
out of the profits of the Company such sum as they think proper as a reserve
fund to meet contingencies, or for equalizing dividends, or for special
dividends or bonuses, or for repairing, improving, maintaining any of the
property of the Company, and for such other purposes as the directors shall in
their absolute discretion think conducive to the interests of the Company.

C.   ORGANIZATIONAL STRUCTURE

     Ultrapetrol (Bahamas) Limited is a company organized and registered as a
Bahamas Corporation since December 1997.

     Ultrapetrol (Bahamas) Limited owns directly 100% of the following
subsidiaries:

     o    Princely International Finance Corp. (a Panamanian corporation)
     o    Massena Port SA ( a Uruguayan corporation)
               -    Dampierre Holding Spain S.L. (a Spanish corporation)
                    -    93 % of Ultrapetrol S.A. (an Argentinean corporation)
                    -    50 % of Parfina SA. (a Paraguayan corporation)
                    -    99 % of Oceanpar SA. (a Paraguayan corporation)

     o    UP River Terminals (Panama) S.A. (a Panamanian corporation)
     o    Kattegat Shipping Inc. (a Panamanian corporation)
     o    Majestic Maritime Ltd. ( a Bahamian corporation)
     o    Stanmore Shipping Inc ( a Panamanian corporation)
     o    Avemar Holding (Bahamas) Limited ( a Bahamian corporation)
     o    Mansan S.A (a Uruguayan corporation)
     o    Parkwood Commercial Corp (a Panamanian corporation)
     o    Internationale Maritime SA (a Bahamian corporation)

     In addition, Ultrapetrol (Bahamas) Limited has an ownership in the
following companies: 92.86 % of UP (River) Holdings Ltd, 50 % of UABL Ltd.
("UABL"), 60% of Ultracape (Holdings) Ltd. ("Ultracape") , 49 % of Maritime
Sipsa S.A. (M.Sipsa) and 27.78 % of UP Offshore (Bahamas) Ltd. ("UP Offshore").
In the case of the latter company we have options to increase our participation
that may be exercised under certain conditions.

     Also, Princely International Finance Corp. has various subsidiaries whose
organization or acquisition is as follows:

                    NAME                          COUNTRY    %OWNED

     o Regal International Investments S.A.     Panamanian    100%
        - Bayham Investment S.A.                Panamanian    100%
        - Draco Investment S.A.                 Panamanian    100%
             - Cavalier Shipping Inc.           Panamanian    100%
     o Danube Maritime Inc.                     Panamanian    100%
     o Baldwin Maritime Inc.                    Panamanian    100%
     o Tipton Marine Inc.                       Panamanian    100%
     o Corporacion de Navegacion Mundial S.A.   Chilean       100%
             - Parfina S.A.                     Paraguayan     50%

     o Oceanview Maritime Inc.                  Panamanian    100%
     o Ultrapetrol International S.A.           Panamanian    100%
     o Kingly Shipping Ltd.                     Bahamian      100%
     o Sovereign Maritime Ltd.                  Bahamian      100%
     o Monarch Shipping Ltd.                    Bahamian      100%
     o Noble Shipping Ltd.                      Bahamian      100%

     o Ultrapetrol de Venezuela, CA             Venezuelan    100%
     o Imperial Maritime (Bahamas) Ltd. Inc.    Panamanian    100%
     o General Venture Inc                      Panamanian    100%
     o Oceanpar S.A.                            Paraguayan      1%
             - Ultrapetrol S.A.                 Argentina       7%
     o Imperial Maritime Ltd.                   Bahamian      100%

D.   PROPERTY AND EQUIPMENT

     We own, directly and indirectly, six ocean-going tankers, one bulkcarrier,
three push boats/tugs, two ocean-going Tug-Barge units, and 89 wet and dry
barges. The vessels' name, dwt, vessel type and date of the original delivery
from the builder's yard are set forth in Item 4. "Information on the Company."
Section B. Business Overview--Our Trading Fleet. We do not own any buildings and
do not pay any rental expense other than as a portion of the administration fees
paid to Oceanmarine.

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.   OPERATING RESULTS

     The following discussion and analysis should be read in conjunction with
the consolidated financial statements of Ultrapetrol (Bahamas) Limited and
subsidiaries for the twelve months ended December 31, 2003, 2002 and 2001
included elsewhere in this report.

General

     We were formed on December 23, 1997 to hold all the capital stock of
Princely International Finance Corporation (a Panamanian company) and
Ultrapetrol S.A. (an Argentine company). The following discussion covers the
audited financial results of the for the twelve months ended December 31, 2002
with a comparison to the audited consolidated financial results for the same
twelve month period in 2001.

     We operate Suezmax, Aframax and Panamax tankers primarily in South America
with additional operations between the Caribbean, United States, West Africa and
the Mediterranean. We also have two oceangoing Tug-Barge units, one of which
operates as a transfer station and 89 barges and three tugs that operate in
barge river trafficking under time charter to UABL Ltd. Our two oceangoing
Tug-Barge units are permitted to engage in cabotage trading in Argentina.
Cabotage trading in Argentina is the transportation of passengers or goods by
sea or river between ports and cargo transfer zones in Argentina. This commerce
is reserved for Argentinean flag vessels that obtained dual flag registration
privileges and Argentinean shipowners who have bareboat chartered foreign flag
vessels and obtained authorization from the Argentinean Maritime Authority.

     During the twelve months of 2003 we employed a significant part of our
fleet on time charter for different clients.

     During the twelve months of 2003, the international freight market
maintained rates above those experienced in 2002.

     The Princess Susana and the Princess Marina were out of service undergoing
mayor repairs during 25 days and 78 days respectively and the Princess Pia and
Princess Eva were out of service due to accidents for 42 days and 124 days,
respectively.

     On April 18, 2003, the Alianza G1 suffered an accident in her main engine
while the vessel was in transit from Argentina to Chile. As a result of this
accident the crankshaft of the vessel was damaged requiring a significant repair
to restore the engine to its full operational power. We settled with its hull
and machinery insurers for a total compensation of $1.9 million in addition to
which we agreed to receive $0.2 million from its loss of hire underwriters and
entered into an agreement to sell the vessel for $2.5 million on August 11th
2003. The vessel was delivered to its new owners on September 17th 2003.

     On May 22, 2003 we entered into a MOA to sell the Princess Veronica for a
total price of $2.0 million. The vessel was delivered to its new owners on June
5th, 2003.

     Our affiliate UABL (50% of which we hold through our unrestricted
subsidiary UP (River) Holdings Ltd. entered into loan agreements on February 27,
2003 with the International Finance Corporation, or "IFC", and Kreditanstalt Fur
Wiederaufbau, or "KfW" with a repayment schedule that starts in June 2005 and
continues until December 2011 in the case of the (A) tranche of the IFC Loan
until December 2009 and in the case of the (B) tranche and the KFW Loan IFC and
KFW have agreed to provide a total of $40 million to finance the capital
expenditures of UABL Limited over the next 3 years. The loans are provided under
two separate agreements to wholly owned subsidiaries of UABL: UABL Barges
(Panama) Inc. $30 million and UABL Paraguay S.A. $10 million. The agreements in
connection with this financing impose restrictions on the ability of UABL to pay
dividends or make other payments to its shareholders if UABL is in default of
its obligations under the loan and require that in conjunction with ACBLH the
Company retain control of UABL.

     On June11, 2003 we entered into a share purchase agreement with IFC
pursuant to which is we have agreed to sell 357 shares (the "Shares")
representing approximately 7.14% of the total share capital of its unrestricted
subsidiary UP (River )Holdings Ltd. ("UP River") for a total price of $5.0
million. In addition, IFC acquired the right to a proportionate share of
payments under the Company's charterparty agreements with UABL dated October 18,
2000 and October 24, 2000. At the same time, we entered into a Shareholders
Agreement with UP River, Inversiones Los Avellanos S.A. and IFC which was
subsequently amended and restated as of August 12, 2003 to include Solimar
Holdings Ltd. and LAIF as parties. Pursuant to the Amended and Restated
Shareholders Agreement IFC has a limited right to put the Shares to UP River.

     On July 25, 2003 the Company's option to repurchase 25,212 of its shares
from Inversiones Los Avellanos S.A. for a total price of $0.9 million expired
and was extended till July 31st 2004.

     On September 10, 2003 we entered into several MOA to purchase a total 20
dry river barges for a total price of $1.0. We employed these barges under time
charter with UABL Ltd.

     On September 23, 2003 we entered into a MOA to sell the Princess Pia for a
total price of $2.9 million. The vessel was delivered to its new owners on
October 24, 2003

     On December 1, 2003 we entered into a MOA to sell the Princess Marisol for
a total price of $4.9 million. The vessel was delivered to its new owners on
December 9, 2003

Revenue

     The majority of our vessels are employed on time charters to affiliated and
unaffiliated companies. The revenue from this operation is derived from a daily
rate that is paid to us for the use of our vessels. Hire revenue accounted for
65% of our total revenues for the twelve months ended December 31, 2003.

     Also, our vessels are employed on a contract of affreightment ("COA") basis
either for single or repetitive voyages. For a COA, the vessel owner or operator
generally pays all voyage and vessel operating expenses and has the right to
substitute one vessel for another. The rate is generally expressed in dollars
per metric ton of cargo. Revenues earned under COA's are referred to as
"freight". COA revenue accounted for 35% of the Company's total revenues for the
twelve months ended December 31, 2003.

     From the total revenues obtained from COA's during the twelve months of
2003 45% were in respect of repetitive voyages for the Company's regular
customers and 55% in respect of single voyages for occasional customers.

Expenses

     When vessels are operated on a COA basis (as well as any time when they are
not operating under time or bareboat charter), all costs relating to a given
voyage, including port charges, canal dues and fuel costs, are paid by the
vessel owner and are recorded as voyage expenses.

     Our operating expenses, or running expenses, are generally paid through
Ravenscroft Miami, an affiliated company, which provides ship management
services that include the cost of all technical management, crewing, spares and
stores, insurance, lubricants, repairs and maintenance. The most significant of
these expenses are maintenance and repairs, wages paid to marine personnel and
marine insurance costs. In the case of our river barges chartered to UABL Ltd.
we contracted the shipmanagement responsibilities to Lonehort Inc., an affiliate
of UABL Ltd.

     Vessels are depreciated to an estimated scrap value on a straight-line
basis over their estimated useful lives. We follow the deferral method of
accounting for survey and dry-dock costs, whereby actual survey and dry-dock
costs are capitalized and amortized over a period of two and one-half years
until the date of the next dry-dock or special survey.

     Our other primary operating expenses include general and administrative
expenses as well as ship management and administration fees paid to Ravenscroft
Miami and Oceanmarine, another affiliate of ours, which provides certain
administrative services. We pay Oceanmarine a monthly fee of $9,000 per vessel
for administrative services including general administration and accounting
(financial reporting, preparation of tax returns), use of office premises, a
computer network, secretarial assistance and other general duties. We also pay
Ravenscroft Miami a monthly ship management fee of $12,500 per vessel for
services including technical management, crewing, provisioning, superintendence
and related accounting functions. We do not expect to pay regular fees to any
affiliated entity other than those described here for management and
administration functions. In the case of our river barges chartered to UABL, we
have contracted the shipmanagement responsibilities to Lonehort Inc., an
affiliate of UABL.

2003 Compared to 2002

                                                             Year December 31
                                                             2003        2002
                                                           --------    --------
                                                          (dollars in thousands)

Freight revenues
      Attributable to wholly owned vessels                   26,445      23,662
      Attributable to wholly chartered-in vessels                42       1,081
                                                           --------    --------
                             Total                           26,487      24,743
Hire revenues
     Attributable to wholly owned vessels                    48,746      48,381
     Attributable to wholly chartered-in vessels                  0           0
                                                           --------    --------
                             Total                           48,746      48,381

                                                           --------    --------
Total Revenues                                               75,233      73,124
                                                           --------    --------

Voyage expenses
     Attributable to wholly owned vessels                   (12,605)     (9,259)
     Attributable to wholly chartered-in vessels                (39)       (926)
                                                           --------    --------
                             Total                          (12,644)    (10,185)

Running costs                                               (28,659)    (27,397)

Amortization of dry-dock expenses                            (7,232)     (8,839)

Depreciation of property and equipment                      (15,335)    (15,968)

Management fees and administrative expenses                  (7,818)     (6,818)

Loss on involuntary conversion of Argentine
receivables                                                              (2,704)
                                                           --------    --------
Operating profit                                              3,545       1,213

Interest expense                                            (16,207)    (16,763)

Financial gain on extinguisment of debt                       1,782           0

Investment in subsidiaries                                    3,140         (45)

Other net income (expenses)                                  (2,461)      1,698)

Revenues
--------

     Total revenues from freight net of commissions increased from $24.8 million
in 2002 to $26.4 million in 2003, or an increase of 6%. This increase is
primarily attributable to the Princess Susana and Princess Veronica COA's
employment instead of time charter operation of those vessels

     Hire revenues net of commissions, increased by 1% from $48.4 to $48.7
million. This increase is attributable to the time charter employment of the
Princess Marisol and Cape Pampas, a new vessel we acquired in July 2002
partially offset by Princess Susana and Princess Veronica COA's employment .

     The total of 103 days out of service experienced by the Princess Marina and
the Princess Susana due to major repairs, and Princess Eva and Princess Pia
which were out of service due to accidents for 166 days during the first six
months of 2003 negatively affected our revenues in this period. Part of this off
hire time is compensated by our loss of hire insurance for which a total of $1.5
million has been included as other income (outside our operational result).

     Operating profit for 2003 was $ 3.5 million, an increase of $2.3 million
from 2002. This difference is mainly attributable to the combined effect of:
lower net earnings of our Panamax size vessels and Alianza G1 which resulted
from time lost due to accidents, lower freight and hire revenues of these
vessels and the subsequent sale of some of these vessels as described above;
lower net earnings of Princess Marina due to her repair period; the sale in the
last quarter of Princess Marisol and higher net earnings of vessels Princess
Katherine, Princess Nadia, and the Princess Susana and the earnings of the Cape
Pampas which operated partially in an improved dry cargo market during the last
quarter of 2003.

Voyage expenses
---------------

     Voyage expenses for 2003 were $12.6 million, as compared to $10.2 million
for 2002, an increase of $2.4 million, or 24%. The increase is primarily
attributable to the Princess Susana and Princess Veronica COA's employment
instead of time charter employment and to a change in trading pattern of
Princess Laura which was employed on shorter voyages between ports where the
port costs are more significant.

Running costs
-------------

     Running costs increased by $1.3 million, or 5%, to $28.7 million in 2003 as
compared to $27.4 million in the equivalent 2002 period. This increase is mainly
attributable to the Cape Pampas, a new vessel acquired in July 2002 and
additional expenses incurred in our Panamax fleet.

Amortization of dry-dock expenses
---------------------------------

     Amortization of dry docking and special survey costs decreased by $1.6
million, or 18%, to $7.2 million in 2003 as compared to $8.8 million in 2002.
The decrease is primarily attributable to the cease of amortization for the
vessels sold during the year. The unamortized balance is included into the gain
or loss disposal calculation.

Depreciation of property and equipment
--------------------------------------

     Depreciation and amortization decreased by $0.7 million, or 4%, to $15.3
million in 2003 as compared to $16.0 million in 2002. This decrease is primarily
due to the sale of the Princess Fatima, Princess Veronica Princess Pia and
Princess Marisol partially offset by an increase attributable to the purchase of
the Cape Pampas.

Management fees and administrative expenses
-------------------------------------------

     Management fees and administrative expenses were $7.8 million in 2003 as
compared to $6.8 million in 2002, an increase of $1.0 million, or 15%. This
increase of $1.0 million is attributable mainly to an increase in administrative
expenses.

Interest expense
----------------

     Interest expenses decreased by $0.6 million, or 4%, to $16.2 million in
2003 as compared to $16.8 million in 2002. The decrease is primarily
attributable to the lower level of financial debt and consequential associated
interest costs.

Financial gain on extinguishment of debt
----------------------------------------

     During the last quarter of 2003, the Company through its subsidiaries,
repurchsed $6.7 million nominal value of its 10.50% First Preferred Ship
Mortgage Notes due 2008. We recognized a gain of $1.8 for the extinguishment of
the debt.

Investment in subsidiaries
--------------------------

     Investment in subsidiaries for 2003 was a gain of $3.1 compared for a loss
of $0.1 in 2002. The difference is mainly due to the Company's 50% interest in
UABL, since whereas in 2003 UABL yielded net income of $4.3 in 2002, it carried
a loss of $2.5.

Other net (expense) income
--------------------------

     This account disclosed an income of $1.7 in 2002 and a loss of $2.5 in
2001. The difference is explained by the combined effect of the following: an
increase in the loss from the sale of property, plant and equipment of $2.1 (a
loss of $3.7 in 2003, as compared to a loss of $1.6 in 2002) and a decrease in
income from claims against insurance companies of $1.8 (income of $1.6 in 2003,
as compared to income of $1.6 in 2002).
<PAGE>

2002 Compared to 2001

                                                         Year ended December 31
                                                            2002         2001
                                                          --------     --------
                                                         (dollars in thousands)

Freight revenues
      Attributable to wholly owned vessels                  23,662       68,137
      Attributable to wholly chartered-in vessels            1,081        5,530
                                                          --------     --------
                             Total                          24,743       73,667
Hire revenues
     Attributable to wholly owned vessels                   48,381       36,266
     Attributable to wholly chartered-in vessels                 0        1,275
                                                          --------     --------
                             Total                          48,381       37,541

                                                          --------     --------
Total Revenues                                              73,124      111,208
                                                          --------     --------

Voyage expenses
     Attributable to wholly owned vessels                   (9,259)     (20,569)
     Attributable to wholly chartered-in vessels              (926)      (6,320)
                                                          --------     --------
                             Total                         (10,185)     (26,889)

Running costs                                              (27,397)     (33,615)

Amortization of dry-dock expense                            (8,839)      (7,246)

Depreciation of property and equipment                     (15,968)     (16,197)

Management fees and administrative expenses                 (6,818)      (7,770)

Loss on involuntary conversion of Argentine
receivables                                                 (2,704)
                                                          --------     --------
Operating profit                                             1,213       19,491

Interest expense                                           (16,763)     (17,698)

Revenues
--------

     Total revenues from freight net of commissions decreased from $73.7 million
in 2001 to $24.7 million in 2002, or a decrease of 66%. This decrease is
primarily attributable to the time charter operation of the Princess Katherine,
Alianza G3, Princess Veronica and Princess Susana instead of COA's employment as
well as a general decrease in freight rates. Another contributing factor was
lower revenue obtained by our Alianza G3-Alianza Campana which spent the entire
first quarter in preparation and positioning for a long term contract. Also the
lower utilization rates of our Panamax vessels coupled with the total of 129
days out of service experienced by Princess Pia and, Princess Fatima due to dry
dock and special survey and Princess Marisol which was out of service due to an
accident for 87 days during 2002, affected negatively our revenues in this
period. Part of this off hire time is compensated by our loss of hire insurance
for which a total of $1.8 million has been included as other income (outside our
operational result).

     Hire revenues net of commissions, increased by 29% from $37.6 to $48.4
million. This increase is attributable to the time charter employment of the
Princess Katherine, Princess Susana, Princess Veronica, Alianza G3 and the
addition of Cape Pampas purchased by Ultracape coupled with a significant
reduction in the charter rates, (because of market conditions) obtained for our
ships after expiry of the time charter agreements that had been fixed in 2001.

     Operating profit for 2002 was $1.2 million a decrease of 94% or $18.3
million from the same period in 2001. The decrease is primarily attributable to
the same factors that affected our revenues in this period detailed above and
includes the full impact of a $2.7 million loss on involuntary conversion of
Argentine receivables which resulted from the devaluation of the Argentine
currency as detailed in "Foreign Currency Transactions". During the first half
of 2002 the receivables denominated in US dollars but collected in Argentine
pesos were exposed to the compulsory conversion to Argentine currency at a rate
of exchange different from the market rate at the time of payment by virtue of
Argentine Law 25.561 and the Decree 214/2002 and thereafter subject to
negotiations between the parties as to the rate of exchange applicable to each
transaction.

     The sale of Princess Fatima resulted in a loss of $1.6 million which has
been accounted for under "other income".

Voyage expenses
---------------

     The 2002 voyage expenses were $10.2 million, as compared to $26.9 million
for 2001, a decrease of $16.7 million, or 62%. The decrease is primarily
attributable to the combined effect of a large portion of the fleet operating on
time charter contract instead of COA and the lower activity of our Panamax
fleet.

Running costs
-------------

     Running costs decreased by $6.2 million, or 18%, to $27.4 million in 2002
as compared to $33.6 million in the equivalent 2001 period. This decrease is
mainly attributable to significant cost reductions achieved on some of our
vessels in operation coupled with the general low level of activity for the
fleet and extended periods of repairs by some of our vessels.

Amortization of dry-dock expense
--------------------------------

     Amortization of dry docking and special survey costs increased by $1.6
million, or 22%, to $8.8 million in 2002 as compared to $7.2 million in 2001.
The increase was due to the amortized portion of dry-docks (i.e., repairs)
carried out in 2001 on the Princess Katherine, Princess Susana and Princess
Nadia.

Depreciation of property and equipment
--------------------------------------

     Depreciation and amortization decreased by $0.2 million, or 1%, to $16.0
million in 2002 as compared to $16.2 million in 2001. This decrease is primarily
due to the sale of the "Princess Fatima" partially compensated by an increase
attributable to the purchase of the Cape Pampas.

Management fees and administrative expenses
-------------------------------------------

     Management fees and administrative expenses were $6.8 million in 2002 as
compared to $7.8 million in 2001, a decrease of $1.0 million, or 13%, which is
attributable mainly to a reduction in administrative expenses of $0.9 million.

Interest expense
----------------

     Interest expenses decreased by $0.9 million, or 5%, to $16.8 million in
2002 as compared to $17.7 million in 2001. The decrease is primarily
attributable to the lower level of financial debt and consequential interest
costs associated.

B.   LIQUIDITY AND CAPITAL RESOURCES

     We are a holding company with no material assets other than those of our
subsidiaries. Consequently, we must fund our capital requirements through other
sources, including cash dividends from subsidiaries, borrowings and shareholder
contributions. We operate in a capital-intensive industry requiring substantial
ongoing investments in revenue producing assets. Our subsidiaries have
historically funded their vessel acquisitions through a combination of bank
indebtedness, shareholder loans, cash flow from operations and equity
contributions. As of December 31, 2003, we had total indebtedness of $155.8
million, $128.3 million from the Note Issue, $2.0 million drawn under a
revolving credit facilities from M&T Bank, the trustee of the Company's Notes,
for Majestic Maritime Ltd., a wholly owned subsidiary, $5.0 million in a senior
loan facility with Nedship Bank (America) N.V. for Kattegat Shipping Inc., a
wholly owned subsidiary, for the purchase of the vessel Princess Marina, $7.5
million in a senior loan facility with M&T Bank for Majestic Maritime Ltd, a
wholly owned subsidiary, for the purchase of the vessel Princess Katherine, $9.3
million in a senior loan facility with Credit Agricole Indosuez for Braddock
Shipping Inc, a 60% owned subsidiary, for the purchase of the vessel Cape
Pampas. We have a short term credit line of $0.2 million drawn under a revolving
credit facilities from the M&T Bank for Stanmore Shipping Inc., a wholly owned
subsidiary and accrued interest expenses for these loans of $ 3.4 million. On
December 31, 2003, we had cash and cash equivalents on hand of $ 8.2 million. We
believe, based upon current levels of operation, cash flow from operations,
together with other sources of funds, that we will have adequate liquidity to
make required payments of principal and interest on our debt, including
obligations under the Notes, complete anticipated capital expenditures and fund
working capital requirements.

Operating Activities
--------------------

     In 2003, we generated a positive $20.5 million in cash flow from operations
compared to $14.4 million for in the same period in 2002. Net losses for the
twelve months of 2003 were $ 11.5 million compared with a net loss of $13.8
million in the same period of 2002.

     Net cash provided by operating activities consists of our net income
increased by non-cash expenses, such as depreciation and amortization of
deferred charges, and adjusted by changes in working capital.

Investing Activities
--------------------

     During the year 2003 our subsidiary UP Offshore Ltd Bahamas disbursed $14.3
million in advances to the yards contracted to build the new offshore vessels of
this total we made equity contribution to UP Offshore for a total of $ 4.4
million and we disbursed $ 2.8 million in the purchase of the new river barges
compared to $16.7 million disbursed for the acquisition of vessels in the same
period of 2002. We disbursed $3.6 million in dry dock and major repair expenses,
compared to $6.0 million in the same period of 2002. Also during the year 2003
the Company received from the proceeds of vessels sales a net of $16.1 million.

Financing Activities
--------------------

     Net cash provided by financing activities decreased by $10.7 million during
2003. The decrease in cash provided by financing activities in the twelve months
of 2003 is mainly attributable to capital payments made during the year 2003.

     During the last quarter of 2003, the Company through its subsidiaries,
repurchased $6,7 million nominal value of its 10,5% First Preferred Ship
Mortgage Notes due 2008 at a net amount of $4.8 million

Foreign Currency Transactions

     Substantially all ours revenues are denominated in U.S. dollars, but 9% of
our total revenues is denominated in US dollars but collected in Argentine pesos
at the equivalent amount of US dollars at the payment date and 9% of our total
out of pocket operating expenses are paid in Argentine pesos. Our operating
results, which are reported in U.S. dollars, may be affected by fluctuations in
the exchange rate between the U.S. dollar and the Argentinean peso. For
accounting purposes, revenue and expense accounts are translated into U.S.
dollars at the exchange rate prevailing on the date of each transaction. We do
not hedge its exposure to foreign currency fluctuations except for the China
construction contract where our subsidiary UP Offshore has a hedge for the
portion of supplies of the vessel construction contract that is denominated in
Euros for a total of Euros 5.7 million at approximately $1.14 per dollar.

Inflation

     We do not believe that inflation has had a material impact on our
operations, although certain of our operating expenses (e.g., crewing, insurance
and dry docking costs) are subject to fluctuations as a result of market forces.
Inflationary pressures on bunker costs are not expected to have a material
effect on our future operations since freight rates for voyage charters are
generally sensitive to the price of ship's fuel. A sharp rise in bunker prices
may have a temporary negative effect on results since freights generally adjust
after prices settle at a higher level.

     Critical accounting policies and estimates

     Our discussion and analysis of the Company's financial condition and
results of operations are based upon the consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires the Company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate its
estimates, including those related to bad debts, useful lives of vessels,
deferred tax assets, and certain accrued liabilities. We base its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We believe the following
critical accounting policies affect its more significant judgments and estimates
used in the preparation of its consolidated financial statements.

     Revenue Recognition

     Revenue is generally recorded when services are rendered, we have a signed
charter agreement or other evidence of an arrangement, pricing is fixed or
determinable and collection is reasonably assured. Revenues are earned under
time charters or affreightment/voyage contracts. Revenue from time charters is
earned and recognized on a daily basis. Revenue for affreightment/voyage
contracts is recognized based upon the percentage of voyage completion. The
percentage of voyage completion is based on the number of voyage days worked at
the balance sheet date divided by the total number of days expected on the
voyage.

     Allowance for Doubtful Accounts

     We maintain allowances for doubtful accounts for estimated losses resulting
from the inability of its customers to make required payments. The estimate of
uncollectible amounts is based on the results of ongoing credit evaluations and
ours historical experience. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required.

     Asset Impairment

     We record impairment losses on long-lived assets used in operations when
indications of impairment are present and the estimated undiscounted cash flows
to be generated by those assets are less than the assets carrying amounts. If
the carrying value is not recoverable, the carrying value of the assets is
reduced to estimate fair value. Undiscounted cash flows are estimated using
expected average long-term day rates and utilization based largely on historical
industry and our experiences. If future market conditions do not meet
expectations, we may be required to record impairment charges which could be
material.

     Useful Life Determination

     Management determines the useful lives of the vessels based upon regulatory
requirements such as OPA 90, market conditions and operational considerations.
We continue to evaluate the reasonableness of the useful lives of the vessels.

     Drydocking Costs

     All of ours vessels must be periodically drydocked and pass certain
inspections to maintain their operating classification, as mandated by certain
maritime regulations. Costs incurred to drydock the vessels are deferred and
amortized on a straight line basis over the period to the next drydocking,
generally 30 months. The alternative accounting policy for drydocking costs is
to expense the expenditures as incurred. The Financial Accounting Standards
Board and the American Institute of Certified Public Accountants have proposed
that the deferral method of accounting for planned major maintenance activities
such as drydocking expenditures should be eliminated. Under the proposal, we
would expense drydocking expenditures as incurred. The unamortized drydocking
costs were approximately $3.5 million as of December 31, 2003.

Recent Developments

     On December 12th ,2003 we entered into a MOA (Memorandum of Agreement) to
sell its Princess Laura for a total price of $4.0 million . The vessel was
delivered to its new owners on January 09th, 2004 for a total price of $ 4.02
million. This price compares with a book value (including unamortized dry dock)
of $ 5.7 million.. therefore resulting in a loss of $ 1.7 million this loss has
been reflected in the 2003 results as an adjustment of the book value of the
vessels at year end.

     On April 23rd 2004 the Company acquired in a series of related
transactions, through two wholly-owned subsidiaries, from ACBL Hidrovias, Ltd.
the remaining 50% equity interest in UABL Ltd. that it did not own along with a
fleet of 50 barges and 7 pushboats. The total purchase price paid in these
transactions was $26.1 million, $17.7 million of which were derived from the
proceeds of previous vessel sales made by Ultrapetrol. The barges and pushboats
enter Ultrapetrol's fleet as "Qualified Substitute Vessels" under the Indenture.

C.   RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

     Not Applicable.

D.   TREND INFORMATION

     Not Applicable.

E.   OFF-BALANCE SHEET ARRANGEMENTS

     Not Applicable.

F.   TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

     The following summarizes the Company's contractual obligations at December
31, 2003, and the effect such obligations are expected to have on its liquidity
and cash flow in future periods.

<TABLE>
<CAPTION>
                                                            Payments due by period
                                               -----------------------------------------------
                                                          less                          more
                                                         than 1     1 - 3     3 - 5    than 5
Contractual Obligations                         Total     year      years     years     years
<S>                                            <C>        <C>       <C>      <C>         <C>
1. Long - Term Debt Obligations
   - M&T Bank (a)                               15,737     4,834     4,912     5,992        --
   - Credit Agricole Indosuez (a)                9,782     2,754     7,027        --        --
   - Private Investors                         188,981    13,476    26,952   148,554        --
2. Capital (Finance) Lease Obligations              --        --        --        --        --
3. Operating Lease Obligations                      --        --        --        --        --
4. Purchase Obligations
   - PSV shipbuilding (b)                       80,806    32,477    46,954     1,375        --
5. Other Long-Term Liabilities Reflected
   on the Company's Balance Sheet under
   GAAP of the primary financial statements
   - Minority interest subject to put rights     5,000        --        --               5,000
                                               -------   -------   -------   -------   -------
Total                                          295,307    53,541    85,844   155,921        --
</TABLE>

(a)  For the calculation of the interest on loans that accrue interest at LIBOR,
     the Company applied the value of such rate as of December 31, 2003, i.e. a
     nominal rate of 1.45% per annum.

(b)(1) The Company has entered into a subscription agreement with AIG-GE
       Capital, LAIF and Comintra Enterprises Ltd. through which each of these
       parties has agreed to subscribe and purchase from UP Offshore (Bahamas)
       Ltd. common shares issued by UP Offshore (Bahamas) Ltd. up to a total
       maximum contribution of $30 million and $2.5 million respectively (of
       which up to 31 December 2003 they had actually contributed $10.5 million
       and Comintra $0.875 million).

(2)  In addition on June 24, 2003 UP Offshore (Bahamas) Ltd. entered into a
     Preference Subscription Agreement with the International Finance
     Corporation through which UP Offshore (Bahamas) Ltd. agreed to issue and
     sell to International Finance Corporation 3 million Preference Shares for
     $3 million (the initial subscription). This initial subscription was
     effected and paid on January 23, 2004.

(3)  The Company also has agreed to finance part of such commitments out of the
     funds to be obtained pursuant to the loan agreement signed by UP Offshore
     (Panama) Ltd. with the International Finance Corporation for an amount of
     $18.4 million, which is to be amortized in semi-annual installments
     beginning June 2005 and ending June 2012, and out of funds to be obtained
     pursuant to the loan signed by UP Offshore Apoio Maritimo Ltda. with the
     International Finance Corporation for an amount of $41 million, to be
     amortized in semi-annual installments from January 2005 through April 2013.

The proceeds of the agreements described in (1) to (3) above will be used to
cover the "Purchase Obligations" described above.

     FUTURE CAPITAL REQUIREMENTS. Our near-term cash requirements are related
primarily to funding operations. We cannot provide assurance that our actual
cash requirements will not be greater than we currently expect. If the Company
cannot generate sufficient cash flow from operations, we may obtain additional
sources of funding through capital market transactions. The company cannot
provide assurance that these sources will be available.

G.   SAFE HARBOR

     Not Applicable.

ITEM 6. - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.   DIRECTORS AND SENIOR MANAGEMENT

     Set forth below are the names and positions of our directors and executive
officers, as of April 30, 2004.

      Name                                   AGE   Position
      ----                                         --------
      Felipe Menendez R. ..................   49   President and Chief Executive
                                                   Officer/Director
      Ricardo Menendez R. .................   55   Director
      James F. Martin......................   49   Director
      Katherine A. Downs...................   49   Director
      Leonard J. Hoskinson.................   50   Director & Secretary

     Certain biographical information with respect to each director and
executive officer is set forth below.

     Felipe Menendez R. Mr. Menendez has been President, Chief Executive Officer
and a Director since incorporation in December 1997 and is the brother of
Ricardo Menendez. He is also President, and has been a Director, of Ultrapetrol
S.A. since its incorporation in 1992. Mr. Menendez is also a Director of
Oceanmarine, SIPSA S.A., a Chilean publicly traded company controlled by the
Menendez family ("SIPSA"), and Ravenscroft Miami. Mr. Menendez has been, and
continues to be, actively involved in other businesses associated with the
Menendez family, as well as other companies affiliated with SIPSA. Mr. Menendez
is also a Director, President and Chief Executive Officer for UABL Limited.

     Ricardo Menendez R. Mr. Menendez has been a Director since incorporation in
December 1997 and is the brother of Felipe Menendez. Mr. Menendez began his
career in the shipping industry in 1970 with Compania Chilena de Navagacion
Interoceania S.A., and has continuously been involved in the management of the
Menendez family's shipping interests. He is the President of Oceanmarine and
Chairman of the Board of Directors of Ravenscroft Miami, and has been a Director
of Ultrapetrol S.A. since it was formed in 1992. Mr. Menendez is also a Director
of SIPSA, and remains involved in the management of other Menendez family
businesses. Mr. Menendez has been a member of the board of The Standard
Steamship Owners Protection & Indemnity Association (Bermuda) Limited (a member
of the International Group of Protection & Indemnity Associations) since 1993.
Mr. Menendez is also a Director in UABL Limited.

     James F. Martin. Mr. Martin has been a Director of Ultrapetrol since 2000.
He is a Managing Director with Emerging Markets Partnership ("EMP"), principal
adviser to the Bermuda-based AIG-GE Capital Latin America Infrastructure Fund
L.P. ("LAIF"), where he heads a sector team focusing on transportation,
environmental services, and oil and gas investments. Prior to joining EMP in
1997, Mr. Martin was head of a team responsible for investments in water and
environmental infrastructure at the International Finance Corporation. Mr.
Martin is also a Director in UABL Limited.

     Katherine A. Downs. Ms. Downs has been a Director of Ultrapetrol since
2000. Ms. Downs is a Director with Emerging Markets Partnership, principal
adviser to the Bermuda-based AIG-GE Capital Latin America Infrastructure Fund
L.P., where she focuses on transportation, environmental services, and oil and
gas investments. Prior to joining EMP in 1997, Ms. Downs was a Managing Vice
President in the private placement group of the Prudential Insurance Company of
America

     Leonard J. Hoskinson. Mr. Hoskinson was appointed Director in March 2000
and assumed the position of Secretary six months later. He is the General
Manager of Ravenscroft Shipping Inc, the Company's appointed manager of its
ocean going fleet with its base in Miami, Florida. Mr. Hoskinson has been
employed by Ravenscroft for over 13 years and prior to that headed the ship
finance group of Marine Midland Bank NA in New York.

B.   COMPENSATION

     The aggregate annual net cost to the Company for the compensation paid to
members of the Board of Directors was zero for the fiscal year ended December
31, 1999, $0.9 million for the fiscal year ended December 31, 2000 ($0.4 million
as monitoring fees and $0.5 million as a bonus to certain directors and
officers), $1.1 million for the fiscal year ended December 31, 2001 ($0.4
million as monitoring fees and $0.7 million as a bonus to certain directors and
officers). $1.1 million for the fiscal year ended December 31, 2002 ($0.4
million as monitoring fees and $0.7 million as a bonus to certain directors and
officers) and $1.1 million for the fiscal year ended December 31, 2003 ($0.4
million as monitoring fees and $0.7 million as a bonus to certain directors and
officers). None of the work conducted by the Board of Directors was conducted in
Argentina.

     We have no funds set aside or accrued to provide pension, retirement or
similar benefits for our directors or officers.

C.   BOARD PRACTICES

     As provided in our Memorandum and Articles of Association and the
International Business Companies Act, 1986, each director elected holds office
until a successor is elected or until his earlier death, resignation or removal.
Officers are elected from time to time by vote of the respective board of
directors and hold office until a successor is elected. The Board of Directors
have not appointed an audit or a compensation committee. The Company's full
board performs the functions of the audit and the compensation committee.

D.   EMPLOYEES

     As of December 31, 2003, we employed approximately 322 employees,
consisting of 17 shore-based personnel and 305 seagoing employees were employed
through our managers . At December 31, 2002, we employed approximately 420
employees, consisting of 16 shore-based personnel and 404 seagoing employees
were employed through our managers and at the year end 2001, we employed
approximately 430 employees consisting of 15 shore-based personnel and 415
seagoing employees were employed through our managers. The crew on board our
vessels is employed through Ravenscroft Ship Management Ltd., Bahamas and
through various manning agents depending on the nationality as listed below:

Indian crew     Orient Ship Management & Manning Pvt., Ltd., Mumbai, India.
Argentine crew  Technical Services S.A.
Filipino crew   C.F. Sharp Crew Management, Manila, Philippines
Ukrainian crew  South Star Ltd., Odessa, Ukraine
Romanian crew   Corona Shipping SRL, Constanta, Romania.

     The crew is employed on contractual terms valid for a fixed duration of
service on board the vessels. We ensure that all the crew employed on board our
vessels have the requisite experience, qualifications & certification to comply
with all international regulations and shipping conventions. Our training
requirements for the crew exceed the statutory requirements. We have in force
special programs such a performance related incentive bonus, which is paid to
senior officers upon rejoining our ships. This ensures retention of qualified
and competent staff within our fleet.

     We always man our vessels above the safe manning requirements of the
vessels' flag state in order to ensure proper maintenance and safe operation of
the vessels. Our crew is employed under the standard collective bargaining
agreements with the seafarers' union in the respective countries.

E.   SHARE OWNERSHIP

DIRECTOR OR OFFICER                                   SHARES

Felipe Menendez R. (1)                                1,138,443
Ricardo Menendez R. (1)                               1,138,443

(1)  Reflects shares beneficially owned by Inversiones Los Avellanos S.A., as
     set forth below in Item 7.--Major Shareholders and Related Party
     Transactions.

ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.   MAJOR SHAREHOLDERS

     The following table sets forth certain information regarding the current
ownership of our outstanding voting securities as of December 31, 2003 by each
person known by us to be the beneficial owner of more than 5% of such securities
and all the directors and senior management as a group.

                                                          Number of
                                                           Common     Percent of
     Name                                                  Shares       Class
     ----                                                  ------       -----

     Solimar Holdings Ltd. (1) ........................     996,008     46.7%
     Inversiones Los Avellanos S.A. (2) ...............   1,138,443     53.3%
     All directors and senior management as a group (2)   1,138,443     53.3%

     ----------
     (1)  Solimar Holdings Ltd. is a wholly-owned subsidiary of AIG-GE Capital
          Latin American Infrastructure Fund L.P., a Bermuda limited
          partnership.
     (2)  In respect of 601,299 held directly by Inversiones Los Avellanos S.A.
          and 537,144 held by Avemar Holdings (Bahamas) Limited, the full voting
          power of which has been granted to Inversiones Los Avellanos S.A. by
          irrevocable proxy. Inversiones Los Avellanos S.A. is controlled by
          members of the Menendez family, including our directors Felipe
          Menendez R. and Ricardo Menendez R.

B.   RELATED PARTY TRANSACTIONS

     A significant part of the Company's revenue is derived from related
parties' chartering activity, mainly from UABL (Bahamas) Limited ("UABL") , an
affiliate and Maritima Sipsa, a new affiliate. We time charter our River Fleet
to UABL, this charter represented in 2003 revenues of approximately $10.2
million. For each of the years ended December 31, 2003, 2002 and 2001 the
revenues derived from related parties amounted to approximately $12.1 million,
$10.0 million and $13.4 million. As of December 31, 2003 and 2002 the net
balances of the accounts receivable and payables from affiliates resulting from
such transactions were approximately $3.5 million and $8.1 million,
respectively.

     The respective owning/operating subsidiaries have contracted with
Oceanmarine for certain administrative services. For these services, we pay
Oceanmarine a monthly fee of $9,000 per vessel. Pursuant to individual ship
management agreements between Ravenscroft Bahamas and the Company's relevant
vessel-owning subsidiaries, Ravenscroft Bahamas has agreed to provide certain
ship management services for all of the Company's ocean vessels. Ravenscroft
Bahamas has subcontracted the provision of these services to Ravenscroft Miami.
For these services, we have agreed to pay Ravenscroft Miami a monthly fee of
$12,500 per vessel plus certain out-of-pocket expenses. In the case of our river
barges chartered to UABL Limited we have contracted the shipmanagement
responsibilities to Lonehort Inc an affiliate company of UABL. Pursuant to an
agency agreement with Ultrapetrol S.A., I Shipping Services Argentina has agreed
to perform the duties of port agent for the Company in Argentina. For these
services, Ultrapetrol S.A. pays I. Shipping Services Argentina fees ranging from
$800 to $1,875 per port call. Each of Ravenscroft Miami, Ravenscroft Bahamas,
Oceanmarine and Inchcape Argentina are affiliates of the Company. We believe
that the payments made to Ravenscroft Miami, Oceanmarine and I. Shipping
Services Argentina reflect market rates for the services provided.

     Under these agreements, these related parties are to provide all necessary
services for the Company and its subsidiaries to operate, including but not
limited to ship management services for its owned vessels, compensation of
directors, accounting services, accommodations and other related services.
Additionally, commissions and agency fees are paid to those related parties. For
each of the years ended December 31, 2003, 2002 and 2001, management fees paid
and/or accrued to related parties for such services amounted to approximately
$2.9 million, $3.2 million and $3.3 million, respectively.

     Ravenscroft sometimes performs ship brokering services on behalf of the
Company. We pay Ravenscroft Miami industry standard rates for such services when
used. For the years ended December 31, 2003, 2002 and 2001, ship broker fees
paid to and accrued for Ravenscroft. for such services amounted to $0,43
million, $0.15 million and $0.27 million, respectively

     Pursuant to an agency agreement with Ultrapetrol S.A., I. Shipping Service
Argentina S.A. has agreed to perform the duties of port agent for the Company in
Argentina. For each of the years ended December 31, 2003, 2002 and 2001 the
amounts paid and/or accrued for such services amounted to $0.1million, $0.2
million and $0.4 million respectively

     Under agreements by the Company and ACBL Hidrovias Limited (Bermuda),
wholly owned subsidiary of ACL, both companies lease certain vessels not
contributed to UABL, to be operated together with the UABL fleet. Additionally,
Lonehort S.A., a shipping agent wholly owned by UABL, bills ship management fees
for the administration of the mentioned vessels. For the years ended December
31, 2003, 2002 and 2001, ship management fees paid to and accrued for Lonehort
S.A. for such services amounted to $ 6.7 million, $6.6 million and $7.3 million,
respectively

     Certain of our directors and senior management hold similar positions with
affiliates. Felipe Menendez, who is our President, Chief Executive Officer and a
Director, is a Director of Oceanmarine and Ravenscroft Miami. Ricardo Menendez,
who is one of our Directors, is the President of Oceanmarine and Chairman of the
Board of Directors of Ravenscroft and Leonard J. Hoskinson, who is one of our
Directors, is General Manager and Director of Ravenscroft Miami. Felipe
Menendez, Ricardo Menendez and James Martin are also Directors in UABL Limited
for which company Felipe Menendez also serves as President and Chief Executive
Officer. Although it is not their current intention to do so, in light of their
positions with such entities, these officers and directors may experience
conflicts of interest in selecting between our interests and those of
Ravenscroft and Oceanmarine.

C.   INTERESTS OF EXPERTS AND COUNSEL

     Not Applicable.

ITEM 8 - FINANCIAL INFORMATION

A.   CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

     See Item 18.

B.   SIGNIFICANT CHANGES

     Not Applicable.

ITEM 9 - THE OFFER AND LISTING

     No active market within or outside the United States exists for the equity
securities of Ultrapetrol (Bahamas) Limited. Our equity securities have not been
registered under the Securities Act of 1933.

     As of the date of this report, there is no active trading market within or
outside the United States for our Notes. The registration statement covering
$135,000,000 in aggregate principal amount of our 10.5 % First Preferred Ship
Mortgage Notes due 2008 was declared effective by the Securities and Exchange
Commission on September 11, 1998, and we then offered the registered notes in
exchange for all of its transfer-restricted notes. The offer to exchange closed
October 19, 1998 and all transfer-restricted notes were exchanged for registered
notes.

ITEM 10 - ADDITIONAL INFORMATION

A.   SHARE CAPITAL

     Not Applicable.

B.   MEMORANDUM AND ARTICLES OF ASSOCIATION

     The following summarizes certain provisions of the Company's Amended and
Restated Memorandum and Articles of Association. This summary is qualified in
its entirety by reference to the International Business Companies Act, 2000 and
the Company's Amended and Restated Memorandum and Articles of Association.
Information on where investors can obtain copies of the Memorandum and Articles
of Association is described under the heading "Documents on Display" under this
Item.

Objects and Purposes

     The Company is incorporated in the Commonwealth of the Bahamas ("The
Bahamas") under the name Ultrapetrol (Bahamas) Limited. The Registered Office of
the Company is situated at H & J Corporate Services Ltd., Shirlaw House, 87
Shirley Street, P.O. Box SS-19084, Nassau, Bahamas. The Registered Agent of the
Company is H & J Corporate Services Ltd., Shirlaw House, 87 Shirley Street, P.O.
Box SS-19084, Nassau, Bahamas.

     Clause 4 of the Company's Memorandum of Association provides that its
objects include the carrying out of the management and exploitation of vessels
of its own or third parties, as well as to act as representatives of other
owners and ship owners or to engage in other related activities; the handling of
maritime, fluvial and lacustrine transportation, domestic and international, of
cargoes, correspondence and maritime works and services in general; the
rendering of training services to personnel relative to sea navigation; the
owning, hiring, and leasing vessels on time charter, bareboat charter, or under
any other charter; to engage in the activities of transportation, transshipment
and unloading operations and cargo complement; to develop loading, discharge and
stowing operations; to render towage services; to act as ship brokers and/or
freighters, to act as maritime agents and to represent vessels of its own or of
third parties; to build vessels and naval appliances as well as to exploit
public and private franchises of any kind, to participate in bids, to construct
ports and also to operate them and represent third parties in any manner in the
maritime business; to effect the purchase, sale, building, management and
exploitation of real estates; and to execute all kinds of acts, representations,
agencies, commissions, consignments, business activities, and management of
properties, stocks and enterprises in general.

Directors

     The business and affairs of the Company shall be managed by the directors.
The Company shall pay to each director an annual fee of US$75,000.00 which
salary shall be paid out of the funds of the Company. Directors shall also be
paid out of funds of the Company all expenses, including travelling expenses,
properly incurred by them in connection with the business of the Company, as may
be approved by resolution of directors and subject to any resolution of the
shareholders. The Amended and Restated Memorandum and Articles of Association do
not place a general prohibition on a director voting in respect of any agreement
or transaction in which he has a financial interest other than by virtue of his
interest in shares of the Company. To this extent, the Company is governed by
the International Business Companies Act, 2000, which states that subject to any
limitations in the Memorandum and Articles of Association and any unanimous
shareholder agreement, no such agreement or transaction is void or voidable by
reason that the director is present at the meeting of directors that approves
the agreement or transaction or that the vote of the director is counted for
that purpose. Such agreement or transaction is valid if the material facts of
the director's interest in the agreement or transaction and his interest in or
relationship to any other party to the agreement or transaction are disclosed in
good faith or are known to the shareholders entitled to vote at a meeting of the
shareholders and the agreement or transaction is approved or ratified by
resolution of the shareholders. A director who has an interest in any particular
business to be considered at a meeting of directors may be counted for the
purpose of determining whether the meeting is duly constituted. A director need
not be a member of the Company and no shareholding qualification shall be
necessary to qualify a person as a director.

Share Rights, Preferences, Restrictions

     Subject to the rights of holders of shares entitled to special rights as to
dividends, all dividends shall be declared and ranked pari passu to shareholders
of record at the date of the declaration of the dividend; but no dividend shall
be paid on those shares which are held by the Company as Treasury shares.
Dividends shall only be paid out of the net profits of the Company and shall
only be paid in cash. It is policy of the Company, unless the members decide
otherwise, at the annual general meeting to distribute a dividend of at least
thirty percent (30%) of the Company's net after-tax profit. But such
distributions shall be subject to the restrictions, terms and conditions which
may be imposed on the Company by lenders, bondholders or other financial
institutions, and/or those limitations imposed by the contracts, agreements or
other financial instruments, including any trust indenture into which the
Company may have entered. Also before making distributions, the Company shall
also make adequate reserves as the Board of Directors may deem necessary for the
Company's commitments (even if after giving effect to such reserves the
distribution would be lower than thirty per cent (30%)). The directors may,
before recommending any dividend, set aside out of the profits of the Company
such sum as they think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for special dividends or bonuses, or for repairing,
improving, maintaining any of the property of the Company, and for such other
purposes as the directors shall in their absolute discretion think conducive to
the interests of the Company. If several persons are registered as joint holders
of any share, any of them may give effectual receipt for any dividend or other
moneys payable in respect of the share.

     Subject to certain voting requirements, the Company may alter or modify the
conditions contained in the Articles and Memorandum of Association as originally
prepared or as amended by resolution of the shareholders.

     No business shall be transacted at any general meeting unless a quorum of
members is present. A quorum shall consist of a shareholder or shareholders
holding not less than sixty-five percent (65%) of the issued and outstanding
shares entitled to vote, provided that for the period beginning on the date of
the Shareholders Agreement and ending on the last Installment Date (both as
defined in the Amended and Restated Articles of Association of the Company), the
presence of Solimar Holdings LDC shall be required to constitute a quorum.
Subject to certain voting requirements contained in Section 1.7 (c) and (e) of
Article I and the exceptions thereto contained in Section 1.8 of Article I, any
question presented to or action taken by the shareholders shall be approved or
disapproved at a meeting at which a quorum shall be present and acting
throughout in accordance with the votes of the shareholders holding a majority
of the shares of Common Stock or other voting Capital Stock of the Company
present at such meeting. At any general meeting of the shareholders unless a
poll is demanded by a shareholder present in person or by proxy, a declaration
by the Chairman of the meeting that a resolution has been carried and an entry
to that effect in the book of proceedings of the shareholders shall be
sufficient evidence of the fact, without proof of the number of proportion of
the votes recorded in favor of or against such resolution. If a poll is demanded
it shall be taken in such manner as the Chairman directs and the result of such
poll shall be deemed to be the resolution of the shareholders. Notice of
meetings of shareholders and other information or written statement required to
be given to shareholders, shall be given by personal service, or sent by
airmail, or by telex, telegram, telefax, cable or other electronic means at the
discretion of the directors.

     There are no limitations under the laws of The Bahamas on the rights of
non-resident or foreign shareholders to hold or exercise voting rights.

C.   MATERIAL CONTRACTS

     None.

D.   EXCHANGE CONTROLS

     The Company is incorporated as an International Business Company ("IBC") in
the Commonwealth of The Bahamas ("The Bahamas"). Under the International
Business Companies Act 2000 ("the Act"), provided that the operations of the
Company are conducted exclusively overseas, it is exempt from the Exchange
Control Regulations Act and any regulations made thereunder. Accordingly, the
import or export of capital and the remittance of dividends, interest or other
payments to non-resident holders of the Company's securities will not require
the prior approval of The Central Bank of The Bahamas ("the Central Bank"),
other than in respect of local Bahamian currency. However, the prior approval of
the Central Bank must be obtained in respect of operations of the Company which
will not be exclusively overseas and likewise for the aforesaid transactions.

     With regard to an IBC whose operations are exclusively overseas, the
transfer of shares between non resident persons and the issuance of shares to or
by such persons may be effected without specific consent under the Exchange
Control Regulations Act and any regulations made thereunder. Issues and
transfers of shares involving any person regarded as resident in The Bahamas for
exchange control purposes require specific prior approval under the Exchange
Control Regulations Act and any regulations made thereunder.

     The Act states that all benefits accruing to an IBC registered in The
Bahamas under the International Business Companies Act, 1989 ("the Old Act")
shall not be affected by the Act. It is felt that this provision preserves the
twenty year exemption granted to the Company from the date of incorporation
under the Old Act in respect of, inter alia, stamp duty, corporation tax and
business license fees. There is a tax information exchange agreement between the
United States and The Bahamas which comes into effect in relation to criminal
tax matters for the taxable period commencing in January 2004 and in relation to
civil matters for the taxable period commencing in January 2006. Expressly, that
arrangement cannot be used by the United States in relation to persons that do
not have U.S. tax liability. Further, there are anti third party provisions,
meaning that the US cannot share this information with any other country or its
agents or employees.

E.   TAXATION

     We have been advised by our Argentinean counsel, Perez Alati, Grondona,
Benites, Arnsten & Martinez de Hoz, that there is some uncertainty under
Argentinean law as to whether payments of interest by Ultrapetrol S.A., our
Argentinean subsidiary, under its guarantee of our Notes, may be subjected to
Argentinean income tax withholding. Perez, Alati et al. have advised us that
payments by Ultrapetrol S.A. made in respect of interest on our Notes might be
subject to withholding imposed by Argentinean taxing authorities. They have
advised us that the withholding determination would depend on whether the
Argentinean taxing authorities view such guarantee payments as equivalent to
loan interest payments.

     Certain of our subsidiaries who are guarantors of our Notes are
incorporated in Panama. We have been advised by our Panamanian counsel, Tapia,
Linares y Alfaro, that there are no taxes or withholding provisions of any
nature to which United States holders of our Notes are subject under the laws of
Panama in respect of any payments that might be made by our Panamanian
subsidiaries under their guarantees of our Notes.

     We have been advised by our Bahamas counsel, Higgs & Johnson, that there
are presently no tax or withholding provisions of the Commonwealth of The
Bahamas to which any United States holders of our Notes would be subject.

     There is currently no reciprocal tax treaty in force between the United
States and any of Panama, the Bahamas or Argentina.

F.   DIVIDEND AND PAYING AGENTS

     Not Applicable.

G.   STATEMENTS BY EXPERTS

     Not Applicable.

H.   DOCUMENTS ON DISPLAY

     The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended. In accordance with these requirements we
file reports and other information with the Securities and Exchange Commission.
These materials, including this annual report and the accompanying exhibits may
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at
the Commission's Regional Offices at 233 Broadway, New York, New York 10048 and
500 West Madison Street, Suite 1400, Northwestern Atrium Center, Chicago,
Illinois 60661. You may obtain information on the operation of the public
reference room by calling 1 (800) SEC-0330, and you may obtain copies at
prescribed rates from the Public Reference Section of the Commission at its
principal office in Washington, D.C. 20549. The SEC maintains a website
(http://www.sec.gov.) that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
SEC. In addition, documents referred to in this annual report may be inspected
at the Company's headquarters at Eighty-Seven Shirley Street, Nassau, Bahamas.

I.   SUBSIDIARY INFORMATION

     Not Applicable.

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk from changes in interest rates, which may
adversely affect our results of operations and financial condition. Our policy
is not to use financial instruments for trading or other speculative purposes,
and we are not a party to any leveraged financial instruments. A discussion of
the fair value of financial instruments and our credit risk is included in Notes
2 and 10, respectively of the consolidated financial statements.

     Exposure To Interest Rates. Short-term variable rate debt, comprised
approximately $7.1 million of our total debt as of December 31, 2003, including
accrued interest. Long-term variable rate debt, comprised approximately $17.0
million of our total debt as of December 31, 2003. Our variable rate debt had an
average interest rate of approximately 2.98% as of December 31, 2003. A
hypothetical 1.0% increase in interest rates on $24.1 million of debt would
cause our interest expense to increase on average approximately $0.24 million
per year over the term of the loans, with a corresponding decrease in income
before taxes.

     Historically, we have not used derivatives or other financial instruments
to hedge the risk associated with the movement in foreign currencies. However,
in November, 2003, UP Offshore (Bahamas) Limited, a subsidiary of the Company,
has entered into a series of hedging contracts with AIG International Inc. in
order to assure the EURO payments due under the shipbuilding contracts for the
construction of two Plataform Supply Vessels (PSVs). Under this EURO forward
foreign exchange contract, the subsidiary obligated to exchange predetermined
amounts of EUROS at specified exchanges rates on specified dates or to make an
equivalent US dollar payment equal to the value of such exchange.

     The following table reflects the amounts of EUROs hedged and the
corresponding exchange rates and settlement dates:

     Nominal amount
     (US dollar)                    Forward rate           Settlement date

     1.431.022               1.14658 USD per Euro          March 25, 2004
     1.431.022               1.14465 USD per Euro          May 28, 2004
     1.431.022               1.14290 USD per Euro          July 30, 2004
     1.431.022               1.14080 USD per Euro          October 28,2004

ITEM 12 - DESCRIPTION OF SECURITIES

     Not Applicable.

                                     PART II

ITEM 13 - DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     Not Applicable.

ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

     Not Applicable.

ITEM 15 CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

     Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer , of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation,
the Chief Executive Officer concluded that the Company's disclosure controls and
procedures are effective in alerting them timely to material information
relating to the Company required to be included in the Company's periodic SEC
filings.

Changes in Internal Controls

     There have been no significant changes in our internal controls or in other
factors that could have significantly affected those controls subsequent to the
date of our most recent evaluation of internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT

     The Company's equity securities are not publicly traded, and its
obligations and duties to Note holders are defined in the indenture to the
Notes. Accordingly, the Company is not required appoint an audit committee or
select a financial expert. The Board of Directors does not believe that the role
played by an audit committee as defined in the Sarbanes Oxley Act. and other
regulations in force is applicable to the Company at this time.

ITEM 16B CODE OF ETHICS

     The Company's equity securities are not publicly traded, and its
obligations and duties to Note holders are defined in the indenture to the
Notes. Accordingly, the Company has not adopted a business code of ethics
because the Board of Directors does not believe that role played by a business
code of ethics is applicable to the Company.

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Pistrelli, Henry Martin y Asociados S.R.L. member of Ernst & Young Global
is the independent accounting firm that audits the financial statements of the
Company and its subsidiaries and is the principal accountant for the audit of
the Company.

     Aggregate fee for professional services rendered for the Company by
Pistrelli, Henry Martin y Asociados S.R.L. in 2003 and 2002 were:

                        2003                    2002

     Audit fee          $0.194 million          $0.147 million

     Tax fee            $0.008 million          $0.005 million

     Audit fees related to the audit services consents and review of documents
filed with the SEC. Audit - related fees relate primarily to the audits of the
Company's financial statements and accounting research and consultation. Tax
fees relate to transfer pricing analysis.

     The Board of Directors pre-approves all audit, audit - related, and non
audit services provides by the Company's independent auditor prior to the
engagement of the independent auditor with respect to such services.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS.

Name of purchaser: Avemar Holding (Bahamas) Limited

Date of the transaction: Oct 12, 2000

(a)  Total number of shares purchased: 537.144

(b)  Average price paid per share: $37,85 (Price with the related expenses to
     this transaction) bare price 37,65

(c)  Total number of Shares purchased as part of publicly announced plan or
     program: N/A

(d)  Maximum number (or approx. dollar value) of Shares that may be purchased
     under the plan or program: N/A

PART III

ITEM 17 - FINANCIAL STATEMENTS

     Not Applicable.
<PAGE>

ITEM 18 - FINANCIAL STATEMENTS

     The following financial statements listed below and set forth on pages F-1
through F-28, together with the auditors' report are filed as part of this
annual report:

Index to Financial Statements of Ultrapetrol (Bahamas) Limited and Subsidiaries

     Independent Auditors' Report (for year 2003 and 2002)                   F-1

     Independent Auditors' Report (for years 2001)                           F-2

     Consolidated Balance Sheets as of December 31, 2003 and 2002            F-3

     Consolidated statements of operations for the years ended
     December 31, 2003, 2002 and 2001                                        F-4

     Consolidated statements of changes in shareholders' equity
     for the years ended December 31, 2003, 2002 and 2001                    F-5

     Consolidated statements of cash flows for the years ended
     December 31, 2003, 2002 and 2001                                        F-6

     Notes to consolidated financial statements for the years
     ended December 31, 2003, 2002 and 2001                                  F-7

Index to Financial Statements of U.A.B.L. Limited

     Independent Auditors' Report (For year 2003 and 2002)                  F-37

     Independent Auditors' Report (for years 2001)                          F-38

     Consolidated balance sheets as of December 31, 2003 and
     2002                                                                   F-39

     Consolidated statements of operation for the year ended
     December 31, 2003, 2002 and 2001                                       F-40

     Statements of changes in stockholders' equity for the year
     ended December 31, 2003, 2002 and 2001                                 F-41

     Consolidated statements of cash flows for the year ended
     December 31, 2003, 2002 and 2001                                       F-42

     Notes to consolidated financial statements for the year
     ended December 31, 2003 2002 and 2001                                  F-43

<PAGE>

REPORT OF INDEPENDENT
AUDITORS

To the Board of Directors of
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES:

     We have audited the consolidated balance sheets of Ultrapetrol (Bahamas)
Limited and its subsidiaries, as of December 31, 2003 and 2002, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. The financial statements of
Ultrapetrol (Bahamas) Limited and its subsidiaries as of December 31, 2001 and
for the year then ended were audited by other auditors who have ceased
operations as a foreign associated firm of the Securities and Exchange
Commission Practice Section of the American Institute of Certified Public
Accountants and whose reported dated April 30, 2002, expressed an unqualified
opinion on those statements.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Ultrapetrol
(Bahamas) Limited and its subsidiaries as of December 31, 2003 and 2002, and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States.

Buenos Aires, Argentina               PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
   March 19, 2004                          Member of Ernst and Young Global

                                                   ENRIQUE C. GROTZ
                                                       Partner
<PAGE>

The following is a copy of the audit report previously issued by PISTRELLI, DIAZ
Y ASOCIADOS (member of Andersen) in connection with Ultrapetrol (Bahamas)
Limited's December 31, 2001 and 2000 financial statements. This audit report has
not been reissued by PISTRELLI, DIAZ Y ASOCIADOS in connection with this filing
on Form 20-F.

REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS

To the Board of Directors of
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES:

     We have audited the accompanying consolidated balance sheets of Ultrapetrol
(Bahamas) Limited and its subsidiaries, a company incorporated under Bahamas
legislation (the Company), as of December 31, 2001 and 2000, and the related
consolidated statements of income (loss), changes in stockholders' equity and
cash flows for the years ended December 31, 2001, 2000 and 1999. These
statements are the responsibility of the Company's Management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for the years ended December 31, 2001, 2000 and 1999, in accordance with
generally accepted accounting principles in the United States of America.

Buenos Aires, Argentina                              PISTRELLI, DIAZ Y ASOCIADOS
   April 30, 2002                                        Member of Andersen

                                                           MARIANA FILAS
                                                              Partner
<PAGE>

          CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2003 AND 2002

    (stated in thousands of U.S. dollars, except par value and share amounts)

                                                               December 31,
                                                           --------------------
                                                             2003        2002
                                                           --------    --------
ASSETS

   CURRENT ASSETS

     Cash and cash equivalents                                8,248       4,724
     Restricted cash                                          1,155       1,662
     Investments                                                194         270
     Accounts receivable, net of allowance for doubtful
       accounts of 1,142 and 810 in 2003 and 2002,
       respectively                                           5,734       7,644
     Due from affiliates                                      9,357      13,246
     Inventories                                              1,009       1,592
     Prepaid expenses                                         2,574       3,299
     Other receivables                                        4,624       6,816
                                                           --------    --------
       Total current assets                                  32,895      39,253
                                                           --------    --------
   NONCURRENT ASSETS

     Dry dock                                                 3,492       8,857
     Other receivables                                        6,414       3,654
     Property and equipment, net                            120,803     134,797
     Restricted cash                                         16,461          --
     Investment in affiliates                                25,729      22,468
     Other assets                                             2,367       4,517
                                                           --------    --------
       Total noncurrent assets                              175,266     174,293
                                                           --------    --------
       Total assets                                         208,161     213,546
                                                           ========    ========

LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY

   CURRENT LIABILITIES

     Accounts payable and accrued expenses                    4,991       5,029
     Due to affiliates                                        1,655         268
     Other financial debt                                    10,462      12,209
     Other payables                                             371         734
                                                           --------    --------
       Total current liabilities                             17,479      18,240
                                                           --------    --------
   NONCURRENT LIABILITIES

     Long-term debt                                         128,341     135,000
     Other financial debt, net of current portion            17,011      21,785
                                                           --------    --------
       Total noncurrent liabilities                         145,352     156,785
                                                           --------    --------
       Total liabilities                                    162,831     175,025
                                                           --------    --------
   MINORITY INTEREST                                         16,716       3,432
                                                           --------    --------

   MINORITY INTEREST SUBJECT TO PUT RIGHTS                    4,821          --
                                                           --------    --------
   SHAREHOLDERS' EQUITY

     Common stock, $.01 par value: authorized shares
       2,134,451, issued and outstanding 2,109,239               21          21
     Treasury stock                                         (20,332)    (20,332)
     Additional paid-in capital                              68,884      68,884
     Accumulated deficit                                    (25,002)    (13,484)
     Accumulated other comprehensive income                     222          --
                                                           --------    --------
     Total shareholders' equity                              23,793      35,089
                                                           --------    --------
   Total liabilities, minority interests and
       shareholders' equity                                 208,161     213,546
                                                           ========    ========

                             See accompanying notes.
<PAGE>

<TABLE>
                        CONSOLIDATED STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

                        (stated in thousands of U.S. dollars)
<CAPTION>
                                                        Year ended December 31,
                                                    --------------------------------
                                                      2003        2002        2001
                                                    --------    --------    --------
<S>                                                 <C>         <C>         <C>
REVENUES

     Freight revenues                                 26,379      24,551      70,952
     Freight revenues from related parties               108         192       2,715
     Hire revenues                                    36,617      38,601      26,843
     Hire revenues from related parties               12,129       9,780      10,698
                                                    --------    --------    --------
     Total revenues                                   75,233      73,124     111,208
                                                    --------    --------    --------

OPERATING EXPENSES (1)

     Voyage expenses                                 (12,644)    (10,185)    (26,889)
     Running costs                                   (28,659)    (27,397)    (33,615)
     Amortization of dry dock                         (7,232)     (8,839)     (7,246)
     Depreciation of property and equipment          (15,335)    (15,968)    (16,197)
     Management fees to related parties               (2,863)     (3,176)     (3,250)
     Administrative expenses                          (4,955)     (3,642)     (4,520)
     Loss on involuntary conversion of Argentine
       receivables                                        --      (2,704)         --
                                                    --------    --------    --------
     Total operating expenses                        (71,688)    (71,911)    (91,717)
                                                    --------    --------    --------
   Operating profit                                    3,545       1,213      19,491
                                                    --------    --------    --------

OTHER INCOME (EXPENSES)

     Interest expense                                (16,207)    (16,763)    (17,698)
     Financial gain on extinguishment of debt          1,782          --          --
     Interest income                                     201         326         296
     Investment in affiliates                          3,140         (45)       (692)
     Other net (expense) income                       (2,461)      1,698       1,408
                                                    --------    --------    --------
     Total other expenses                            (13,545)    (14,784)    (16,686)
                                                    --------    --------    --------

   (Loss) income before income taxes and minority
     interest                                        (10,000)    (13,571)      2,805

     Income taxes                                       (185)       (150)       (390)

     Minority interest                                (1,333)       (132)         --
                                                    --------    --------    --------
   Net (loss) income                                 (11,518)    (13,853)      2,415
                                                    ========    ========    ========
</TABLE>

(1)  In addition to management fees to related parties, operating expenses
     included 6,833, 7,669 and 7,778 in 2003, 2002, and 2001, respectively,
     related principally to ship management fees due to related parties.

                             See accompanying notes.
<PAGE>

<TABLE>
                            CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                               FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

                                       (stated in thousands of U.S. dollars)
<CAPTION>
                                                                             Accumulated
                                                   Additional                   other
                                        Common       paid-in    Treasury    comprehensive   Accumulated
               Balance                   stock       capital      stock        income         deficit      Total
-------------------------------------   -------   -----------   ---------   -------------   -----------   -------
<S>                                     <C>          <C>         <C>           <C>            <C>         <C>
December 31, 2000                            20       64,484     (20,223)           --         (2,046)     42,235

- Capital stock increase                      1        5,295          --            --             --       5,296
- Purchase of own shares                     --           --        (109)           --             --        (109)
- Notes receivables as increase in
    capital stock                            (1)      (1,998)         --            --             --      (1,999)
- Net income and comprehensive income        --           --          --            --          2,415       2,415
                                        -------      -------     -------       -------        -------     -------

December 31, 2001                            20       67,781     (20,332)           --            369      47,838

- Capital stock increase                      1        1,103          --            --             --       1,104
- Net loss and comprehensive loss            --           --          --            --        (13,853)    (13,853)
                                        -------      -------     -------       -------        -------     -------

December 31, 2002                            21       68,884     (20,332)           --        (13,484)     35,089
                                        -------      -------     -------       -------        -------     -------

Comprehensive loss:
- Changes in value of derivatives            --           --          --           222             --         222
- Net loss                                   --           --          --            --        (11,518)    (11,518)
                                                                                                          -------
Total comprehensive loss                     --           --          --            --             --     (11,296)
                                        -------      -------     -------       -------        -------     -------

December 31, 2003                            21       68,884     (20,332)          222        (25,002)     23,793
                                        =======      =======     =======       =======        =======     =======
</TABLE>

                             See accompanying notes.
<PAGE>

<TABLE>
                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                         FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

                                (stated in thousands of U.S. dollars)
<CAPTION>
                                                                        Year ended December 31,
                                                                    --------------------------------
                                                                      2003        2002        2001
                                                                    --------    --------    --------
<S>                                                                 <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net (loss) income                                                 (11,518)    (13,853)      2,415

   Adjustments to reconcile net (loss) income to net cash
        provided by operating activities:

      Depreciation of property and equipment                          15,335      15,968      16,197
      Amortization of dry dock expenses                                7,232       8,839       7,246
      Note issuance expenses amortization                                585         585         585
      Minority interest in equity of subsidiaries                      1,333         132          --
      Financial gain on extinguishment of debt                        (1,782)         --          --
      Loss (gain) from sales of property and equipment                 1,975       1,575        (150)
      Net loss (gain) from investment in affiliates                   (3,140)         45         692

   Changes in assets and liabilities, net:
        (Increase) decrease in assets:
            Accounts receivables                                       1,910       3,320       7,466
            Due from affiliates                                        5,518       4,564     (12,233)
            Inventories                                                  583         (79)        920
            Prepaid expenses                                             725         495       1,682
            Other receivables                                           (568)         94         636
            Other assets                                                  --           8          51
        Increase (decrease) in liabilities:
            Accounts payable and accrued expenses                      1,404         (95)     (8,729)
            Due to affiliates                                          1,387      (7,998)      8,266
            Other payables                                              (363)        558        (128)
            Other                                                       (145)        237        (102)
                                                                    --------    --------    --------
            Net cash provided by operating activities                 20,471      14,395      24,814
                                                                    --------    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES

   Purchase of property and equipment                                (17,089)    (17,690)     (4,802)
   Dry dock expenses                                                  (3,580)     (6,005)    (10,097)
   Proceeds from sales of property and equipment                      16,134       1,867       2,706
   Decrease (increase) in loan to affiliate                           (1,750)        480      (1,721)
   Other                                                                  --         (80)       (219)
                                                                    --------    --------    --------
            Net cash used in investing activities                     (6,285)    (21,428)    (14,133)
                                                                    --------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES

   Minority interest in equity of subsidiaries                        16,192       3,300          --
   Proceeds from financial debt                                           --      11,032          --
   Funds used in reacquisition of the Notes                           (4,754)         --          --
   Repayment of financial debt                                        (4,946)     (3,320)     (5,822)
   Capital contribution                                                   --       1,104       3,297
   Increase in restricted cash                                       (15,954)     (1,662)         --
   Funds used in acquisition of treasury stock                        (1,200)     (4,400)     (6,400)
   Other                                                                  --        (169)       (109)
                                                                    --------    --------    --------
            Net cash provided by / (used in) financing activities    (10,662)      5,885      (9,034)
                                                                    --------    --------    --------
            Net (decrease) increase in cash and cash equivalents       3,524      (1,148)      1,647

            Cash and cash equivalents at the beginning of year         4,724       5,872       4,225
                                                                    --------    --------    --------
            Cash and cash equivalents at the end of year               8,248       4,724       5,872
                                                                    --------    --------    --------
</TABLE>

                             See accompanying notes.
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        (stated in thousands of U.S. dollars, except otherwise indicated)

1.   CORPORATE ORGANIZATION AND CONSOLIDATED COMPANIES

     Organization

     Ultrapetrol (Bahamas) Limited ("Ultrapetrol Bahamas" or "the Company") is a
     company organized and registered as a Bahamas Corporation since December
     1997.

     The Company's operations consist of international and inland transportation
     of petroleum and dry-cargo products by vessels and barges owned by its
     subsidiaries. Revenues are generated through time and freight charters with
     related and unrelated clients.

     On March 7, 2000 the Company signed an agreement to issue and sell newly
     issued voting common shares representing a total of up to 49.9% of its
     issued and outstanding capital stock to Solimar Holdings LDC "Solimar", a
     newly formed company owned jointly by WSUP investors LDC, an affiliate of
     WestSphere Capital, and AIG-GE Capital Latin American Infraestructure Fund
     L.P. (collectively the "investors") for up to 50,000.

     On March 17, 2000 Solimar acquired the first tranche of 498,004 shares
     representing 50% of the total newly issued voting common shares to be sold
     under the stock sale agreement for a purchase price of 25,000, with net
     proceeds after issuance costs of 22,836.

     The second tranche was acquired on June 16, 2000, through the issuance of
     298,803 shares, under the mentioned agreement, for a price of 15,000, with
     act proceeds after issuance costs of 14,180.

     On July 24, 2000, the last tranche was acquired for 10,000 consisting of
     199,201 shares with net proceeds to the Company of 9,411.

     On June 28, 2001, the Company issued 138,443 new shares for 5,295 which
     were totally subscribed by Los Avellanos, one of the Company's original
     shareholders and was paid 3,297 in 2001 and 1,104 in 2002 and the balance
     are payable in July 2004. As of December 31, 2003 and 2002 the outstanding
     payment was 894 and was shown as a reduction of shareholders' equity. The
     Company has an option to repurchases 25,212 of its shares for a total price
     of 894 from Inversiones Los Avellanos S.A. until July 31, 2004.

     As of December 31, 2003 the shareholders of Ultrapetrol Bahamas are Solimar
     Holdings LDC, Inversiones Los Avellanos S.A. and Avemar Holdings (Bahamas),
     a wholly owned subsidiary of the Company (See Note 16), in the proportion
     of 46.66%, 28.17% and 25.17%, respectively. Since Avemar Holdings (Bahamas)
     granted an irrevocable proxy to Inversiones Los Avellanos S.A. in full for
     all of its voting powers related to its interest in the Company, as of
     December 31, 2003, Inversiones Los Avellanos S.A. held 53.30% of the
     Company's voting rights.

     As of December 31, 2003, 2002 and 2001 the consolidated financial
     statements include the accounts of the Company and its subsidiaries
     described as follows:

<TABLE>
<CAPTION>
                                                                                  Percentage of shares
                                                                                 held as of December 31,
                                                                                 -----------------------
                     Company                                       Origin        2003     2002    2001
--------------------------------------------------------------   ----------      ----     ----    ----
<S>                                                              <C>            <C>      <C>      <C>
Princely International Finance Corp. ("Princely")                Panamanian      100%     100%    100%

- General Venture Inc.                                           Panamanian      100%      -       -
- Regal International Investments S.A. ("Regal")                 Panamanian      100%     100%    100%

     - Bayham Investment S.A. ("Bayham")                         Panamanian      100%     100%    100%
     - Draco Investment S.A. ("Draco")                           Panamanian      100%     100%    100%
          - Cavalier Shipping Inc. ("Cavalier")                  Panamanian      100%     100%    100%

- Danube Maritime Inc. ("Danube")                                Panamanian      100%     100%    100%

- Baldwin Maritime Inc. ("Baldwin")                              Panamanian      100%     100%    100%

- Tipton Marine Inc. ("Tipton")                                  Panamanian      100%     100%    100%

- Corporacion de Navegacion Mundial S.A. ("CorNaMuSA")           Chilean         100%     100%    100%
          - Parfina S.A. ("Parfina")                             Paraguayan      50%      50%     50%

- Panpetrol Shipping S.A. ("Panpetrol")                          Panamanian      100%     100%    100%

- Oceanview Maritime Inc. ("Oceanview")                          Panamanian      100%     100%    100%

- Ultrapetrol International S.A. ("Ultrapetrol International")   Panamanian      100%     100%    100%

- Kingly Shipping Ltd. ("Kingly")                                Bahamanian      100%     100%    100%

- Sovereign Maritime Ltd. ("Sovereign")                          Bahamanian      100%     100%    100%

- Monarch Shipping Ltd. ("Monarch")                              Bahamanian      100%     100%    100%

- Noble Shipping Ltd. ("Noble")                                  Bahamanian      100%     100%    100%

- Stately Shipping Ltd. ("Stately")                              Bahamanian      100%     100%    100%

- Imperial Maritime Ltd.                                         Bahamanian      100%     100%    100%

- Imperial Maritime Ltd. (Bahamas) Inc.                          Panamanian      100%     100%    100%

- Oceanpar S.A. ("Oceanpar")                                     Paraguayan       1%      100%    100%

          - Ultrapetrol S.A.                                     Argentinean      7%       -       -

- Ultrapetrol de Venezuela C.A.("Ultrapetrol Venezuela")         Venezuelan      100%     100%    100%

Majestic Maritime Ltd. ("Majestic")                              Bahamanian      100%     100%    100%

UP (River) Holding Ltd. ("Up River")                             Bahamanian     92,86%    100%    100%

UP River Terminal (Panama) S.A.                                  Panamanian      100%     100%     -

Stanmore Shipping Inc. ("Stanmore")                              Panamanian      100%     100%    100%

Mansan S.A. ("Mansan")                                           Uruguayan       100%     100%    100%

Kattegat Shipping Inc. ("Kattegat")                              Panamanian      100%     100%    100%

Avemar Holding (Bahamas) Ltd. ("Avemar)                          Bahamanian      100%     100%    100%

Parkwood Commercial Corp. ("Parkwood")                           Panamanian      100%     100%    100%

Internationale Maritime S.A. ("Internationale Maritime")         Bahamanian      100%     100%    100%

Ultracape (Holdings) Ltd.                                        Bahamanian      60%      60%      -

- Ultracape International S.A.                                   Panamanian      100%     100%     -

     - Braddock Shipping Inc. ("Braddock")                       Panamanian      100%     100%     -

     - Invermay Shipping Inc. ("Invermay")                       Panamanian      100%     100%     -
- Palmerston Shipping Inc.                                       Panamanian      100%     100%     -

- Wallasey Shipping Inc. ("Wallasey")                            Panamanian      100%     100%    100%

UP Offshore (Bahamas) Ltd.                                       Bahamanian     27,78%   27,78%    -

- UP Offshore Apoio Maritimo Ltda.                               Brasilian      99,99%   99,99%    -

- UP Offshore Panama S.A.                                        Panamanian      100%     100%     -

     - Packet Maritime Inc.                                      Panamanian      100%     100%     -
     - Padow Shipping Inc.                                       Panamanian      100%     100%     -
     - Pampero Navigation Inc.                                   Panamanian      100%     100%     -
     - Pelorus Maritime Inc.                                     Panamanian      100%     100%     -
     - Postgreve Shipping Inc.                                   Panamanian      100%     100%     -
     - Primage Navigation                                        Panamanian      100%     100%     -
Massena Port S.A.                                                Uruguayan       100%      -       -
     - Danpierre Holding Sapin S.L.                              Spanish         100%      -       -
          - Ultrapetrol S.A.                                     Argentinean     93%       -       -
          - Parfina S.A.                                         Paraguayan      50%       -       -
          - Oceanpar S.A.                                        Paraguayan      99%       -       -
</TABLE>

     Events in Argentina

     Beginning in 1991, the Argentine peso ("peso") was tied to the US dollar at
     a rate of one peso to one US dollar. As a result of economic instability
     and substantial withdrawals from the banking system, in early December
     2001, the Argentine government instituted restrictions that prohibit
     foreign money transfers without Central Bank approval and only allow cash
     withdrawals from bank accounts for personal transactions in small amounts
     with certain limited exceptions. While the legal exchange rate remained at
     one peso to one US dollar, financial institutions were allowed to conduct
     only limited activity due to these controls, and currency exchange activity
     was effectively halted except for personal transactions in small amounts.

     On January 6, 2002, the Argentine government abolished the one peso to one
     US dollar legal exchange rate. On January 9, 2002, Decree 71 created a dual
     exchange market whereby foreign trade transactions were conducted at an
     official exchange rate of 1.4 peso to one US dollar and other transactions
     were conducted in a free floating exchange market. On February 8, 2002,
     Decree 260 unified the dual exchange market and allowed the peso to float
     freely with the US dollar.

     On February 3, 2002, Decree 214 required all contracts that were previously
     payable in US dollars to be payable in pesos. Pursuant to an emergency law
     passed on January 10, 2002, US dollar obligations between private parties
     due after January 6, 2002, were to be liquidated in pesos at a negotiated
     rate of exchange which reflects a sharing of the impact of the devaluation.
     The Company's settlements in pesos of the existing US dollar-denominated
     agreements were completed by June 30, 2002.

     Absent the emergency law that was enacted on January 10, 2002, the
     devaluation of the peso would have had no effect on the Company's US
     dollar-denominated receivables at December 31, 2001. However, a 2,704 loss
     resulting from the involuntary conversion of certain receivables from U.S.
     dollars to pesos was recorded in 2002 and is reflected in "Loss on
     involuntary conversion of Argentine receivables" in the accompanying
     statement of operations.

     The majority of the previously mentioned Argentine subsidiary's revenues
     are denominated and collected in U.S. dollars. In addition, this subsidiary
     does not have financial loans denominated in pesos in Argentina.
     Accordingly, the above economic changes in Argentina did not significantly
     adversely affect the Company. The most significant impact related to the
     reduction of the US dollar equivalent value of the subsidiary's peso
     denominated operating expenses.

     The total consolidated revenues in Argentina classified by port of charge
     was 7,023 for the year ended December 31, 2003.
<PAGE>

2.   SIGNIFICANT ACCOUNTING POLICIES

     a)   Basis of presentation and principles of consolidation

          The consolidated financial statements have been prepared in accordance
          with accounting principles generally accepted in the United States
          ("US GAAP").

          The consolidated financial statements include all entities for which
          the Company has control. Significant intercompany accounts and
          transactions have been eliminated in consolidation.

          As discussed in Note 6 on March 30, 1998, Ultrapetrol Bahamas
          successfully completed its offering of 135,000 principal amount of its
          10.5% First Preferred Ship Mortgage Notes due 2008 ("the Notes"). The
          balance sheet balances reflecting reciprocal receivables and payables
          between Ultrapetrol Bahamas and its subsidiary guarantors of the Notes
          originating from the allocation of the proceeds of the issuance have
          been eliminated. Furthermore, the income (loss) originating in
          transactions reflecting interest expense between Ultrapetrol Bahamas
          and its subsidiary guarantors have been eliminated. As only certain of
          the Company's subsidiaries guarantee the Notes summary financial
          information of the guarantor subsidiaries is presented. See Note 18.

     b)   Foreign currency remeasurement

          The Company uses the U.S. dollar as its functional currency. The
          majority of the Company's sales are billed and collected in U.S.
          dollars and all financing is in U.S. dollars.

          All monetary assets and liabilities not denominated in U.S. dollars
          have been remeasured into U.S. dollars using the exchange rates in
          effect at the balance sheet date. Operations statement amounts have
          been translated using the average exchange rate for each month. Gains
          or losses resulting from foreign currency measurements are included in
          the operations statement for the same year.

     c)   Receivables and payables

          These accounts are recorded and carried at nominal value. Receivables
          and payables include the portion of the respective financial income,
          expense accrued as of year-end.

     d)   Accounts receivable, net of allowance for doubtful accounts

          Receivables are recorded and carried at face value less allowances for
          uncollectible accounts estimated by the Company, in order to write
          them down to estimated realizable values.

     e)   Allowance for doubtful account

          Changes in the allowance for doubtful accounts for the years ended
          December 31, 2003, 2002 and 2001 are as follows:

                                                2003         2002         2001
                                               ------       ------       ------

          Balance at January 1,                   810          540          700
          Provision                               882          322          200
          Amounts written off                    (550)         (52)        (360)
                                               ------       ------       ------

          Balance at December 31,               1,142          810          540
                                               ======       ======       ======
<PAGE>

     f)   Inventories

          This account represents fuel and lubricants which were accounted for
          at the lower of cost or market.

     g)   Prepaid expenses

          This account includes prepaid insurance, administrative vessel fees
          paid in advance and advances to suppliers.

     h)   Dry dock

          The Company is required, under various shipping regulations, to
          perform periodic overhaul activities, generally every 30 months. The
          Company capitalizes such costs and amortizes the asset through the
          next expected dry dock date, which reflects the investment nature of
          this cost. This account is classified as noncurrent based on the
          aforementioned useful life estimate.

     i)   Property and equipment, net

          Property and equipment, which is principally comprised of ocean-going
          vessels and river barges, is stated at cost less accumulated
          depreciation. This cost includes the purchase price and all directly
          attributable costs for the asset to be in working condition.
          Maintenance and repair costs, other than dry dock costs discussed
          above, are expensed as incurred. The ocean-going vessels are
          considered to have useful lives of 24 years from the date on which
          they were built. The depreciation amount is calculated net from the
          estimated scrap value and is recorded by the straight-line method over
          the estimated useful lives of the related assets.

          The river barges are considered to have useful lives of 35 years from
          the date on which they were built. The depreciation amount is
          calculated net from the scrap value of the barge convoy.

          The furniture is considered to have useful lives of 10 years and the
          software 3 years. The depreciation amount is recorded by the
          straight-line method over the estimated useful lives of the related
          assets.

          Long-lived assets are reviewed for impairment in accordance with SFAS
          No. 144, "Accounting for the Impairment or Disposal of Long-lived
          Assets", whenever events or changes in circumstances indicate that the
          carrying amount may not be recoverable. If the sum of the expected
          future undiscounted cash flows is less than the carrying amount of the
          asset, a loss is recognized for the difference between the fair value
          and carrying value of the asset.

     j)   Investment in affiliates

          This account includes the Company's 50% interest in UABL Limited
          ("UABL"), net of the deferred gain explained in note 3.a), 50%
          interest in UABL Terminals as discussed in Note 3 and 49% interest in
          Sipsa Maritima S.A. These investments are accounted for by the equity
          method.

     k)   Other assets

          This account includes notes-issuance expenses net of amortization
          costs and is being amortized over the note's term (10 years).

     l)   Other payables

          This account mainly includes salaries, social security payables, taxes
          payables and advances from customers.
<PAGE>

     m)   Revenue recognition

          Revenues are recognized daily as earned from freight and hire charters
          over the period of the respective agreements.

     n)   Use of estimates

          The preparation of the consolidated financial statements in accordance
          with US GAAP requires management to make estimates and assumptions
          that affect reported amounts in the consolidated financial statements
          and accompanying notes. Actual results could differ from those
          estimated.

     o)   Cash and cash equivalents

          Cash and cash equivalents include highly-liquid, temporary cash
          investments with original maturities of three months or less when
          purchased.

     p)   Fair value of financial instruments

          In accordance with Statement of Financial Accounting Standards (SFAS)
          N(degree) 107 "Disclosures about Fair Value of Financial Instruments",
          the fair value of the Company's assets and liabilities considered to
          be financial instruments have been valued at the discounted amount of
          future cash flows at market interest rates current available to the
          Company for credits/loans with similar terms.

          The fair value of EURO hedging contract is the amount at which they
          could be settled, based on quoted market prices.

          The book value and estimated fair values of the Company's financial
          instruments are as follows:

<TABLE>
<CAPTION>
                                                                          Book value          Fair value
                                                                       -----------------   -----------------
                                                                        2003      2002      2003      2002
                                                                       -------   -------   -------   -------
<S>                                                                    <C>       <C>        <C>      <C>
          Assets:

          Windsor Financial Services Inc. note receivable (Note 12)      1,234     2,134     1,234     2,134
          Forward contract                                                 606        --       606        --

          Liabilities (Note 6.e):

          Notes                                                        131,708   138,544    93,206   111,544
          Allfirst Bank (principal plus accrued interest)                7,500     8,700     7,500     8,700
          Allfirst Bank (principal plus accrued interest)                2,000     2,000     2,000     2,000
          Allfirst Bank (principal plus accrued interest)                   --     1,000        --     1,000
          Allfirst Bank (principal plus accrued interest)                  250       250       250       250
          Nedship Bank (principal plus accrued interest)                 5,005     6,019     5,005     6,019
          SII                                                               --     1,348        --     1,348
          Credit Agricole Indosuez (principal plus accrued interest)     9,351    11,133     9,351    11,133
</TABLE>

          The fair value of the Company's other financial instruments, including
          its cash and cash equivalents, approximates carrying value because of
          the short maturity of those instruments.

     q)   Comprehensive income:

          According to SFAS No. 130, the Company is required to disclose
          separately the changes in shareholders' equity, other than net income
          (loss) and transactions with shareholders, defined as other
          comprehensive income. Comprehensive (loss) income for the years ended
          December 31, 2003, 2002 and 2001 consists of net (loss) income and
          changes in value of derivates. Comprehensive (loss) income is
          reflected in the consolidated statements of changes in shareholders'
          equity.
<PAGE>

     r)   Recent pronouncements:

          In January 2003, the FASB issued FASB Interpretation N(degree) 46,
          consolidation of variable interest entities, an interpretation of ARB
          N(degree) 51 ("FIN 46") requires certain variable interest entities to
          be consolidated by the primary beneficiary of the variable interest
          entity. The primary beneficiary is defined as the party which, as a
          result of holding its variable interest, absorbs a majority of the
          entity's expected losses, receives a majority of its expected residual
          returns, or both, FIN 46 is effective for all new variable interest
          entities created or acquired prior to February 1, 2003, the provisions
          of FIN 46 must be applied for the first interim or annual period
          ending after March 15, 2004. The company has determined that the
          adoption of FIN 46 will not have a significant impact on its financial
          position, results of operations or cash flows.

     s)   Financial instruments

          The Company sometimes uses EURO forward foreign exchange contracts to
          reduce its exposure to foreign currency risk from its purchases in
          EUROS. A EURO forward foreign exchange contract obligates the Company
          to exchange predetermined amounts of EUROS at specified exchange rates
          on specified dates or to make an equivalent U.S. dollar payment equal
          to the value of such exchange.

          Financial Accounting Standards Board Statement N(degree) 133,
          Accounting for Derivate Instruments and Hedging Activities (Statement
          133), requires companies to recognize all of its derivative
          instruments as either assets or liabilities in the statement of
          financial position at fair value. The accounting for changes in the
          fair value (i.e., gains or losses) of a derivative instrument depends
          on whether it has been designated and qualifies as part of a hedging
          relationship and further, on the type of hedging relationship.

          For derivate instruments that are designated and qualify as a cash
          flow hedge, the effective portion of the gain or loss on the derivate
          instrument is reported as a component of other comprehensive income
          and reclassified into earnings in the same line item associate with
          the forecasted transaction in the same period or periods during which
          the hedged transaction affects earnings. The remaining gain or loss on
          the derivative instrument in excess of the cumulative change in the
          present value of future cash flows of the hedged item, if any, is
          recognized in other income/expense in current earnings during the
          period of change.

     t)   Other net (expense) income

          For the years ended December 31, 2003, 2002 and 2001 this account
          includes:

<TABLE>
<CAPTION>
                                                        2003      2002      2001
                                                       ------    ------    ------
          <S>                                          <C>       <C>        <C>
          Loss on property, plant and equipment sold   (3,686)   (1,549)      (92)
          Other (expenses)                               (337)      (69)     (190)
          Claims against insurance companies            1,562     3,316     1,690
                                                       ------    ------    ------
                                                       (2,461)    1,698     1,408
                                                       ======    ======    ======
</TABLE>
<PAGE>

3.   NEW OPERATIONS AND ORGANIZATION OF NEW SUBSIDIARIES

     a)   UABL Limited joint venture

          On October 18, 2000 UP River Holdings Ltd., a subsidiary of the
          company, signed an agreement with ACBL Hidrovias Ltd. (ACBLH), a
          subsidiary of American Commercial Lines LLC ("ACL") to form a new
          company, UABL Ltd. ("UABL"), to serve commodity shippers in Argentina,
          Bolivia, Brazil, Paraguay and Uruguay. The transaction consummated
          pursuant to the agreement, which closed on October 24, 2000, included,
          among other things, the contribution of the stock of UP River and its
          subsidiaries equipment which included many of the Company's barges and
          tugboats, and cash contributions of 1,712. Additionally, certain time
          charter contracts involving some vessels not contributed by the
          Company's subsidiaries were ceded to UABL.

          The book value of the contributions made by the Company and the ones
          made by ACL's subsidiaries differed by 12,202. This amount represents
          a deferred gain and was recorded by the Company as an offset against
          the investment in affiliates account. The amount is being amortized
          over 120 months, which represents the remaining average useful life of
          the barges and tugboats contributed by the Company. As of December 31,
          2003 and 2002 the unamortized deferred gain totaled 8,338 and 9,550,
          respectively.

          UABL shall not be obligated or become liable for any obligation or
          liability, known or unknown, fixed, contingent or otherwise of ACBLH
          or ACBLH SA (at present called UABL SA) a company contributed by ACBLH
          or arising prior to October 24, 2000 in connection with any ACBLH
          vessel, or any vessel chartered to UABL pursuant to an ACBLH charter
          in connection with or arising out of or resulting from events
          occurring prior to that date, without limitation, any liability
          arising in connection with any ACBLH environmental liabilities, ACBLH
          legal violations, ACBLH litigation, ACBLH employee claims, ACBLH loan
          agreements or other indebtedness, any tax, or any other liabilities,
          obligations, or exception to any representation or warranty. UABL
          shall not assume and ACBLH shall fully indemnify UABL against such
          liabilities.

          During 2000, the tax authority served a notice to ACBLH S.A. (at
          present called UABL SA) with the purpose of verifying the latter's
          compliance with the transfer pricing regulations for transactions with
          related companies for the period prior to the formation of UABL SA,
          i.e. during 1996, 1997, 1998 and 1999, among other things.

          In light of the above, during 2001 UABL SA amended its income tax
          returns for the above-mentioned years charging a loss of 3,292 to the
          consolidated statement of operation of UABL SA (consisting of a tax
          loss of 2,270, interest expense for 1,487 and a gain on the sale of
          government bonds of 465). In compliance with the contract provision
          described above, ACBLH compensated UABL SA in the amount of 3,119
          causing a net decrease of 173, in the shareholders net worth.

          In addition, pursuant to the mentioned consolidation agreement, all
          claims, severance benefits, costs, and other expenses, social security
          taxes, charges and contributions and other costs incurred by ACBLH SA
          (at present called UABL SA) or UP River, or subsidiary of UP River, in
          connection with an employee employed by UABL SA and subsequently
          terminated by UABL SA shall be paid by UABL SA to, or on behalf of
          ACBLH or UP, as the case may be provided, that the maximum amount that
          UABL SA shall be required to pay to or behalf of the parent companies
          in respect of any of the mentioned costs, in the aggregate, shall be
          1,800. ACBLH and UP agreed to fully indemnify UABL SA against such
          liabilities over the mentioned amount.

          During 2002 UP River Terminal and ACBLH, the shareholders of UABL,
          decided to spin-off UABL'S equity interest in OTS S.A. and Puertos del
          Sur S.A. to UABL Terminals which is owned by UP River Terminal and
          ACBLH. Accordingly, since the transaction was between entities under
          common ownership, the transaction was accounted for at historical cost
          and no gain or loss was recognized.
<PAGE>

     b)   UP Offshore (Bahamas) Ltd. and its subsidiaries

          On April 18, 2002, the Company entered into agreements with AIG/GE
          Capital Latin Infrastructure Fund LP, a Bermuda Limited Partnership,
          ("LAIF") relating to the creation of two new companies in which both
          Ultrapetrol and LAIF will be shareholders.

          On June 11, 2003 UP Offshore (Panama), a wholly owned subsidiary of UP
          Offshore (Bahamas), signed a shipbuilding contract with the Foreign
          Economic & Technical Cooperation Co. of Changjang National Shipping
          Group -a non-related party- for construction of two Platform Supply
          Vessels ("PSVs").

          The main conditions of the contracts are as follow:

          -    The purchase price of the vessels is EURO 6,439,599 plus USD
               7,870,621 per each one.

          -    The contract price shall be paid in five installments. The first
               one on July 21, 2003 and the last one with the delivery of the
               vessels.

          -    The first vessel shall be delivery safety afloat by the seller to
               UP Offshore (Panama) at Nanjing, China on February 28th, 2005 and
               the second one on March 31st, 2005.

          On June 9, 2003 UP Offshore Apoio Maritimo Ltda., a wholly owned
          subsidiary of UP Offshore (Bahamas), signed shipbuilding contracts for
          construction of four PSVs with EISA Estaleiro Ilha S/A -a non-related
          party and a Brazilian corporation-.

          The main conditions of the contracts are as follows:

          -    The purchase price of the vessels is 15,830 per each one.

          -    The contract price shall be paid monthly, according to the
               percentage reached by the seller on the progress of the ship
               construction for the referred month.

          -    The PSVs will be delivered to the Company at a safe berth always
               afloat at the shipyard within 22 (twenty-two), 28 (twenty-eight),
               34 (thirty-four) and 48 (forty-eight) months after the date of
               signature of the contract, respectively.

          In 2003 the Company contributed 4,375 and has a 27.78% interest in UP
          Offshore (Bahamas).

          On June 25, 2003 the Company signed an administration agreement with
          UP Offshore (Bahamas) Ltd.

          Under this agreement Ultrapetrol (Bahamas) Ltd agrees to assist the UP
          Offshore (Bahamas) Ltd by providing management services required by
          the UP Offshore (Bahamas) Ltd in its star-up phase, including
          providing the services of the Chief Executive Officer and to provide
          ongoing management and commercial advisory services thereafter.

          The parties agree that Ultrapetrol (Bahamas) Ltd's professional fees
          under this agreement shall be the 2% of the UP Offshore (Bahamas)
          Ltd.'s annual EBITDA.

          Ultrapetrol's services in connection with the agreement shall begin on
          June 25, 2003 and unless earlier terminated end on December 31, 2013.

     c)   Ultracape (Holdings) Ltd. and its subsidiaries

          Ultracape (Holdings) Ltd., has the objective of purchasing second hand
          modern capsize bulkcarriers to operate in the international market.

          As of December 31, 2003 the Company contributed 4,950 and has a 60%
          stake in Ultracape.
<PAGE>

          On April 19, 2002 Ultracape entered into a Memorandum of Agreement to
          purchase the vessel Vasco Da Gama (renamed Cape Pampas). On July 1,
          2002 we completed the purchase of the Cape Pampas.

     d)   UP River (Holdings) Ltd.

          On June 10, 2003, the Company sold to the International Finance
          Corporation (IFC) 357 common shares of UP River (Holdings) Ltd., which
          constitute 7,14% of the issued and outstanding common shares of UP
          River (Holdings) Ltd.

          Also, the Company agreed to pay to the IFC, promptly after receipt of
          charter party payments for amounts accruing after the closing of the
          transaction pursuant to the Charter Party Agreements dated October 18
          and 24, 2000 between Ultrapetrol and UABL and any replacements or
          renewals thereof (such payment, the "Charter Party Payments"), an
          amount equal of the 7,14% of the amount of the respective Charter
          Party Payments.

          In full consideration for (a) the sale of the shares, and (b) the
          right to receive a portion of the Charter Party Payments, the IFC paid
          to the Company 5 million U.S. dollars.

          During the period beginning on December 31, 2009 and ending on
          December 31, 2010 the IFC will be exercise its option to put all of
          the shares of UP River (Holdings) Ltd. then owned by it to UP River
          (Holdings) Ltd. for an amount in cash equal to 5 million U.S. dollars
          minus the amount of any cash received by IFC in respect of ownership
          of such shares (whether by dividend, proceeds from Charter Party
          Payments or otherwise) plus interest thereon, compounded annually
          calculated as a rate equal to LIBOR plus 200 basic points.

          Also, Ultrapetrol shall have the right, exercisable form time to time
          to purchase from the IFC all of the shares of UP River (Holdings) Ltd
          then owned by IFC. The purchase price for the shares to be purchased,
          which shall be an amount sufficient to result in a realized IRR to the
          IFC on such shares equal to 18% per annum.

          As of December 31, 2003, the Company recorded 4,821 as a "Minority
          interest subject to put rights", which is the initial proceeds
          received by the IFC plus accrued interest less Charter Party Payments
          made to the IFC.

4.   DRY DOCK

          The capitalized amounts in dry dock as of December 31, 2003 and 2002
          are as follows:

                                                            2003           2002
                                                           ------         ------

          Original book value                              18,997         33,909
          Accumulated depreciation                         15,505         25,052
                                                           ------         ------
          Net book value                                    3,492          8,857
                                                           ======         ======

5.   PROPERTY AND EQUIPMENT, NET

     In June, 2000, the Company completed the purchase of the Princess
     Katherine, a Suezmax tanker, and the Princess Marina, an Aframax tanker, by
     Majestic and Kattegat, respectively, two wholly owned subsidiaries. The
     total amount of the acquisitions, totaling 36,379, were financed partially
     by two mortgage loans with Allfirst Bank and Nedship Bank.

     As of December 31, 2003 this debt totaled 12,505 (including the current
     portion of 2,205) and is due in the following years succeeding December 31,
     2003: 2,205 in 2004, 2,200 in 2005 and 2006 and 5,900 in 2007. As of
     December 31, 2003 the net book value of these assets was 27,323 (including
     dry dock costs).
<PAGE>

     On July, 2002, the Company purchased the Cape Pampas, a second hand capsize
     bulk carrier through its subsidiary, Braddock. The amount of the
     acquisition was financed partially by a mortgage loan agreement with Credit
     Agricole Indosuez.

     As of December 31, 2003 this debt totaled 9,351 (including the current
     portion of 2,640) and is due in the following years succeeding December 31,
     2003: 2,640 in 2004, 2,574 in 2005, and 4,137 in 2006. As of December 31,
     2003 the net book value of this asset was 15,748 (including dry dock
     costs).

     On August 26, 2002, the Company entered into a Memorandum of Agreement
     ("MOA") through which it committed to sell its vessel Princess Fatima, to
     an unrelated company for 1,867, net of associated expenses. On September
     19, 2002 the Company delivered the Princess Fatima pursuant to the MOA and
     received the purchase price. The Company recognized a loss of 1,549 in the
     statements of operations for the year ended December 31, 2002 for this
     disposal.

     The proceeds from the sale of the Princess Fatima Vessel were deposited in
     a restricted cash account and can only be used to buy another vessel to
     guarantee the Notes. Subsequently, the Princess Sofia was bought with part
     of these proceeds.

     On March 11, 2003 the Company entered into a MOA to sell the Princess Sofia
     for a total price of 2,300. The vessel was delivered to its new owners on
     April 25, 2003. The Company recognized a gain of 18 in the statements of
     operations for the year ended December 31, 2003 for this disposal.

     On May 22, 2003 the Company entered into a MOA to sell the Princess
     Veronica for a total price of 1,965. The vessel was delivered to its new
     owners on June 5, 2003. The Company recognized a loss of 147 in the
     statements of operations for the year ended December 31, 2003 for this
     disposal.

     On August 11, 2003 the Company entered into a MOA to sell the Alianza G1
     for a total price of 2.558. The vessel was delivered to its new owner on
     September 17, 2003. The Company recognized a gain of 122 in the statements
     of operations for the year ended December 31, 2003 for this disposal.

     Subsequently, from September to October 2003 a wholly owned subsidiary of
     Ultrapetrol, purchased 20 barges, which were renamed Iguazu Barges. The
     amount of the acquisition was 2,775, 974 of this amount was financed with
     the funds included in the restricted cash account disclosed in noncurrent
     assets.

     On September 23, 2003 the Company entered into a MOA to sell the Princess
     Pia for a total price of 2,918. The vessel was delivered to its new owner
     on October 24, 2003. The Company recognized a loss of 1,470 in the
     statements of operations for the year ended December 31, 2003 for this
     disposal.

     On December 1, 2003 the Company entered into a MOA to sell the Princess
     Marisol for a total price of 4,950. The vessel was delivered to its new
     owner on December 9, 2003. The Company recognized a loss of 499 in the
     statements of operations for the year ended December 31, 2003 for this
     disposal.

     On December 12, 2003, the Company entered into a MOA to sell the Princess
     Laura. The vessel was delivered to its new owners on January 9, 2004. This
     decision was based on managements assessment of the projected cost
     associated with the vessel's next drydocking which were scheduled to occur
     during 2004 and the estimated operating revenue for the vessel over its
     remaining operating live. A charge of 1,710 was recorded during the year
     ended December 31, 2003 that represents the difference between the vessel's
     book value and the estimated proceeds from their anticipated sale.

     As of December 31, 2003, 16,461 corresponding to the proceeds from the sale
     of the vessels mentioned above has disclosed in noncurrent assets is
     related to cash which, under the terms and conditions of the Notes, should
     only be used to acquire another vessels to guarantee the Notes.
<PAGE>

     The capitalized cost of all vessels and the related accumulated
     depreciation as of December 31, 2003 and 2002 is as follows:

                                                     2003           2002
                                                   --------       --------
                                                     Original book value
                                                   -----------------------

     Ocean-going vessels                            155,870        195,821
     River barges                                    24,567         21,792
     River tugboats                                     303            303
     Furniture and fixture tugboat                      106            101
     Advanced to PP&E vendors                        14,309             --
                                                   --------       --------
     Total original book value                      195,155        218,017
     Accumulated depreciation                       (74,352)       (83,220)
                                                   --------       --------
     Net book value                                 120,803        134,797
                                                   ========       ========

     As of December 31, 2003 the net book value of the assets pledged as a
     guarantee to the Notes was 57,519 (including dry dock costs).

6.   LONG-TERM DEBT AND OTHER FINANCIAL DEBT

     a)   10.5% First Preferred Ship Mortgage Notes due 2008

          On March 30, 1998, the Company successfully completed its offering of
          135,000 in principal amount of its 10.5% First Preferred Ship Mortgage
          Notes due in full in 2008. In accordance with the terms provided in
          such Offering, the Notes are fully and unconditionally guaranteed on a
          joint and several basis by certain subsidiaries of the Company, and
          are secured by first ship mortgages on vessels already owned by the
          guarantors and on additional vessels that the Company purchased with
          the proceeds obtained from the Offering.

          The Company is required to meet certain restrictions and enforce such
          restrictions on its subsidiaries guarantying the Notes ("restricted
          subsidiaries"), during the life of the Notes under the contract:

          -    Limitation on indebtedness, unless the consolidated debt service
               coverage ratio exceeds 2.0 to 1.0, and certain conditions
               included in the indenture are met.

          -    Limitation on indebtedness and preferred stock of restricted
               subsidiaries, except for certain clauses specified in the
               indenture.

          -    Limitation on the restricted payment of any dividends or any
               other distribution of any sort in respect of the Company's or any
               of its restricted subsidiaries' capital stock, if at the time of
               the distribution the Company has incurred any event of default,
               unless certain clauses stated in the indenture are met.

          -    Limitation on restrictions on distributions by restricted
               subsidiaries, on the ability of any restricted subsidiary to pay
               dividends or make any other distributions of capital stock to the
               Company or to any of its restricted subsidiaries, unless certain
               clauses specified in the indenture are met.

          -    Limitation on asset sales, provided certain conditions stated in
               the indenture are met.

          -    Limitation to engage in lines of business other than the shipping
               business.

          -    Limitation on affiliate transactions unless the terms on which
               the Notes were issued are complied with.
<PAGE>

          -    Limitation on encumbrances of any nature whatsoever on any of the
               Company's properties.

          -    Limitation on sale or leaseback transactions with any Company
               property, unless certain conditions required in the indenture are
               met.

          -    Limitation on merger and consolidation of all or substantially
               all its assets, provided certain conditions stated in the
               indenture are met.

          -    Limitation on the occurrence of any of the events defined in the
               indenture as a change of control of the Company's common stock.

          As of December 31, 2003 the Company was not in default in its
          compliance with any of the obligations defined in the indenture
          pursuant to which the Notes were issued.

          Although Ultrapetrol Bahamas Limited, parent company, subscribed the
          Notes issue, the principal amount and related expense will be paid
          through funds obtained from the operations of the Company's
          subsidiaries.

          During the last quarter of 2003, the Company through its subsidiaries,
          repurchase 6,659 nominal value of its 10,5% First Preferred Ship
          Mortgage Notes due 2008.

          As of December 31, 2003 the aggregating outstanding amount related
          with the Notes was 128,341 and is due in full in 2008.

          The Company recognized a gain of 1,782 (a gain of 1,975 for the excess
          of the net carrying amount over the reacquisition price less 70 for
          commissions and 123 for the unamortized deferred issuance expenses
          associated with these Notes) in the statement of operations for the
          year ended December 31, 2003 for the extinguishment of the debt and
          derecognized a liability for 6,659.

     b)   Loan with the Credit Agricole Indosuez of up to 27,000

          On July 1, 2002 Braddock (the "Borrower") entered into a loan
          agreement with: (i) Credit Agricole Indosuez ("the Lender"), (ii)
          Credit Agricole Indosuez ("the Agent") as agent for and on behalf of
          the Lenders, itself and the Security Trustee (together the "Creditor
          Parties") and (iii) Credit Agricole Indosuez (the named "Security
          Trustee") for and on behalf of the Creditor Parties pursuant to which
          the Lenders available a loan (the "Loan") for a total amount of 11,032
          for the purpose of financing part of the acquisition cost of the
          vessel "Vasco da Gama", that was renamed "Cape Pampas" a second hand
          capesize bulk carriers.

          The loan is payable in 14 consecutive equal quarterly installments
          commencing 9 months after delivery down to a balloon amount which is
          repayable on the final fourteenth repayment date falling due 4 years
          from drawdown. This loan accrues interest at LIBOR plus a margin of
          1.5% per year, payable quarterly.

     c)   Loan with the International Finance Corporation of up to 18,400

          On November 15, 2002, UP Offshore (Panama) SA entered into a loan
          agreement with International Finance Corporation ("IFC") pursuant to
          which IFC will make available a loan in the aggregate principal amount
          of up to 18,400, consisting of two loans: one of up to 13,100 and the
          other of up to 5,300 for the purpose of financing the building of two
          new platform supply vessels ("PSV") ("the Project").

          The first loan is payable in 15 equal semiannually installments from
          June 2005 through June 2012. This loan accrues interest at LIBOR plus
          a margin of 2.75 % per year, payable semiannually.

          The second loan is payable in 13 equal semiannually installments from
          June 2005 through June 2011. This loan shall accrue interest at LIBOR
          plus a margin of 2.50 % per year, payable semiannually.
<PAGE>

          UP Offshore (Panama) SA obligations under the loan are secured by:

          -    a first priority Panamanian naval mortgage over the Project PSV
               in favor of IFC to secure payment of amounts due to IFC;

          -    a corporate guarantee issued by UP Offshore (Bahamas) Ltd. to
               guarantee repayment of the loan and all amounts due by the
               borrower to IFC;

          -    a corporate guarantee issued by a wholly-owned subsidiary of the
               borrower that owns a Project PSV in favor of IFC to secure the
               obligations of the borrower;

          -    an account pledge creating security interest in the "earnings
               account" and the "debt service reserve account" for the benefit
               of IFC; and

          -    a pledge of all shares of the borrower owned and to be owned by
               UP Offshore (Bahamas) Ltd. during the life of the loan.

          UP Offshore (Panama) SA has agreed not to pay dividend or make any
          distribution on its capital stock, incur expenditures for fixed or
          other noncurrent assets, except those included in the building of the
          PSV, sell, transfer, lease or somehow dispose of all or a substantial
          part of its assets, change the nature or scope of the project or
          change the nature of its business.

          Also UP Offshore (Panama) SA has agreed to maintain after Project
          completion occurs a long-term debt to equity ratio of no more than 2
          and a debt service coverage ratio of at least 1.2 and to keep the fair
          market value of the PSV and of any additional security at 125% of the
          aggregate outstanding amount of the respective tranches.

          As of December 31, 2003 no disbursements have been made.

     d)   Loan with the International Finance Corporation of up to 41,600

          On December 3, 2002, UP Offshore Apoio Maritimo Ltda. entered into a
          loan agreement with IFC pursuant to which IFC will make available a
          loan in the aggregate principal amount of up to 41,600, consisting of
          two loans: one of up to 11,600 and the other of up to 30,000 for the
          purpose of financing the building of four new platform supply vessels
          ("PSV") ("the Project").

          The first loan of 11,600 is divided into five tranches each, the first
          one to the fourth one are in the amount of 2,595 and the fifth tranche
          is in the amount of 1,220. The loan is payable in 100 monthly
          installments from January 2005 through April 2013, commencing on
          January 15, 2005 with an amount of 26, increasing to 35 on July 15,
          2005, to 83 on January 15, 2006 and to 130 on July 15, 2006; the final
          installment is due on April 15, 2013 in the amount of 129. This loan
          shall accrue interest at LIBOR plus a margin of 4.75% per year,
          payable semiannually.

          The second loan of 30,000 is divided into five tranches each, the
          first one to the fourth one are in the amount of 6,710 and the fifth
          tranche is in the amount of 3,160. The loan is payable in 88 monthly
          installments from January 2005 through April 2012, commencing on
          January 15, 2005 with an amount of 76, increasing to 158 on July 15,
          2005, to 247 on January 15, 2006 and to 388 on July 15, 2006; the
          final installment is due on April 15, 2012 in the amount of 333. This
          loan shall accrue interest at LIBOR plus a margin of 4.50% per year,
          payable semiannually.

          UP Offshore Apoio Maritimo Ltd.' obligations under the loan are
          secured by:

          -    a first-ranking preferred Brazilian naval mortgage over the
               relevant SPV for the benefit of IFC;

          -    a corporate guarantee issued by UP Offshore (Bahamas) Ltd. to
               guarantee payment of all amounts due to IFC in respect of the
               loan;
<PAGE>

          -    an account pledge creating security interest in the "earnings
               account" for the benefit of IFC; and

          -    a pledge of all quotas of the borrower owned and to be owned by
               UP Offshore (Bahamas) Ltd. during the life of the loan.

          UP Offshore Apoio Maritimo Ltd. has agreed not to pay dividends or
          make any distribution on its capital stock, incur expenditures for
          fixed or other noncurrent assets, except those included in the
          building of the PSV, sell, transfer, lease or somehow dispose of all
          or a substantial part of its assets, change the nature or scope of the
          project or change the nature of its business.

          Also UP Offshore Apoio Maritimo Ltd. has agreed to maintain after
          project completion occurs a long-term debt to equity ratio of no more
          than 1.8 and a debt service coverage ratio of al least 1.2 and to keep
          the fair market value of the PSV and of any additional security at
          125% of the aggregate outstanding amount of the respective tranches.

          As of December 31, 2003 no disbursements have been made.

     e)   Balances of financial payables as of December 31, 2003 and 2002 are as
          follows:

<TABLE>
<CAPTION>
                                                                             Nominal value
                                                                          -------------------
                                  Financial institution /     Agreement                          Accrued
                                           other                year      Current  Noncurrent   expenses    Total      Average rate
                                ---------------------------   ---------   -------  ----------   --------   --------   -------------
          <S>                   <C>                             <C>         <C>       <C>          <C>       <C>      <C>
          Total 2002                                                        8,397     156,785      3,812     168,994
                                                                            =====     =======      =====     =======
          Ultrapetrol Bahamas   Private Investors ("Notes")     1998           --     128,341      3,367     131,708      10.5%
          Majestic              Allfirst Bank                   2000        1,200       6,300         --       7,500  Libor + 1.5%
          Kattegat              Nedship Bank                    2000        1,000       4,000          5       5,005  Libor + 1.25%
          Majestic              Allfirst Bank                   2001        2,000          --         --       2,000  Libor + 1.75%
          Stanmore              Allfirst Bank                   2000          250          --         --         250  Libor + 2%
          Braddock              Credit Agricole Indosuez        2002        2,574       6,711         66       9,351  Libor + 1.5%
                                                                            -----     -------      -----     -------
          Total 2003                                                        7,024     145,352      3,438     155,814
                                                                            =====     =======      =====     =======
</TABLE>

          As of December 31, 2003 financial debt listed above, excluding the
          noncurrent portion of the Notes, totaled 27,473 (including the current
          portion of 10,462) and is due in the following years succeeding
          December 31, 2003: 10,462 in 2004, 4,774 in 2005, 6,337 in 2006 and
          5,900 in 2007.

7.   COMMITMENTS AND CONTINGENCIES

     The Company is subject to legal proceedings, claims and contingencies
     arising in the ordinary course of business. When such amounts can be
     estimated and are probable, management accrues the corresponding liability.
     While the ultimate outcome of lawsuits or other proceedings against the
     Company cannot be predicted with certainty, management does not believe the
     costs of such actions will have a material effect on the Company's
     consolidated financial position or results of operations.

     On February 21, 2003, Ursa Shipping Ltd. ("Ursa") brought suit in the
     United States District Court for the District of New Jersey against M/T
     Princess Susana and Noble Shipping Ltd. (a wholly owned subsidiary of the
     Company) seeking damages arising out of the delay in delivery of a cargo of
     Kirkuk crude oil to the Valero terminal in Paulsboro, New Jersey.

     Princess Susana (the "Vessel") was detained by the United States Coast
     Guard prior to her arrival in Paulsboro when, during a routine Coast Guard
     tank vessel examination, a small amount of cargo was found to have leaked
     from one of the cargo tanks into one of the void spaces aboard the Vessel.
     The Vessel was discharged after a delay of approximately eight days. On or
     about February 25, 2003, Valero Marketing and Supply Co. ("Valero")
     commenced an action against Noble Shipping Ltd. The Valero and Ursa
     complaints seek damages in excess of 9,000. Noble took the position that
     the claims are overstated and they have since been reduced to approximately
     7,600.
<PAGE>

     In connection with the above complaints, the Vessel was detained. Security
     was posted by the Vessel owners' protection and indemnity insurers in the
     amount of 11,200 and the Vessel was released from arrest (insurance
     coverage is in place). Both the Ursa and the Valero complaints have been
     answered, defenses have been raised, and a counterclaim has been raised in
     the Ursa action seeking, inter alia, unpaid freight and demurrage.
     Subsequently, Valero impleaded the seller of the cargo, Taurus Petroleum
     Ltd. ("Taurus"), into the action by way of an amended complaint. Noble has
     answered the amended complaint, raised defenses, and brought a cross claim
     against Taurus for indemnity.

     Discovery is ongoing and scheduled to conclude at the end of 2004.

     The company's management and its legal counsel believe this claim is
     covered by insurance. The insurer is actively conducting the defense
     through its designated counsel and has not asserted any objections,
     defenses or reserved its rights with respect to Noble's insurance claim.
     The Company would expect any damages arising from this action to be covered
     by the proceeds of such insurance.

     On November 25, 1995, Ultrapetrol S.A. registered with the Customs
     Authority of Bahia Blanca the temporary importation of "Princess Pia"
     vessel.

     According to Decree No. 1493/92, such temporary importation was authorized
     for three years.

     Besides, in compliance with CIC No. 98 003 IT 01 300083-4 also registered
     with the Customs Authority of Bahia Blanca, the above mentioned term was
     extended, as confirmed by the Transport Secretariat (Subsecretaria de
     Transporte") which authorized the navigation, communication and commerce of
     Princess Pia as a vessel of Argentine flag up to November 21, 2001.

     On October 23, 2001 Ultrapetrol S.A.'s customs agent registered the
     re-exportation of Princess Pia with the Customs Authority of Bahia Blanca.

     Subsequently, as for November 22, 2001 the Transport Secretariat authorized
     the navigation of Princess Pia as a vessel of Panamanian flag, allowing the
     rendering of supplying services within the country.

     On November 16, 2001, Ultrapetrol S.A.'s customs agent requested the
     cancellation of the vessel's temporary importation, stating that due to
     operative reasons such vessel was not able to enter the jurisdiction of the
     Custom Authority of Campana.

     In accordance with the aforementioned scenario, the Customs Authority of
     Bahia Blanca consider that Ultrapetrol S.A. was comprised under the
     provisions of Section 970 of the Customs Code and, consequently, issued a
     resolution claiming the sum of Argentine pesos $4,689,695 (approximately US
     dollar 1,610,000) as import taxes and the sum of Argentine pesos $4,689,695
     (approximately US dollar 1,610,000) as fines.

     Such resolution was based in the fact that as Ultrapetrol S.A. requested
     the cancellation of the regime without making the vessel available to the
     Custom Authority, such authority was not able to exercise its control and
     verifying functions as set forth in Section 268 of the Customs Code.

     In response to said resolution, on March 16, 2004 Ultrapetrol S.A.
     submitted an appeal with the Argentine Tax Court ("Tribunal Fiscal de la
     Nacion").

     The main important arguments introduced by Ultrapetrol S.A. were, among
     others, that it has not caused any breach to the Customs Code since the
     Princess Pia has operated within argentine territory only during the
     periods in which it was expressly authorized by the competent authorities
     and that the issuance of the appealed resolution was based on an undue
     interpretation of the customs legislation. The value of the vessel
     considered by the Custom Authority in order to establish the tax and fines
     claimed has also been objected by Ultrapetrol S.A.

     Said appeal is nowadays pending of resolution by the Argentine Tax Court.

     The management of the Company and its legal counsel do not believe the
     outcome of this matter will have a material impact on its financial
     position or results of operations.
<PAGE>

     As of December 31, 2003, most of the Company and managers Company employees
     are covered by industry-wide collective bargaining agreements that set
     basic standards.

8.   EURO HEDGING CONTRACT

     On November, 2003 UP Offshore (Bahamas) Limited, a subsidiary of the
     Company, has entered into a series of hedging contracts with AIG
     International Inc. in order to assure the EURO payments due under the
     shipbuilding contract with the Foreign Economic & Technical Cooperation Co.
     for construction of two PSVs. Through this forward contract, the Company
     effectively converted its payments in EUROs to US dollars at a specific
     exchange rates.

     Nominal amount
     (U.S. dollar)               Forward rate              Settlement date
     --------------          --------------------          ---------------

       1.431.022             1.14658 USD per Euro          March 25, 2004
       1.431.022             1.14465 USD per Euro           May 28, 2004
       1.431.022             1.14290 USD per Euro           July 30, 2004
       1.431.022             1.14080 USD per Euro          October 28,2004

9.   INCOME TAXES

     The earnings from shipping operations were derived from sources outside
     Panama, such earnings were not subject to Panamanian taxes.

     Two of the Company's subsidiaries, Parfina and Oceanpar, are subject to
     Paraguayan corporate income taxes. However, Oceanpar obtained an exemption
     which includes ninety-five percent of their taxable income earned from
     their fuel and dry-cargo shipping operations for the years 2001 and 2002.
     In addition, another subsidiary is subject to Chilean corporate income
     taxes and Ultrapetrol Argentina is subject to Argentine corporate income
     taxes.

     In Argentina, the tax on minimum presumed income ("TOMPI"), supplements
     income tax since it applies a minimum tax on the potential income from
     certain income generating-assets at a 1% tax rate. The Company's tax
     obligation in any given year will be the higher of these two tax amounts.
     However, if in any given tax year tax on minimum presumed income exceeds
     income tax, such excess may be computed as payment on account of any excess
     of income tax over TOMPI that may arise in any of the ten following years.

     Certain entities, defined as "Qualified Foreign Corporations", are exempt
     from United States of America ("U.S.") corporate income tax on U.S. source
     income from their international shipping operations, pursuant to Section
     883 of the US tax code. A foreign corporation will be considered a
     Qualified Foreign Corporation if (i) its country of incorporation exempts
     shipping operations of U.S. persons from income tax (the "Incorporation
     Test"), (ii) it meets the "Ultimate Owner Test", and (iii) it files a US
     Federal income tax return (Form 1120F) to claim the Section 883 exemption.
     A foreign corporation meets the Ultimate Owner Test if (a) more than 50% of
     the value of its stocks is ultimately owned by individuals who are tax
     residents of one or more foreign countries that exempt U.S. persons from
     tax on shipping earnings ("Qualified Foreign Countries") and, (b) the scope
     of the exemption provided by such Qualified Foreign Countries is broad
     enough to cover the type of shipping income (e.g. freight income, time
     charter hire or bareboat charter hire) earned by the foreign corporation.
     For the years 2003, 2002 and 2001 Princely and Ultracape (Holdings) Ltd.
     satisfied the Incorporation Test because they are incorporated in Panama
     and Bahamas, respectively, which provide the required exemption to U.S.
     persons involved in shipping operations as confirmed by Revenue Ruling
     2001-48. Each of Princely and Ultracape (Holdings) Ltd. also satisfied the
     Ultimate Owner Test, having obtained sufficient back-up documentation to
     evidence support its respective position that for the years 2003, 2002 and
     2001 more than 50% of the value of its outstanding shares were ultimately
     owned by individuals who were residents of Qualified Foreign Countries in
     respect to the types of shipping income earned by Princely and Ultracape
     (Holdings) Ltd. for which exemption is being claimed. Consistent with prior
     years, Princely and Ultracape will filed IRS Form 1120F for the year 2003
     to claim the Section 883 exemption.
<PAGE>

     Based on the foregoing, the Company expects all of its income to be exempt
     from U.S. income taxes for 2003, 2002 and 2001.

     Ultrapetrol Bahamas accounts for income taxes under the liability method in
     accordance with SFAS N(degree) 109 "Accounting for Income Taxes".

     Under this method, deferred tax assets and liabilities are established for
     temporary differences between the financial reporting basis and the tax
     basis of the Company's assets and liabilities at each year end. Deferred
     tax assets are recognized for all temporary items and an offsetting
     valuation allowance is recorded to the extent that it is not more likely
     than not that the asset will be realized.

     The provision for income taxes (which includes TOMPI) is comprised of:

                                               For the years ended December 31,
                                               --------------------------------
                                               2003          2002          2001
                                               ----          ----          ----

     Current expense                            108           150           390
     Deferred                                    77            --            --
                                               ----          ----          ----
                                                185           150           390
                                               ====          ====          ====

     Reconciliation of tax provision to taxes calculated based on the statutory
     tax rates is as follows:

<TABLE>
<CAPTION>
                                                      For the years ended December 31,
                                                      -------------------------------
                                                        2003        2002        2001
                                                      -------     -------     -------
<S>                                                   <C>         <C>           <C>
     Pre-tax (loss) income                            (10,000)    (13,571)      2,805
     Sources not subject to income tax (tax exempt
       income)                                          5,271       6,475       3,405
                                                       (4,729)     (7,096)      6,210
     Argentine statutory tax rate                          35%         35%         35%
                                                      -------     -------     -------
     Tax (benefit) provision                           (1,655)     (2,484)      2,174

     (Decrease) increase in valuation allowance           (33)       (368)     (2,174)
     Effects of foreign exchange changes related to
       Argentine subsidiary                             1,873       2,887          --
     Tax on minimum presumed income (T.O.M.P.I.)           --         115         390
                                                      -------     -------     -------
     Income tax provision                                 185         150         390
                                                      =======     =======     =======
</TABLE>

     As of December 31, 2003, Ultrapetrol Argentina had a credit related to
     TOMPI of 274 which expires 58 in 2010, 93 in 2011 and 123 in 2012.

                                                          As of December 31,
                                                          ------------------
                                                          2003          2002
                                                          ----          ----
     Deferred tax assets
         NOLs                                               --           345
         TOMPI credit                                      274           425
         Other, net                                        119           120
                                                          ----          ----
         Total deferred assets                             393           890
                                                          ----          ----
     Deferred tax liabilities
         Property and equipment                            339           369
         Dry dock                                          131           488
                                                          ----          ----
         Total deferred liabilities                        470           857
                                                          ----          ----
         Valuation allowance                                --           (33)
                                                          ----          ----
         Net deferred tax (liabilities)                    (77)           --
                                                          ====          ====
<PAGE>

10.  RELATED PARTY TRANSACTIONS

     As of December 31, 2003 and 2002, the balances of due from affiliates and
     certain prepayments made to related vendors such as Ravenscroft Shipping
     Inc., were as follows:

                                                        As of December 31,
                                                       --------------------
                                                         2003          2002
                                                       ------        ------

     - Ravenscroft Shipping Inc.                        3,966         5,112
     - UABL and its subsidiaries                        3,501         8,134
     - Maritima Sipsa S.A                               1,890            --
                                                       ------        ------
       Due from affiliates                              9,357        13,246
                                                       ======        ======

     As of December 31, 2003 and 2002 the balance of due to affiliates was as
     follows:

                                                         As of December 31,
                                                        -------------------
                                                         2003          2002
                                                        -----         -----

     - UABL and its subsidiaries                        1,550            80
     - Oceanmarine                                         98            86
     - Ravenscroft Shipping Inc.                           --            88
     - Other                                                7            14
                                                        -----         -----
       Due to affiliates                                1,655           268
                                                        =====         =====

     For the years ended December 31, 2003, 2002 and 2001, the revenues derived
     from related parties were as follows:

                                                  For the years ended
                                                     December 31,
                                             ------------------------------
                                              2003        2002        2001
                                             ------      ------      ------
       Freight revenues
     - UABL and its subsidiaries                108         192       2,715
                                             ------      ------      ------
                                                108         192       2,715
                                             ======      ======      ======
       Hire revenues
     - UABL and its subsidiaries             10,176       9,780      10,698
     - Maritima Sipsa S.A                     1,953          --          --
                                             ------      ------      ------
                                             12,129       9,780      10,698
                                             ======      ======      ======

     The Company through certain of its subsidiaries has contracted with
     Oceanmarine, a related party, for certain administrative services. This
     agreement stipulates a fee of 9 per month and per vessel. Pursuant to the
     individual ship management agreement between Ravenscroft Ship Management
     Ltd., a Bahamas Corporation ("Ravenscroft Bahamas"), and the Company's
     relevant vessel-owning subsidiaries, Ravenscroft Bahamas has agreed to
     provide certain ship management services for all of the Company's vessels.
     Ravenscroft Bahamas has subcontracted the provision of these services to
     Ravenscroft Shipping Inc., a Miami-based related party of the Company. This
     agreement stipulates a fee of 12.5 per month and per vessel.

     Under these contracts, these related parties are to provide all that is
     necessary for such companies to operate, including but not limited to
     crewing, insurance, accounting and other required services. Additionally,
     commissions and agency fees are paid to those related parties.
<PAGE>

     For each of the years ended December 31, 2003, 2002 and 2001, management
     fees paid and/or accrued to related parties for such services amounted to
     2,863, 3,176 and 3,250 respectively.

     Additionally, during December 2003 the Company paid in advance some
     administrative fees for the year 2004 of about 453. As of December 31,
     2003, such amount was recorded in Prepaid expenses.

     Compensation paid to directors totaled 1,135, 1,135 and 1,100 during the
     years ended December 31, 2003, 2002 and 2001.

     Under agreements by the Company and ACBL Hidrovias Limited (Bermuda),
     wholly owned subsidiary of ACL, both companies lease certain vessels not
     contributed to UABL, to be operated together with the UABL fleet.
     Additionally, Lonehort S.A., a shipping agent wholly owned by UABL, bills
     ship management fees for the administration of the mentioned vessels. For
     the years ended December 31, 2003, 2002 and 2001, ship management fees paid
     to and accrued for Lonehort S.A. for such services amounted to 6,691, 6,599
     and 7,346, respectively.

     The Company sold Venecia, a wholly owned subsidiary, to a related party,
     Windsor Financial Services Inc., at its book value with a remaining
     receivable balance of 1,234.

     As of December 31, 2003 the Company had a loan of 950 to UABL that was
     recorded in Due from affiliates. During the years ended December 31, 2003
     and 2002 the Company outsourced freight from UABL for 42 and 835,
     respectively. Besides the expense recovery from UABL totaled 906 and 543
     for the years ended December 31, 2003 and 2002 and the administrative
     services fees to UABL totaled 348 and 348 during the years ended December
     31, 2003 and 2002, respectively.

     Pursuant to an agency agreement with Ultrapetrol S.A., I. Shipping Services
     S.A. has agreed to perform the duties of port agent for the Company in
     Argentina. For each of the years ended December 31, 2003, 2002 and 2001 the
     amounts paid and/or accrued for such services amounted to 100, 235 and 432,
     respectively.

11.  MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK

     a)   Major customers

          As of December 31, 2003 revenues from three customers of the Company
          represented 19,777, 10,248 and 9,136, respectively, of the Company's
          consolidated revenues.

          As of December 31, 2002 revenues from four customers of the Company
          represented 29,631, 13,242, 9,972 and 5,943, respectively, of the
          Company's consolidated revenues.

          As of December 31, 2001 revenues from four customers of the Company
          represented 25,053, 15,301, 13,894 and 11,343, respectively, of the
          Company's consolidated revenues.

     b)   Concentrations of credit risk

          Financial instruments that potentially subject the Company to
          significant concentrations of credit risk consist principally of cash
          and cash equivalents, restricted cash, investment, accounts
          receivable, due from affiliates and other receivables.

          The financial institutions are located in Argentina, France and the
          United States and the Company's cash management policy is designed to
          limit exposure to any one institution. As of December 31, 2003 the
          Company's investment in HSBC was 101. Also the Company has restricted
          cash in Credit Agricole Indosuez for 1,147 and in All First Bank for
          16,469.
<PAGE>

          Concentrations of credit risk with respect to accounts receivable are
          limited due to the large number of entities comprising the Company's
          customer base and their credit rating. As of December 31, 2003 the
          Company's accounts receivables from four customers totaled 6,159
          (including UABL and its subsidiaries for 2,551).

          As of December 31, 2003 the Company's receivables from Windsor
          Financial Service Inc. amounted to 1,234.

          The Company does not require collateral for this or other receivables.

12.  OTHER RECEIVABLES

     The breakdown of other receivables is the following:

                                                             2003     2002
                                                            ------   ------

     Current

     Insurance claims recoverable                            2,370    3,964
     Tax recoverables                                          212      613
     Windsor Financial Services Inc. note receivable         1,234    2,134
     Other                                                     808      105
                                                            ------   ------
                                                             4,624    6,816
                                                            ======   ======
     Noncurrent

     Insurance claims recoverable                            6,414    3,654
                                                            ======   ======

13.  BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION

     The Company's operations include only one business segment. For such
     reason, as of December 31, 2003, 2002 and 2001, no additional business
     segment information is disclosed.

     Ultrapetrol's vessels and river barges operate on a worldwide basis and are
     not restricted to specific locations. Accordingly, it is not possible to
     allocate the assets of these operations to specific countries. In addition,
     the Company does not manage its operating profit on a geographic basis.

     Segment information, for the years ended December 31, 2003, 2002 and 2001,
     is as follows:

                                                For the years ended December 31,
                                                --------------------------------
                                                    2003        2002        2001
                                                --------    --------    --------

     Revenues (1)

     - Argentina                                   7,023      27,493      53,595
     - USA                                        21,507          --          --
     - Paraguay                                      365      10,864      13,741
     - Brazil                                     10,153       9,668       9,269
     - South and Central America/Others           19,774      11,518      10,872
     - Africa                                         --       2,844      14,410
     - Asia                                        3,770          --       2,014
     - Europe                                     12,641      10,737       7,307
                                                --------    --------    --------
                                                  75,233      73,124     111,208
                                                ========    ========    ========

     (1)  Classified by port of charge
<PAGE>

14.  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     Interest and income taxes paid for the years ended December 31, 2003, 2002
     and 2001 are as follows:

                                           For the years ended December 31,
                                           --------------------------------
                                            2003         2002         2001
                                           ------       ------       ------

     Interest paid                         14,983       15,641       13,408
     Income taxes paid                        182          108           --

15.  CLAIMS AGAINST INSURANCE COMPANIES

     As of December 31, 2003 and 2002, the "Other receivables" account includes
     8,784 and 7,618, respectively, related to claims against insurance
     companies. Claims for 6,500 have been made by the Company against the
     insurance companies regarding the repair expenses incurred to date for
     damage to some vessels in 2003.

     On April 18, 2003, the Alianza G1 suffered an accident in her main engine
     while the vessel was in transit from Argentina to Chile. The vessel arrived
     in Talcahuano (Chile) and following the engine manufacturer recommendations
     proceeded to repair the engine. The vessel's crankshaft had been damaged
     and cracked but Sulzer considered that if cracks were only superficial the
     crankshaft could be repaired by grinding and polishing. Unfortunately, by
     May 30, 2003 the maximum allowance grinding of 7 mm had been completed and
     the crack continued. Further tests were carried out and it was determined
     that in one location the crack had a further depth of 12 mm. The engine
     manufacturers condemned the crankshaft and recommended that the vessel
     should replace the crankshaft by a new one in order to operate normally.
     This case resulted in total loss and the Company settled with its hull and
     machinery insurers for a total compensation of 1,900. As of December 31,
     2003 the Company collected this amount.

     The "Other net (expense) income" account for the year ended December 31,
     2003, includes 1,562 related to claims for loss of income (business
     interruption) corresponding to the Alianza G-1, Princess Eva and Princess
     Pia.

     The "Other net (expense) income" account for the year ended December 31,
     2002, includes 1,760 related to claims for loss of income (business
     interruption) corresponding to the Alianza G-3, Princess Marisol, Princess
     Katherine and Princess Pia.

     The "Other net (expense) income" account for the year ended December 31,
     2001 includes 1,145 related to claims for loss of income (business
     interruption) corresponding to the Alianza Campana and Princess Veronica.

16.  TREASURY STOCK

     On October 12, 2000 the Company through a wholly owned subsidiary, Avemar
     Holdings (Bahamas) Limited ("Avemar"), purchased 537,144 shares of the
     Company previously owned by Societe Internationale D'Investissement S.A.
     (Bahamas) ("SII"). The nominal purchase price of said shares was 20,000,
     8,000 of which was paid as of December 31, 2000 and the balance of which is
     payable 6,400 in 2001, 4,400 in 2002 and 1,200 in 2003. As of December 31,
     2002 and 2001 the balance of 1,348 and 5,606 was disclosed in the "Other
     financial debt" account.
<PAGE>

     As of December 31, 2003 and 2002, the Company recorded 20,332 in the
     "Treasury stock" account, 20,000 of which relates to the amount payable to
     SII and 332 relates to direct cost of acquisition.

17.  SUMMARIZED FINANCIAL INFORMATION OF UABL

     As described in Note 3, the Company owns 50% of UABL Limited, which is
     accounted for by the equity method.

     Summarized financial information of UABL Limited is presented below. This
     information is prepared in accordance with the Company's accounting
     policies set out in Note 2. This summarized financial disclosure should be
     read in conjunction with the consolidated financial statements.

     a)   Summarized balance sheets

                                                         December 31,
                                                       ---------------
                                                        2003     2002
                                                       ------   ------

          Current assets                               12,311    6,888
          Noncurrent assets                            86,827   83,340
                                                       ------   ------
          Total assets                                 99,138   90,228
                                                       ======   ======

          Current liabilities                          11,278   20,927
          Noncurrent liabilities                       22,497    8,205
                                                       ------   ------
          Total liabilities                            33,775   29,132
          Shareholders' equity                         65,363   61,096
                                                       ------   ------
          Total liabilities and shareholders' equity   99,138   90,228
                                                       ======   ======

     b)   Summarized statements of operations

<TABLE>
<CAPTION>
                                                             Year ended December 31,
                                                         --------------------------------
                                                             2003        2002        2001
                                                         --------    --------    --------
          <S>                                            <C>         <C>         <C>
          Revenues                                         60,260      47,060      56,581

          Operating expenses                              (54,537)    (48,712)    (60,113)
                                                         --------    --------    --------
          Operating income (loss)                           5,723      (1,652)     (3,532)

          Other income (expense), net                      (1,359)     (1,013)        148
                                                         --------    --------    --------
          Income (loss) before tax on minimum presumed      4,364      (2,665)     (3,384)
               income and income tax

          Recovery of tax on minimum presumed income          529          --          --
          Tax on minimum presumed income                       (3)       (200)       (725)
          Income taxes                                       (623)        402          --
          Settlement for tax contingency                       --          --      (3,292)
                                                         --------    --------    --------
          Net income (loss) for the year                    4,267      (2,463)     (7,401)
                                                         ========    ========    ========
</TABLE>
<PAGE>

18.  SUPPLEMENTAL GUARANTOR INFORMATION

     As described in Note 6, the Notes are fully and unconditionally guaranteed
     by certain subsidiaries of the Company.

     The subsidiaries which offered their assets in collateral of the above
     mentioned indebtedness are: Ultrapetrol Argentina, Parfina, Imperial,
     Cavalier, Regal, Baldwin, Tipton, Kingsway, Plate Princess, Panpetrol,
     Oceanview, Kingly, Sovereign, Monarch, Noble and Oceanpar ("Guarantor
     Subsidiaries").

     In addition, a restricted subsidiary is a nonguarantor subsidiary which
     owns a qualified substitute vessel. In the terms of the indenture, the term
     qualified substitute vessel is only used in connection with the tender of
     replacement vessel upon the sale or loss of a mortgaged vessel, it has to
     be registered under the laws of a jurisdiction acceptable to institutional
     lenders and has an apprised value at least equal to the vessel for which it
     is being substituted.

     Supplemental condensed combining financial information for the Guarantor
     Subsidiaries is presented below. This information is prepared in accordance
     with the Company's accounting policies set out in Note 2. This supplemental
     financial disclosure should be read in conjunction with the consolidated
     financial statements.

     Certain eliminations were made to conform the financial information to the
     financial statement presentation of Ultrapetrol Bahamas and its
     subsidiaries. The principal elimination entries relate to the financial
     current account balances among the Company, the Guarantor Subsidiaries and
     the Non-Guarantor Subsidiaries, and to the balances originated in bareboat
     charter transactions between the Guarantor Subsidiaries and the
     Non-Guarantor Subsidiaries.

     Investments in the subsidiaries are accounted for by their parent company
     under the equity method of accounting only for the purpose of the
     supplemental combining presentation. Under the equity method, the value and
     earnings of subsidiaries' undertakings are reflected in the parent
     company's noncurrent assets and other income/expenses accounts.

     Separate full financial statements of the Guarantor Subsidiaries are not
     included herein because the Company has determined that such financial
     statements do not provide any additional or relevant information to the
     investors.
<PAGE>

<TABLE>
                                     SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS

                                                 AS OF DECEMBER 31, 2003

                                          (stated in thousands of U.S. dollar)
<CAPTION>
                                                                Combined
                                                            guarantors that    Combined                       Total
                                                             are joint and       Non-      Consolidating   consolidated
                                                  Parent         several      Guarantors    adjustments      amounts
                                                 --------   ---------------   ----------   -------------   ------------
<S>                                              <C>           <C>             <C>           <C>             <C>
Current assets
Due from affiliates                                94,252         5,624             839       (91,358)          9,357
Other current assets                                1,174        12,268          16,723        (6,627)         23,538
                                                 --------      --------        --------      --------        --------
Total current assets                               95,426        17,892          17,562       (97,985)         32,895
                                                 --------      --------        --------      --------        --------

Noncurrent assets
Property and equipment, net                            --        64,528          56,275            --         120,803
Investment in affiliates                           47,939            --              --       (22,210)         25,729
Other noncurrent assets                            18,828         8,104           1,802            --          28,734
                                                 --------      --------        --------      --------        --------
Total noncurrent assets                            66,767        72,632          58,077       (22,210)        175,266
                                                 --------      --------        --------      --------        --------
Total assets                                      162,193        90,524          75,639      (120,195)        208,161
                                                 ========      ========        ========      ========        ========

Current liabilities
Due to affiliates                                       7        94,816           2,944       (96,112)          1,655
Other financial debt                                3,367            --           7,095            --          10,462
Other current liabilities                              26         4,014           1,358           (36)          5,362
                                                 --------      --------        --------      --------        --------
Total current liabilities                           3,400        98,830          11,397       (96,148)         17,479
                                                 --------      --------        --------      --------        --------

Noncurrent liabilities
Long-term debt                                    135,000            --              --        (6,659)        128,341
Other financial debt, net of current
portion                                                --            --          17,011            --          17,011
                                                 --------      --------        --------      --------        --------
Total noncurrent liabilities                      135,000            --          17,011        (6,659)        145,352
                                                 --------      --------        --------      --------        --------
Total liabilities                                 138,400        98,830          28,408      (102,807)        162,831
Minority interests                                     --            --              --        16,716          16,716

Minority interests subject to put right                --            --              --         4,821           4,821

Shareholders' equity                               23,793        (8,306)         47,231       (38,925)         23,793
                                                 --------      --------        --------      --------        --------
 Total liabilities, minority interests
   and shareholders' equity                       162,193        90,524          75,639      (120,195)        208,161
                                                 ========      ========        ========      ========        ========
</TABLE>
<PAGE>

<TABLE>
                                SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS

                                            AS OF DECEMBER 31, 2002

                                     (stated in thousands of U.S. dollar)
<CAPTION>
                                                       Combined
                                                   guarantors that    Combined                       Total
                                                    are joint and       Non-      Consolidating   consolidated
                                         Parent         several      Guarantors    adjustments      amounts
                                        --------   ---------------   ----------   -------------   ------------
<S>                                     <C>           <C>             <C>           <C>             <C>
Current assets
Due from affiliates                      115,731        11,624              --      (114,109)         13,246
Other current assets                       2,042        15,389          16,331        (7,755)         26,007
                                        --------      --------        --------      --------        --------
Total current assets                     117,773        27,013          16,331      (121,864)         39,253
                                        --------      --------        --------      --------        --------

Noncurrent assets
Property and equipment, net                   --        88,808          45,989            --         134,797
Investment in affiliates                  54,234            --              --       (31,766)         22,468
Other noncurrent assets                    3,075        11,431           2,522            --          17,028
                                        --------      --------        --------      --------        --------
Total noncurrent assets                   57,309       100,239          48,511       (31,766)        174,293
                                        --------      --------        --------      --------        --------
Total assets                             175,082       127,252          64,842      (153,630)        213,546
                                        ========      ========        ========      ========        ========

Current liabilities
Due to affiliates                              1       111,912          10,450      (122,095)            268
Other financial debt                       4,891            --           7,318            --          12,209
Other current liabilities                    101         3,618           1,754           290           5,763
                                        --------      --------        --------      --------        --------
Total current liabilities                  4,993       115,530          19,522      (121,805)         18,240
                                        --------      --------        --------      --------        --------

Noncurrent liabilities
Long-term debt                           135,000            --              --            --         135,000
Other financial debt, net of
current portion                               --            --          21,785            --          21,785
                                        --------      --------        --------      --------        --------
Total noncurrent liabilities             135,000            --          21,785            --         156,785
                                        --------      --------        --------      --------        --------
Total liabilities                        139,993       115,530          41,307      (121,805)        175,025

Minority interests                            --            --              --         3,432           3,432

Shareholders' equity                      35,089        11,722          23,535       (35,257)         35,089
                                        --------      --------        --------      --------        --------
 Total liabilities, minority
   interests and shareholders' equity    175,082       127,252          64,842      (153,630)        213,546
                                        ========      ========        ========      ========        ========
</TABLE>

<PAGE>

<TABLE>
                       SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF OPERATIONS

                                 FOR THE YEAR ENDED DECEMBER 31, 2003

                                 (stated in thousands of U.S. dollar)
<CAPTION>
                                              Combined
                                          guarantors that    Combined                       Total
                                           are joint and       Non-      Consolidating   consolidated
                                Parent         several      Guarantors    adjustments      amounts
                               --------   ---------------   ----------   -------------   ------------
<S>                            <C>           <C>             <C>           <C>             <C>
Freight revenues                   158        30,204             266        (4,141)         26,487
Hire revenues                       --        29,375          20,223          (852)         48,746
                               -------       -------         -------       -------         -------
Total revenues                     158        59,579          20,489        (4,993)         75,233

Operating expenses              (1,152)      (61,063)        (12,917)        3,444         (71,688)
                               -------       -------         -------       -------         -------
Operating profit                  (994)       (1,484)          7,572        (1,549)          3,545

Other income/(expenses), net   (10,524)      (18,454)            401        15,032         (13,545)
                               -------       -------         -------       -------         -------
Loss before income tax and
minority interests             (11,518)      (19,938)          7,973        13,483         (10,000)

Income taxes                        --          (158)            (27)           --            (185)
Minority interests                  --            --              --        (1,333)         (1,333)
                               -------       -------         -------       -------         -------
Net loss                       (11,518)      (20,096)          7,946        12,150         (11,518)
                               =======       =======         =======       =======         =======
</TABLE>

<TABLE>
                       SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF OPERATIONS

                                 FOR THE YEAR ENDED DECEMBER 31, 2002

                                 (stated in thousands of U.S. dollar)
<CAPTION>
                                              Combined
                                          guarantors that    Combined                       Total
                                           are joint and       Non-      Consolidating   consolidated
                                Parent         several      Guarantors    adjustments      amounts
                               --------   ---------------   ----------   -------------   ------------
<S>                            <C>           <C>             <C>           <C>             <C>
Freight revenues                    --        24,196           1,781        (1,234)         24,743
Hire revenues                       --        32,178          20,982        (4,779)         48,381
                               -------       -------         -------       -------         -------
Total revenues                      --        56,374          22,763        (6,013)         73,124

Operating expenses              (1,355)      (58,682)        (18,115)        6,241         (71,911)
                               -------       -------         -------       -------         -------
Operating (loss) profit         (1,355)       (2,308)          4,648           228           1,213

Other income/(expenses), net   (12,498)      (12,575)         (1,034)       11,323         (14,784)
                               -------       -------         -------       -------         -------
(Loss) income before income
tax and minority interests     (13,853)      (14,883)          3,614        11,551         (13,571)

Income taxes                        --          (122)            (28)           --            (150)
Minority interests                  --            --              --          (132)           (132)
                               -------       -------         -------       -------         -------
Net (loss) income              (13,853)      (15,005)          3,586        11,419         (13,853)
                               =======       =======         =======       =======         =======
</TABLE>
<PAGE>

<TABLE>
                       SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF OPERATIONS

                                 FOR THE YEAR ENDED DECEMBER 31, 2001

                                 (stated in thousands of U.S. dollar)
<CAPTION>
                                              Combined
                                          guarantors that    Combined                       Total
                                           are joint and       Non-      Consolidating   consolidated
                                Parent         several      Guarantors    adjustments      amounts
                               --------   ---------------   ----------   -------------   ------------
<S>                            <C>           <C>             <C>           <C>             <C>
Freight revenues                     --        65,723           7,944            --          73,667
Hire revenues                        --        25,129          12,412            --          37,541
                               --------      --------        --------      --------        --------
Total revenues                       --        90,852          20,356            --         111,208

Operating expenses               (1,662)      (76,979)        (13,076)           --         (91,717)
                               --------      --------        --------      --------        --------
Operating (loss) profit          (1,662)       13,873           7,280            --          19,491

Other income/(expenses), net      4,077       (13,138)            990        (8,615)        (16,686)
                               --------      --------        --------      --------        --------
Income before income tax and
minority interests                2,415           735           8,270        (8,615)          2,805

Income taxes                         --          (335)            (55)           --            (390)
Minority interests                   --            --              --            --              --
                               --------      --------        --------      --------        --------
Net income                        2,415           400           8,215        (8,615)          2,415
                               ========      ========        ========      ========        ========
</TABLE>

<TABLE>
                        SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW

                                  FOR THE YEAR ENDED DECEMBER 31, 2003
<CAPTION>
                                                Combined
                                            guarantors that    Combined                       Total
                                             are joint and       Non-      Consolidating   consolidated
                                  Parent         several      Guarantors    adjustments      amounts
                                 --------   ---------------   ----------   -------------   ------------
<S>                              <C>           <C>             <C>           <C>             <C>
Net (loss) income                (11,518)      (20,096)          7,946        12,150         (11,518)
Adjustments to reconcile net
  loss to net cash provided
  by operating activities:        13,825        25,618           4,696       (12,150)         31,989
                                 -------       -------         -------       -------         -------
Net cash provided by operating
  activities                       2,307         5,522          12,642            --          20,471

Net cash (used in) provided by
  investing activities            14,384        (4,092)        (16,577)           --           6,285

Net cash (used in) provided by
   financing activities          (16,644)           --           5,982            --         (10,662)
                                 -------       -------         -------       -------         -------
Net increase in cash and cash
   equivalents                        47         1,430           2,047            --           3,524
                                 =======       =======         =======       =======         =======
</TABLE>
<PAGE>

<TABLE>
                           SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOW

                                     FOR THE YEAR ENDED DECEMBER 31, 2002
<CAPTION>
                                                     Combined
                                                 guarantors that    Combined                       Total
                                                  are joint and       Non-      Consolidating   consolidated
                                       Parent         several      Guarantors    adjustments      amounts
                                      --------   ---------------   ----------   -------------   ------------
<S>                                   <C>           <C>             <C>           <C>             <C>
Net (loss) income                     (13,853)      (15,005)          3,586        11,419         (13,853)
Adjustments to reconcile net (loss)
  income to net cash provided by
  operating activities:                17,699        20,838           1,262       (11,551)         28,248
                                      -------       -------         -------       -------         -------
Net cash provided by operating          3,846         5,833           4,848          (132)         14,395
   activities

Net cash (used in) provided by
   investing activities                   403        (5,148)        (16,683)           --         (21,428)

Net cash (used in) provided by in
   financing activities                (4,490)           --          10,375            --           5,885
                                      -------       -------         -------       -------         -------
Net increase (decrease) in cash and
   cash equivalents                      (241)          685          (1,460)         (132)         (1,148)
                                      =======       =======         =======       =======         =======
</TABLE>

<TABLE>
                           SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW

                                     FOR THE YEAR ENDED DECEMBER 31, 2001

                                     (stated in thousands of U.S. dollar)
<CAPTION>
                                                     Combined
                                                 guarantors that    Combined                       Total
                                                  are joint and       Non-      Consolidating   consolidated
                                       Parent         several      Guarantors    adjustments      amounts
                                      --------   ---------------   ----------   -------------   ------------
<S>                                   <C>           <C>             <C>           <C>             <C>
Net income                              2,415           400           8,215        (8,615)          2,415
Adjustments to reconcile net income
  to net cash provided by operating
  activities:                          11,184           521           1,943         8,751          22,399
                                      -------       -------         -------       -------         -------
Net cash provided by operating         13,599           921          10,158           136          24,814
   activities

Net cash (used in) investing
  activities                          (10,250)       (3,883)             --            --         (14,133)

Net cash used in financing
  activities                           (3,212)           --          (5,822)           --          (9,034)
                                      -------       -------         -------       -------         -------
Net (decrease) increase in cash
  and cash equivalents                    137        (2,962)          4,336           136           1,647
                                      =======       =======         =======       =======         =======
</TABLE>
<PAGE>

19.  SUBSEQUENT EVENTS TO THE DATE OF THE AUDITORS REPORT
     (Unaudited)

     On April 23, 2004 the Company acquired in a series of related transactions,
     through two wholly owned subsidiaries, from ACBL Hidrovias Ltd. the
     remaining 50% equity interest in UABL Limited that it did not own along
     with the fleet of 50 river barges and 7 river tugboats. The total purchase
     price paid in these transactions was 26.100, 17.700 of which were derived
     from the proceeds of previous vessels sales by the Company. The barges
     enter the Company's fleet as a guarantee to the Notes (Note 6.a).
<PAGE>

REPORT OF INDEPENDENT
AUDITORS

To the Board of Directors of
UABL LIMITED:

     We have audited the consolidated balance sheets of UABL LIMITED as of
December 31, 2003 and 2002, and the related consolidated statements of
operations, shareholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The consolidated financial statements of UABL LIMITED as of December
31, 2001, and for the year then ended were audited by other auditors who have
ceased operations as a foreign associated firm of the Securities and Exchange
Commission Practice Section of the American Institute of Certified Public
Accountants and whose reported dated March 26, 2002, expressed an unqualified
opinion on those statements.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of UABL LIMITED as
of December 31, 2003 and 2002, and the consolidated results of its operations
and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States.

Buenos Aires, Argentina
    March 1, 2004
                                      PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
                                            Member of Ernst & Young Global

                                                   ENRIQUE C. GROTZ
                                                        Partner
<PAGE>

The following is a copy of the audit report previously issued by PISTRELLI, DIAZ
Y ASOCIADOS (member of Andersen) in connection with UABL LIMITED's December 31,
2001 and 2000 financial statements. This audit report has not been reissued by
PISTRELLI, DIAZ Y ASOCIADOS in connection with this filing on Form 20-F.

REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS

To the Board of Directors of
UABL LIMITED:

     We have audited the accompanying consolidated balance sheets of UABL
LIMITED and its subsidiaries, a company incorporated under Bahamas legislation
(the Company), as of December 31, 2001 and 2000, and the related consolidated
statements of income (loss), changes in stockholders' equity and cash flows for
the year ended December 31, 2001 and for the period of October 24 (Inception
date) to December 31, 2000. These statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

     We conducted our audits in accordance with auditing generally accepted
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of UABL LIMITED as of December
31, 2001 and 2000, and the results of its operations and its cash flows for the
year ended December 31, 2001 and for the period of October 24 (Inception date)
to December 31, 2000, in accordance with generally accepted accounting
principles in the United States.

Buenos Aires, Argentina                              PISTRELLI, DIAZ Y ASOCIADOS
    March 26, 2002                                       Member of Andersen

                                                            MARIANA FILAS
                                                               Partner
<PAGE>

          CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2003 AND 2002

  (stated in thousands of U.S. dollars, except par value and number of shares)

                                                               December 31,
                                                           --------    --------
                                                             2003        2002
                                                           --------    --------
ASSETS

   CURRENT ASSETS

     Cash and cash equivalents                                  710         321
     Restricted cash                                            416          --
     Investments                                                100          86
     Accounts receivable, net of allowance for
      doubtful accounts of 47 and 265 in 2003 and
      2002, respectively                                      5,171       2,386
     Due from affiliates                                      2,001         353
     Inventories                                              1,383       1,052
     Prepaid expenses                                           292         645
     Other receivables                                        1,890       1,450
     Deferred tax asset                                         348         595
                                                           --------    --------
     Total current assets                                    12,311       6,888
                                                           --------    --------

   NONCURRENT ASSETS

     Other receivables                                          109          96
     Investments                                                 --         100
     Due from affiliates                                      2,467       2,229
     Property and equipment, net                             81,330      80,915
     Restricted cash                                          1,281          --
     Other assets                                             1,640          --
                                                           --------    --------
     Total noncurrent assets                                 86,827      83,340
                                                           --------    --------
      Total assets                                           99,138      90,228
                                                           --------    --------

LIABILITIES AND SHAREHOLDERS' EQUITY

   CURRENT LIABILITIES

     Accounts payable and accrued expenses                    3,020       1,781
     Due to affiliates                                        5,021      15,496
     Other payables                                             630         928
     Current portion of long-term debt                        1,955       2,111
     Current portion of capital lease obligations               652         611
                                                           --------    --------
     Total current liabilities                               11,278      20,927
                                                           --------    --------

   NONCURRENT LIABILITIES

     Accounts payables and accrued expenses                      55          --
     Long-term debt, less current portion                    21,567       6,678
     Capital lease obligations, less current portion            875       1,527
                                                           --------    --------
      Total noncurrent liabilities                           22,497       8,205
                                                           --------    --------
      Total liabilities                                      33,775      29,132
                                                           --------    --------

   SHAREHOLDERS' EQUITY

     Common stock, $1 par value, 10,000 shares
     authorized, issued and outstanding                          10          10
     Additional paid-in capital                              74,549      74,549
     Accumulated deficit                                     (9,196)    (13,463)
                                                           --------    --------
     Total shareholders' equity                              65,363      61,096
                                                           --------    --------
     Total liabilities and shareholders' equity              99,138      90,228
                                                           ========    ========

                             See accompanying notes.
<PAGE>

<TABLE>
                        CONSOLIDATED STATEMENTS OF OPERATIONS

                FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

                        (stated in thousands of U.S. dollars)
<CAPTION>
                                                       Year ended December 31,
                                                   --------------------------------
                                                     2003        2002        2001
                                                   --------    --------    --------
<S>                                                <C>         <C>         <C>
REVENUE

     Revenues from third parties                     45,329      32,381      37,499
     Revenues from related parties                      896         895       4,027
     Management fee from related parties             14,035      13,784      15,055
                                                   --------    --------    --------
     Total revenue                                   60,260      47,060      56,581
                                                   --------    --------    --------

OPERATING EXPENSES (1)

     Port expenses                                   (5,822)     (3,902)     (5,671)
     Boat costs                                     (15,524)    (13,163)    (18,968)
     Barge costs                                     (4,573)     (4,257)     (4,597)
     Charter hire from related parties              (20,308)    (19,755)    (22,399)
     Depreciation of property and equipment          (4,398)     (4,070)     (3,259)
     Administrative and selling expenses             (3,912)     (3,565)     (5,219)
                                                   --------    --------    --------
     Total operating expenses                       (54,537)    (48,712)    (60,113)
                                                   --------    --------    --------
   Operating income (loss)                            5,723      (1,652)     (3,532)
                                                   --------    --------    --------

OTHER INCOME (EXPENSES), net

     Investment in affiliates                            --         (99)        (83)
     Interest expense                                (1,414)       (997)       (282)
     Foreign exchange gains                              55          83         513
                                                   --------    --------    --------
     Total other income (expenses), net              (1,359)     (1,013)        148
                                                   --------    --------    --------

   Income (Loss) before tax on minimum presumed
    income and income tax for the year                4,364      (2,665)     (3,384)
     Recovery of tax on minimum presumed income         529          --          --
     Tax on minimum presumed income for the year         (3)       (200)       (725)
     Income taxes                                      (623)        402          --
     Settlement of tax contingency                       --          --      (3,292)
                                                   --------    --------    --------
   Net income (loss) for the year                     4,267      (2,463)     (7,401)
                                                   ========    ========    ========
</TABLE>

(1)  In addition to charter hires from related parties, operating expenses
     included 1,049, 1,206 and 3,226 in 2003, 2002 and 2001, respectively,
     related to charges from related parties.

                             See accompanying notes.
<PAGE>

<TABLE>
                    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                 FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

                          (stated in thousands of US dollars)
<CAPTION>
                                                   Additional
                                         Common      paid-in     Accumulated
               Balance                   stock       capital       deficit     Total
-------------------------------------   -------    ----------    -----------  -------
<S>                                     <C>          <C>           <C>        <C>
December 31, 2000                            10       74,395        (3,599)    70,806

Additional paid-in capital                   --        3,119            --      3,119

Net loss for the year                        --           --        (7,401)    (7,401)
                                        -------      -------       -------    -------
December 31, 2001                            10       77,514       (11,000)    66,524

Spin off approved by the shareholders
    on August 15, 2002                       --       (2,965)           --     (2,965)

Net loss for the year                        --           --        (2,463)    (2,463)
                                        -------      -------       -------    -------
December 31, 2002                            10       74,549       (13,463)    61,096
                                                                              -------
Net income for the year                      --           --         4,267      4,267
                                        -------      -------       -------    -------
December 31, 2003                            10       74,549        (9,196)    65,363
                                        =======      =======       =======    =======
</TABLE>

                             See accompanying notes.
<PAGE>

<TABLE>
                             CONSOLIDATED STATEMENTS OF CASH FLOWS

                     FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

                             (stated in thousands of U.S. dollars)
<CAPTION>
                                                                 Year ended December 31,
                                                             --------------------------------
                                                               2003        2002        2001
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net income (loss) for the year                               4,267      (2,463)     (7,401)

   Adjustments to reconcile net income (loss) for the
     year to net cash provided by operating activities:
        Depreciation of property and equipment                  4,398       4,070       3,259
        Amortization of other assets                              202          --          --
        Loss from investment in affiliates                         --          99          83
        Income from sales of property and equipment                --          --          (2)
        Deferred tax                                              247        (595)         --

   Changes in assets and liabilities, net:
        (Increase) decrease in assets:
            Accounts receivable                                (2,785)      1,305       2,029
            Due from affiliates                                (1,678)     16,871     (16,811)
            Inventories                                          (331)        413          96
            Prepaid expenses                                      353       1,127      (1,157)
            Other receivables                                    (423)      1,830       1,260
        Increase (decrease) in liabilities:
            Accounts payable and accrued expenses               1,294      (1,259)     (4,055)
            Due to affiliates                                  (9,759)    (12,498)     27,436
            Other payables                                       (298)        119        (530)
                                                             --------    --------    --------
            Net cash (used in) provided by operating
              activities                                       (4,513)      9,019       4,207
                                                             --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES

   Proceeds from property and equipment                             8         597          53
   Loans granted to related parties                              (238)     (2,158)         --
   Investment in certificate of deposit                            86        (186)        607
   Purchases of property and equipment                         (4,821)     (7,699)    (17,145)
   Investment in affiliate                                         --          --      (2,461)
                                                             --------    --------    --------
            Net cash used in investing activities              (4,965)     (9,446)    (18,946)
                                                             --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES

   Increase in restricted cash                                 (1,697)         --          --
   Proceeds from issuance of long-term debt                    16,800       5,594      10,100
   Repayment of long-term debt and capital lease
     obligation                                                (2,678)     (4,497)       (270)
   Repayment of loans due to related parties                     (716)       (455)         --
   Costs incurred to issue long-term debt                      (1,842)         --          --
   Capital contribution                                            --          --       3,119
                                                             --------    --------    --------
            Net cash provided by financing activities           9,867         642      12,949
                                                             --------    --------    --------

            Net increase (decrease) in cash and cash
              equivalents                                         389         215      (1,790)

            Cash and cash equivalents at beginning of year        321         106       1,896
                                                             --------    --------    --------
            Cash and cash equivalents at end of year              710         321         106
                                                             ========    ========    ========

Supplemental cash flow information:

Interest paid                                                   1,048         715          57
Income taxes paid                                                 328         100         569
</TABLE>

                             See accompanying notes
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          (stated in thousands of U.S. dollars, except where indicated)

1)   CORPORATE ORGANIZATION AND NATURE OF OPERATIONS

     Organization

     ACBL Hidrovias Ltd. ("ACBLH"), a subsidiary of American Commercial Lines
     LLC ("ACL"), and UP River (Holdings) Ltd. ("UP River"), a Bahamian
     corporation and a subsidiary of Ultrapetrol (Bahamas) Limited
     ("Ultrapetrol"), individually and through their subsidiaries, owned certain
     vessels, land-based assets, permits and contracts of affreightment, which
     they used to operate a river transportation business on the Parana,
     Paraguay and Uruguay Rivers in Argentina, Bolivia, Brazil, Paraguay and
     Uruguay.

     The respective Boards of Directors of ACBLH and UP (collectively, the
     "Parties") decided to combine the businesses of ACBLH and UP River into a
     new business entity, UABL Limited ("the Company" or "UABL Limited"), and
     for that purpose executed a Consolidation Agreement ("the Consolidation
     Agreement") on October 18, 2000 (the "Closing Date"). As a result of the
     business combination, the Company was organized and registered as a
     Bahamian corporation on October 18, 2000. The Company has an authorized
     capital stock of 10,000 shares, with a par value of $1 per share and is
     owned equally by UP and ACBLH and its affiliates. These contributions were
     recorded at the historical cost basis of the related entities or assets.

     On the Closing Date and in accordance with the Consolidation Agreement,
     UABL S.A. ("UABL SA"; formerly ACBL Hidrovias S.A.), under Argentinean
     legislation and UP River, under Bahamian legislation, were contributed to
     the Company by ACBLH and UP River, respectively. Additionally, the parties
     contributed equipment, cash and certain time charter contracts involving
     certain vessels to the Company on the Closing Date.

     Lonehort S.A. ("Lonehort") a ship management company serving the boats,
     barges and other marine equipment of the Company was created in October
     2000. UABL Limited is its sole shareholder (100% interest).

     As of December 31, 2003, 2002 and 2001 the consolidated financial
     statements include the accounts of the Company and its subsidiaries
     described as follows:

<TABLE>
<CAPTION>
                     Company                         Origin      2003   2002   2001
------------------------------------------------   ----------    ----   ----   ----
<S>                                                <C>           <C>    <C>    <C>
- Thurston Shipping Inc. ("Thurston")              Panamanian    100%   100%   100%
- UABL S.A.                                        Argentinian   100%   100%   100%
- Sernova S.A. ("Servova")                         Argentinian   100%   100%   100%
- UABL Paraguay S.A. ("UABL Paraguay")             Paraguayan    100%   100%   100%
- Riverpar S.A. ("Riverpar")                       Paraguayan    100%   100%   100%
- Yataiti S.A. ("Yataiti")                         Paraguayan    100%   100%   100%
- ACBL del Paraguay S.A. ("ACBL del Paraguay")     Paraguayan    100%   100%   100%
- Corydon International S.A.                       Uruguayan     100%    --     --
- Cedarino S.L.                                    Spain         100%    --     --
- UABL International S.A. ("UABL International")   Panamanian    100%   100%   100%
- Lonehort S.A. ("Lonehort")                       Panamanian    100%   100%   100%
- UABL Barges (Panama) Inc. ("UABL Barges")        Panamanian    100%   100%    --
- Blueroad Finance Inc. ("Blueroad")               Panamanian    100%    --     --
- Arlene Investment Inc.                           Panamanian    100%    --     --
- Marnave S.R.L. ("Marnave")                       Paraguayan    100%    --     --
</TABLE>
<PAGE>

     Recent developments

     Argentina

     Approximately 14% of the Company's revenues are generated from its
     Argentine subsidiaries which also hold approximately 41% of the
     consolidated assets of the Company. Argentina has undergone major economic,
     political and social changes in the last several years, including
     significant economic changes in December 2001 and throughout 2002. Most
     importantly, in January 2002 the government eliminated the prior
     convertibility law which had been in place since 1991 through which the
     Argentine peso was traded at one peso per U.S. dollar. Beginning in
     February 2002 the government established a single market for all foreign
     exchange transactions at a single free-floating exchange rate. Subsequent
     to this change the Argentine peso devalued significantly.

     However, since the end of the third quarter 2002 Argentine's economy has
     shown signs of stabilization.

     In 2003, the Argentine economy grew at a rate of approximately 8 percent
     and as of December 31, 2003 the peso was trading on one U.S. dollar per
     2.91 pesos.

     In addition to the above changes the government also converted all debts
     denominated in U.S. dollars or other foreign currencies in the financial
     system to pesos at the exchange rate of one peso per US$1.00. There were
     also various other banking and foreign payment restrictions which were
     substantially lifted in 2002.

     The majority of the Argentine subsidiary's revenues are denominated and
     collected in U.S. dollars. In addition, the Company does not have financial
     loans denominated in pesos in Argentina. Accordingly, the above economic
     changes in Argentina did not significantly adversely affect the Company.
     The most significant impact related to the reduction of the U.S. dollar
     equivalent value of the Company's peso denominated operating expenses.

     Notwithstanding the above, the Argentine government continues to make
     changes in the country which could affect the Company's Argentine
     operations.

     Paraguay

     Approximately 28% of the Company's revenues are generated from its
     Paraguayan subsidiaries which also hold approximately 26% of the
     consolidated assets of the Company. Paraguay has undergone certain
     economic, political and social changes in the last several years.

     The majority of the Paraguayan subsidiaries' revenues are denominated and
     collected in U.S. dollars. In addition, the Company does not have financial
     loans denominated in guarani in Paraguay. Accordingly, the above economic
     changes in Paraguay did not significantly adversely affect the Company. The
     most significant impact related to the reduction of the U.S. dollar
     equivalent value of the Company's guarani denominated operating expenses.

     Notwithstanding the above, future economic changes in Paraguay could affect
     the Company's subsidiaries and operations in this country.

2)   SIGNIFICANT ACCOUNTING POLICIES

     a)   Basis of presentation and principles of consolidation

          The consolidated financial statements have been prepared in accordance
          with accounting principles generally accepted in the United States
          ("US GAAP").
<PAGE>

          The consolidated financial statements include the accounts of the
          Company and its subsidiaries all of which are wholly-owned.
          Significant intercompany accounts and transactions have been
          eliminated in consolidation.

     b)   Foreign-currency remeasurement

          The Company uses the US dollar as its functional currency. The
          majority of the Company's sales are billed and collected in U.S.
          dollars and all financing is in U.S. dollars.

          All monetary assets and liabilities not denominated in US dollars have
          been remeasured into US dollars using the exchange rates in effect at
          the balance sheet date. Operations statement amounts have been
          translated using the average exchange rate for each month. Gains or
          losses resulting from foreign currency measurements are included in
          the operations statement for the same year.

     c)   Investments

          As of December 31, 2003 and 2002, this account includes a certificate
          of deposit in Citibank N.A., Paraguay.

     d)   Other receivables

          This account mainly includes claims receivables, tax credits for VAT
          and income tax withholdings as of December 31, 2003 and 2002.

     e)   Inventories

          This account includes fuel and spare parts, which were accounted for
          at the lower of cost or market. The amounts for each item were as
          follows:

                                                      2003       2002
                                                     ------     ------

          Spare parts                                   676        696
          Fuel                                          707        356
                                                     ------     ------
              Total                                   1,383      1,052
                                                     ======     ======

     f)   Prepaid expenses

          This account includes prepaid insurance, charter expenses and advances
          to suppliers.

     g)   Property and equipment

          Property and equipment, which is principally comprised of river
          barges, tugboats and river equipment is stated on the basis of cost.
          This cost includes the purchase price and all directly attributable
          costs for the asset to be in working condition. Maintenance and repair
          costs are expensed as incurred.

          The barges and tugboats are considered to have useful lives of 35
          years from the date on which they were built. The depreciation amount
          is calculated net of the estimated scrap value of the barges and
          tugboats at the date they were built. River equipment is considered to
          have a useful life of 15 years. Depreciation for all property and
          equipment is recorded by the straight-line method over the estimated
          useful lives of the related assets.
<PAGE>

          Long-lived assets are reviewed for impairment in accordance with SFAS
          No. 144, "Accounting for the Impairment or Disposal of Long-lived
          Assets", whenever events or changes in circumstances indicate that the
          carrying amount may not be recoverable. If the sum of the expected
          future undiscounted cash flows is less than the carrying amount of the
          asset, a loss is recognized for the difference between the fair value
          and carrying value of the asset.

     h)   Accounts payable and accrued expenses

          This account mainly includes payables to agents and suppliers.

     i)   Other payables

          This account mainly includes salaries, social security payables, taxes
          payable and accruals.

     j)   Revenue recognition

          Barge transportation revenues are recognized daily as earned from
          charters over the period of the respective agreements.

     k)   Use of estimates

          The preparation of the consolidated financial statements in accordance
          with US GAAP requires management to make estimates and assumptions
          that affect reported amounts in the consolidated financial statements
          and accompanying notes. Actual results could differ from those
          estimated.

     l)   Balances of long-term debt as of December 31, 2003 and 2002 are as
          follows:

<TABLE>
<CAPTION>
                                                                            Nominal Value
                                                       -------------------------------------------------------
                                                             Current
                          Financial                    --------------------
                         Institution/       Agreement               Accrued     Non                 Average
     Company                Other             year     Principal   expenses   current     Total       rate
--------------------------------------------------------------------------------------------------------------
<S>             <C>                           <C>      <C>         <C>        <C>        <C>      <C>
UABL Barges     IFC - Tranche A               2002           --        21        8,400    8,421   LIBOR + 3,75%
UABL Barges     IFC - Tanche B                2002           --         7        2,800    2,807   LIBOR + 3,50%
UABL Barges     KFW                           2003           --        15        5,600    5,615   LIBOR + 3,50%
UABL Paraguay   Citibank S.A.                 2001          247        --        1,482    1,729   LIBOR + 2,75%
UABL Paraguay   Citibank S.A.                 2002           64        --           --       64         5,00%
UABL Limited    Transamerica Leasing Inc.     2001        1,601        --        3,285    4,886         8,00%
                                                       ---------   --------   --------   ------
Total 2003                                                1,912        43       21,567   23,522
                                                       =========   ========   ========   ======
Total 2002                                                2,111        --        6,678    8,789
                                                       =========   ========   =================
</TABLE>

          The long-term debt is due in the following years succeeding December
          31, 2003:

                                      Year          Amount
                                   ----------      ------

                                      2004          1,955
                                      2005          4,860
                                      2006          4,679
                                      2007          3,127
                                      2008          3,127
                                   Thereafter       5,774
                                                   ------
                                                   23,522
                                                   ======
<PAGE>

     m)   Comprehensive income:

          According to SFAS No. 130, the Company is required to disclose
          separately the changes in shareholders' equity, other than net income
          (loss) and transactions with shareholders, defined as other
          comprehensive income. The Company has no items of other comprehensive
          income to report. The comprehensive income only includes the net
          income (loss) for the year.

     n)   Fair value of financial instruments:

          In accordance with Statement of Financial Accounting Standards (SFAS)
          N(degree) 107 "Disclosures about fair value of financial instruments",
          the fair value of the Company's assets and liabilities considered to
          be financial instruments have been valued at the discounted amount of
          future cash flows at market interest rates current available to the
          Company for credits/loans with similar terms. The fair value of the
          Company's financial instruments approximates carrying value.

     o)   Cash and cash equivalents:

          Cash and cash equivalents include highly-liquid, temporary cash
          investments with original maturities of three months or less when
          purchased.

     p)   Allowance for doubtful accounts

          Changes in allowance for doubtful accounts for the years ended
          December 31, 2003, 2002 and 2001 are as follows:

                                                   December 31,
                                             ------------------------
                                             2003      2002      2001
                                             ----      ----      ----

          Balance at January 1,               265       312       355
          Provision                            29       108       312
          Amounts written off                (222)     (110)     (355)
          Amounts recovered                   (25)      (45)       --
                                             ----      ----      ----
          Balance at December 31,              47       265       312
                                             ====      ====      ====

3)   PROPERTY AND EQUIPMENT

     The capitalized cost of property and equipment and the related accumulated
     depreciation as of December 31, 2003 and 2002 is as follows:

                                                      December 31,
                                                  --------------------
                                                    2003        2002
                                                  --------    --------

     Boats and tug boats                             9,703       7,978
     Barges                                         80,999      77,731
     Improvements in third parties' assets           2,731       2,691
     Vehicles                                           56          89
     Equipment                                       3,529       3,443
     Furniture & fixtures                              997         981
     Land & operating base                           2,758       2,730
     Work in progress                                   63         126
     Prepayment to suppliers                            --         281
                                                  --------    --------
                                                   100,836      96,050
     Less accumulated depreciation                 (19,506)    (15,135)
                                                  --------    --------
     Total                                          81,330      80,915
                                                  ========    ========
<PAGE>

4)   SPIN-OFF OF EQUITY INVESTMENT

     In 2002 the shareholders of UABL Limited decided to spin-off their equity
     interest in OTS SA and Puertos del Sur SA to UABL Terminals. UABL Terminals
     is owned by the same ultimate shareholders as UABL Limited. Accordingly,
     since the transaction was between entities under common ownership, the
     transaction was accounted for at historical cost and no gain or loss was
     recognized.

     These investments were accounted for by the equity method in 2002 and 2001.

5)   COMMITMENTS AND CONTINGENCIES

     a)   Consolidation agreement

          According to the provisions of the Consolidation Agreement, UABL
          Limited shall not be obligated or become liable for any obligation or
          liability, known or unknown, fixed, contingent or otherwise of UP, UP
          River or the Subsidiaries of UP and ACBLH, UABL SA, arising prior to
          October 24, 2000 in connection with any vessel, or any vessel
          chartered to UABL Limited, in connection with or arising out of or
          resulting events occurring prior to that date, without limitation, any
          liability arising in connection with any environmental liabilities,
          legal violations, litigation, employee claims, loan agreements or
          other indebtedness, any tax, or any other liabilities, obligations, or
          exception to any representation or warranty. UABL Limited shall not
          assume, and UP and ACBLH shall severally indemnify UABL Limited
          against such liabilities.

          In addition, pursuant to the mentioned Consolidation Agreement, all
          claims, severance benefits, costs, and other expenses, social security
          taxes, charges and contributions and other costs incurred by UABL SA
          or UP River, or subsidiary of UP River, in connection with an employee
          employed by the Company and subsequently terminated by the Company
          shall be paid by the Company to, or on behalf of ACBLH or UP, as the
          case may be; provided, that the maximum amount that the Company shall
          be required to pay to or on behalf of parent companies in respect of
          any of the mentioned costs in the aggregate, shall be 1,800. ACBLH and
          UP agreed to fully indemnify the Company against such liabilities over
          the mentioned amount.

          During 2000 the Argentine tax authority served a notice to UABL SA
          with the purpose of verifying the latter's compliance with transfer
          pricing regulations for transactions with related companies for the
          period prior to the organization of UABL Limited, i.e. during 1996,
          1997, 1998 and 1999, among other things.

          In light of the above, during 2001 the Company amended its income tax
          returns for the above-mentioned years charging a loss of 3,292 to UABL
          SA's income statement (consisting of a tax loss of 2,270, interest
          expense for 1,487 and a gain on the sale of government bonds of 465).
          In compliance with the contract provision described above, ACBLH
          compensated UABL Limited in the amount of 3,119 causing a net decrease
          of 173, in the shareholders equity.

          According to US GAAP, this compensation was accounted for as
          additional paid-in capital and was not offset against the loss
          generated by the tax liability.

     b)   Leases

          The Company leases a boat and sixteen barges under capital leases
          until 2006.
<PAGE>

          Property and equipment includes the following amounts for leases that
          have been capitalized at December 31, 2003 and 2002:

                                                      December 31,
                                                   ------------------
                                                    2003        2002
                                                   ------      ------

          Boat                                      1,543       1,543
          Barges                                    2,518       2,518
                                                   ------      ------
                                                    4,061       4,061
          Less accumulated depreciation              (391)       (168)
                                                   ------      ------
                                                    3,670       3,893
                                                   ======      ======

          The Company recorded depreciation expense in the amount of 223 and 168
          on assets recorded under capital leases for the year ended December
          31, 2003 and 2002.

          Under the charter agreements entered into by the parties, both UP and
          ACBLH lease certain vessels which were not contributed to the Company
          through the Consolidation Agreement. These operating leases expire in
          2008.

          The Company recorded charter hire expenses to related parties of
          20,308, 19,755 and 22,399 for the years ended December 31, 2003, 2002
          and 2001, respectively.

          Future minimum payments under capital leases and noncancelable
          operating leases with initial terms of one year or more consisted of
          the following as of December 31, 2003:

<TABLE>
<CAPTION>
                                                        Capital   Operating leases -
                                                        leases     Related parties
                                                        -------   -------------------
          <S>                                           <C>                    <C>
          2004                                             732                 20,995
          2005                                             732                 20,995
          2006                                             183                 20,995
          2007                                              --                 20,995
          2008                                              --                 10,469
                                                        ------                 ------
          Total minimum lease payments                   1,647                 94,449
                                                                               ======

          Amount representing interest                    (120)
                                                        ------

          Present value of net minimum lease payments
           (including current portion of 652)            1,527
                                                        ======
</TABLE>

     c)   Other

          10% of the Company's employees are covered by a collective bargaining
          agreement.
<PAGE>

     d)   Contingencies

          The Company is subject to legal proceedings, claims and contingencies
          arising in the ordinary course of business. When such amounts can be
          estimated and are probable, management accrues the corresponding
          liability. While the ultimate outcome of lawsuits or other proceedings
          against the Company cannot be predicted with certainty, management
          does not believe the costs of such actions will have a material effect
          on the Company's consolidated financial position or results of
          operations.

6)   INCOME TAXES

     As the earnings from shipping operations of UABL International and Thurston
     are derived from sources outside of Panama, such earnings are not subject
     to Panamanian taxes.

     UABL Paraguay, ACBL del Paraguay, Yataiti and Riverpar are subject to
     Paraguayan corporate income taxes. UABL SA and Sernova are subject to
     Argentine corporate income taxes.

     In Argentina the tax on minimum presumed income ("TOMPI") supplements
     income tax since it applies a minimum tax on the potential income from
     certain income generating-assets at a 1% tax rate. The Company's tax
     obligation in any given year will be the higher of these two tax amounts.
     However, if in any given tax year tax on minimum presumed income exceeds
     income tax, such excess may be computed as payment on account of any excess
     of income tax over TOMPI that may arise in any of the ten following years.

     The Company accounts for income taxes under the liability method in
     accordance with SFAS No. 109 "Accounting for Income Taxes".

     Under this method, deferred tax assets and liabilities are established for
     temporary differences between the financial reporting basis and the tax
     basis of the Company's assets and liabilities at each year end. Deferred
     tax assets are recognized for all temporary items and an offsetting
     valuation allowance is recorded to the extent that it is not more likely
     than not that the asset will be realized.

     UABL Limited's pre-tax income for the years ended December 31, 2003, 2002
     and 2001 was taxed in foreign jurisdictions (Argentina and Paraguay).

     The provision (benefit) for income taxes (which includes TOMPI) is
     comprised of:

                                            For the year ended December 31,
                                            -------------------------------
                                            2003         2002          2001
                                            ----         ----          ----

     Current

        Argentina                              3          211           725
        Paraguay                             376          182            --
                                            ----         ----          ----
     Total current                           379          393           725
                                            ----         ----          ----

     Deferred

        Argentina                            244         (464)           --
        Paraguay                               3         (131)           --
                                            ----         ----          ----
     Total deferred                          247         (595)           --
                                            ----         ----          ----
     Total                                   626         (202)          725
                                            ====         ====          ====
<PAGE>

     Reconciliation of the tax (benefit) provision to taxes calculated based on
     the statutory tax rates is a follows:

                                                For the year ended December 31,
                                                -------------------------------
                                                 2003         2002        2001
                                                ------       ------      ------

     Pre-tax income (loss)                       4,364       (2,665)     (3,384)
     Statutory tax rate                             35%          35%         35%
                                                ------       ------      ------
     Tax provision (benefit)                     1,527         (933)     (1,184)

     Sources not subject to income tax
     at the statutory rate                        (541)       1,672         609

     (Decrease) Increase in valuation
     allowance                                  (1,095)      (2,966)        575

     Effects of foreign exchange changes
     related to Argentine subsidiary               732        1,825          --

     Tax on minimum presumed income                  3          200         725
                                                ------       ------      ------
     Income tax provision (benefit)                626         (202)        725
                                                ======       ======      ======

     As of December 31, 2003 UABL SA had accumulated net operating loss
     carryforwards ("NOLs") totaling 363 that expire 346 in 2005 and 17 in 2006.
     The use of the NOLs will depend upon future taxable income in UABL SA in
     Argentina.

     As of December 31, 2003, UABL SA had a credit related to TOMPI of 704 which
     expires 163 in 2010, 154 in 2011, 212 in 2012 and 175 in 2013.

     In addition, ACBL del Paraguay had NOLs of 85 that expire in 2005.

                                                       2003          2002
                                                      ------        ------
     Deferred tax assets

        NOLs                                             448         1,663
        Due to affiliate                                 113           116
        TOMPI credit                                      --           162
        Property and equipment                            38            --
        Other, net                                       106             6
                                                      ------        ------
         Total deferred assets                           705         1,947

     Deferred tax liabilities
        Property and equipment                           283           257
        Other, net                                        74            --
                                                      ------        ------
                                                         357           257

        Valuation allowance                               --        (1,095)
                                                      ------        ------
         Net deferred assets                             348           595
                                                      ======        ======
<PAGE>

7)   RELATED-PARTY TRANSACTIONS

     As of December 31, 2003 and 2002 the balances from related parties were as
     follows:

     Accounts receivable from related parties

                                                             2003     2002
                                                            ------   ------
     Current:

     - Ultrapetrol SA                                           --       10
     - Ultrapetrol (Bahamas) Ltd.                              164       --
     - Parfina SA                                              356       61
     - Oceanmarine                                             177      194
     - ACBLH (1)                                                25       10
     - Oceanpar                                                 --       18
     - Princely International Finance Corp.
       and its wholly-owned subsidiaries                     1,042       --
     - UABL Terminals Ltd.                                     154       60
     - Puerto del Sur S.A                                       83       --
     - OTS S.A                                                  --       --
                                                            ------   ------
                                                             2,001      353
                                                            ======   ======

     (1)  This entity is a subsidiary of ACL who is a 50% shareholder of the
          Company. See note 14 related to significant events at ACL.

                                                           2003       2002
                                                          ------     ------
     Noncurrent:

     Loans due from related parties

     - OTS SA (1)                                            187        173
     - Puerto del Sur SA (3)                               2,280      2,056
                                                          ------     ------
                                                           2,467      2,229
                                                          ======     ======
     Accounts payable to related parties

     - Mansan SA                                             201        201
     - Ultrapetrol SA                                        110        678
     - Princely International Finance Corp.
       and its wholly-owned subsidiaries                   1,678      3,682
     - ACBLH (2)                                             569      5,372
     - Oceanpar SA                                           314      1,777
     - Oceanmarine                                             1         63
     - Parfina                                               248        555
     - Louisiana Dock Company LLC                             --        552
                                                          ------     ------
                                                           3,121     12,880
                                                          ------     ------
     Loans due to related parties (1)

     - ACBLH (2)                                             950      1,375
     - Ultrapetrol (Bahamas) Ltd.                            950      1,101
     - Ultrapetrol SA                                         --        140
                                                          ------     ------
                                                           1,900      2,616
                                                          ------     ------
                                                           5,021     15,496
                                                          ======     ======

     (1)  These loans accrue no interest and have no maturity date.

     (2)  This entity is a subsidiary of ACL who is a 50% shareholder of the
          Company. See note 14 related to significant events at ACL.

     (3)  This loan accrues interest at a nominal interest rate of 7% per year,
          payable semiannually. The principal will be repaid in 8 equal
          semiannual installments, beginning on June 30, 2006.
<PAGE>

     For the years ended December 31, 2003, 2002 and 2001, the transactions with
     related parties were as follows:

<TABLE>
<CAPTION>
                                                   2003          2002          2001
                                                ----------    ----------    ----------
<S>                                             <C>           <C>           <C>
     Revenues from related parties

     - Parfina SA                                       --           424         1,777
     - Oceanpar SA                                      42           411         1,470
     - Ultrapetrol SA                                   --            --           449
     - Oceanmarine                                     854            60           331
                                                ----------    ----------    ----------
          Total                                        896           895         4,027
                                                ----------    ----------    ----------

     Management fee revenue

     - ACBLH (1)                                     7,344         7,185         7,709
     - Ultrapetrol (Bahamas) Ltd.                      912           912           913
     - Princely International Finance Corp.
       and its wholly owned subsidiaries             5,779         5,687         6,433
                                                ----------    ----------    ----------
          Total                                     14,035        13,784        15,055
                                                ----------    ----------    ----------
          Total revenues from related parties       14,931        14,679        19,082
                                                ==========    ==========    ==========

     Operating expenses

     - ACBLH (1)                                    10,263        10,097        11,539
     - Oceanpar SA                                   1,694         1,537           107
     - Mansan SA                                     1,205         1,205         1,432
     - Ultrapetrol SA                                  667           621           154
     - Parfina SA                                      639           543           800
     - Lousiana Dock Company LLC (1)                     7            --           355
     - Oceanmarine SA                                    4            13           318
     - Princely International France Corp.
       and its wholly owned subsidiaries             6,530         6,945        10,920
     - Ultrapetrol (Bahamas) Ltd.                      348            --            --
                                                ----------    ----------    ----------
          Total                                 (2) 21,357    (2) 20,961    (2) 25,625
                                                ==========    ==========    ==========

     Cash (paid) from related parties related to
         loans due to related parties

     - Ultrapetrol SA                                 (140)          140            --
     - Ultrapetrol (Bahamas) Ltd.                     (151)         (620)        1,721
     - ACBLH (1)                                      (425)           25         1,950
                                                ----------    ----------    ----------
            Total                                     (716)         (455)        3,671
                                                ==========    ==========    ==========
</TABLE>

     (1)  These entities are subsidiaries of ACL who is a 50% shareholder of the
          Company. See note 14 related to significant events at ACL.

     (2)  Includes 20,308, 19,755 and 22,399 as of December 31, 2003, 2002 and
          2001, respectively, related to the hire of certain vessels according
          to the Charter Party Agreement dated as of October 24, 2000 and 1,049,
          1,206 and 3,226 related to expense recovery and administrative
          services fees.
<PAGE>

                                                       2003     2002     2001
                                                      ------   ------   ------
     Cash paid to related parties related to
       loans due from related parties

     - OTS SA                                             14      102       71
     - Puerto del Sur SA                                 224    2,056       --
                                                      ------   ------   ------
         Total                                           238    2,158       71
                                                      ======   ======   ======

     Property, spare parts and equipment
       acquisitions from related parties

     - Oceanmarine SA                                     --       49       --
     - Lousiana Dock Company LLC (1)                      15      721      790
                                                      ------   ------   ------
                                                          15      770      790
                                                      ======   ======   ======

     Management fee revenue

     Management fee relates to compensation for crew, maintenance and operation
     of certain vessels related to Ship Management Agreements dated as of
     October 24, 2000, between Lonehort S.A., ACBLH and Ultrapetrol Bahamas Ltd.

     These agreements have a period of three years since October 24, 2000 and
     can be extended at the option of ACBLH and Ultrapetrol Bahamas Ltd. for an
     additional three years and afterwards, an additional two years. The
     management fees are stipulated in the related contracts for each specific
     vessel.

     Charter party agreements

     The Company and its subsidiaries entered into Charter Party Agreements with
     ACBLH and Ultrapetrol Bahamas Ltd. and its subsidiaries. These agreements
     have a period of three years since October 24, 2000, which is renewable at
     the owners' option for all or part of the vessels included in the
     agreements for a further three years after which the owner has a further
     option to renew for two more years.

     Under these agreements the Company and its subsidiaries pay a daily rate
     which is specific to stated vessels.

     Expenses recovery and administrative service fees

     The Company's shareholders charged the Company certain expenses in 2003,
     2002 and 2001 related to cost-sharing functions for legal, insurance and
     administrative areas. There is no formal written agreement related to these
     charges.
<PAGE>

8)   RESTRICTED CASH

     As of December 31, 2003, 416 has disclosed in current assets related to
     interest to be paid by the Company to IFC and KFW on June 15, 2004, which,
     under the terms and conditions of the loan, should be deposited with the
     trustee account open therefor.

     As of December 31, 2003, 1,281 has disclosed in noncurrent assets is
     related to disbursements by the IFC and the KFW, which, under the terms and
     conditions of the loan agreement, should only be used to acquired property
     and equipment.

9)   BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION

     The Company's operations include only one business segment river
     transportation services in South America. For such reason, as of December
     31, 2003, 2002 and 2001, no additional business or geographic segment
     information is disclosed.

10)  PURCHASE OF BARGES AND PLEDGED ASSETS

     In November 2001, ACBL del Paraguay acquired from Transamerica Leasing Inc.
     twenty-four dry-cargo barges under a Paraguayan flag with a gross tonnage
     of 1,500 tons each. The barges were built in 1998 and 1999. Together with
     the barges the Company also acquired a tugboat. The tugboat has a
     Paraguayan flag and was built in 1999.

     The transaction was closed in the total amount of 11,100 payable as
     follows: a down payment of 3,100 and a 8,000 Transamerica Ltd loan
     repayable in 60 monthly installments of 161, which include interest at a
     7,94% annual rate. As of December 31, 2003 this debt totaled 4,885
     (including the current portion of 1,601) and is due in the following years
     succeeding December 31, 2003: 1,601 in 2004, 1,733 in 2005 and 1,552 in
     2006.

     The transaction was secured with a mortgage in favor of Transamerica
     Leasing Inc. covering the full value of the assets acquired. As of December
     31, 2003 and 2002 the net book value of these assets was 10,414 and 10,739.

     ACBL del Paraguay and UABL Limited committed, among other things, to
     preserve its corporate existence, to respect all the laws and applicable
     regulations, to maintain and preserve all its properties, not to enter into
     any merger transaction, consolidation or liquidation, not to change the
     terms and conditions of vessels management, not to dispose of a significant
     part of its assets or business, not to assume any debt, excluding those
     related with the ordinary course of business, to be responsible for the
     management and operation of vessels and to limit the distribution of
     dividends in the event of default.

     In December 2001, UABL Paraguay acquired from Citibank N.A. Paraguay seven
     dry-cargo barges with Paraguayan flag with a gross tonnage of 1,500 tons
     each. The barges were built in 1997 and 1998.

     The transaction was closed in the total amount of 2,100 payable in 17
     semiannual installments. The first installment was paid in December 2002.
     Interest accrues at LIBOR (London interbank offered rate) plus 275 bp. As
     of December 31, 2003 the debt totaled 1,729 (including the current portion
     of 247) and the maturities for the years subsequent to December 31, 2003
     are 247 in each year for the years 2004 through 2008 and 494 thereafter.
<PAGE>

     This transaction was secured with a mortgage in favor of Citibank N.A.
     Paraguay on the assets acquired and on other barges owned by UABL Paraguay
     as a credit enhancement. As of December 31, 2003 the net book value of
     these assets is 2,009.

11)  MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK

     a)   Major customers

          For the year ended December 31, 2003 revenues from four Company
          customers represented 13,442, 7,344, 6,691 and 5,640, of UABL's
          consolidated revenues.

          For the year ended December 31, 2002 revenues from four Company
          customers represented 9,807, 7,494, 6,599, and 4,101 of UABL's
          consolidated revenues.

          For the year ended December 31, 2001 revenues from three Company
          customers represented approximately 6,433, 7,709 and 10,304 of UABL's
          consolidated revenues.

     b)   Concentrations of credit risk

          Financial instruments that potentially subject the Company to
          significant concentrations of credit risk consist principally of cash,
          investment, accounts receivable and other receivables.

          The financial institutions are located in Argentina, Paraguay and the
          United States and the Company's cash management policy is designed to
          limit exposure to any one institution. As of December 31, 2003 and
          2002 the Company's investment in certificates of deposit was 100 and
          186.

          Concentrations of credit risk with respect to accounts receivable are
          limited due to the large number of entities comprising the Company's
          customer base and their credit rating.

          As of December 31, 2003 the company's receivables from OTS SA and
          Puerto del Sur SA totaled 187 and 2,363 (including a current portion
          of 83).

          As of December 31, 2002 the Company's receivables from OTS SA and
          Puerto del Sur SA amounted to 2,229. The Company does not require
          collateral for these receivables.

12)  CLAIMS AGAINST INSURANCE COMPANIES

     As of December 31, 2003 and 2002, the "Other receivables" account includes
     396 and 814 in claims against insurance companies.

     The "Other revenues" account for the year ended December 31, 2003 includes
     264 in compensation received from insurers.

     The "Other revenues" account for the year ended December 31, 2002, includes
     500 in compensation received from insurers in connection with an accident
     including the Pueblo Esther tugboat during the year. As December 31, 2002
     this amount was fully collected.
<PAGE>

     In addition, the "Other revenues" account for the year ended December 31,
     2001 includes 687 related to claims for loss of income (business
     interruption) corresponding to the Alianza Rosario and San Pedro tugboats.

13)  IFC AND KFW LOAN AGREEMENTS

     On December 17, 2002, UABL Barges signed a loan agreement with the
     International Financial Corporation (IFC) amounting to 20,000.

     This loan is divided into two tranches:

     -    Tranche A, amounting to 15,000, is payable in 14 semiannual
          installments of 1,071 each, beginning on June 15, 2005 and ending on
          December 15, 2011. This loan shall accrue interest at LIBOR plus 3.75%
          per year.

     -    Tranche B, amounting to 5,000, is payable in 10 semiannual
          installments of 500 each, beginning on June 15, 2005 and ending on
          December 15, 2009. This loan shall accrue interest at LIBOR plus 3.50%
          per year.

     As of December 31, 2003 the Company has received disbursements for 11,200.
     The funds must be disbursed before May 31, 2005. The Company must pay a fee
     of 0.50% per annum on the unused portion of the loan on a semianually
     basis.

     In addition, on February 27, 2003, the Company signed a loan agreement with
     Kreditanstalt fur Wiederaufbau (KFW) amounting to 10,000.

     This loan shall be payable in 10 semiannual installments of 1,000 each,
     beginning on June 15, 2005 and ending on December 15, 2009. This loan shall
     accrue interest at LIBOR plus 3.50% per year.

     As of December 31, 2003 the Company has received disbursements for 5,600.
     The funds must be disbursed before May 31, 2005. The Company must pay a fee
     of 0.50% per annum on the unused portion of the loan on a semiannually
     basis.

     These loans are guaranteed by UABL Limited and UABL S.A., Sernova S.A. and
     UABL International and secured by a mortgage taken on existing on to be
     acquired barges and tugboats belonging to UABL Limited and its
     subsidiaries. The Company's obligations under these loans are secured by
     barges and tugboats with a net book value of 24,986 at December 31, 2003.

     UABL Barges has agreed to keep a debt coverage ratio not lower than 1, and
     not to take other loans, change its business nature, pay dividends and
     sell, transfer or somehow dispose of a significant portion of its assets,
     among others.

     In addition, UABL Limited has agreed to keep a debt coverage ratio not
     lower than 1.25 until June 15, 2005, not lower than 1.50 from such date
     onwards and a consolidated debt ratio lower than 1. If further agreed to
     keep the market value of mortgaged assets at 130% of the remaining loan
     debt, and not to pay dividends under certain circumstances, change its
     business nature, take other loans and sell, transfer or somehow dispose of
     a significant portion of its assets, among others.
<PAGE>

     During March 2003, UABL Paraguay S.A., a wholly-owned subsidiary of the
     Company, entered into a fuel supply contract with Repsol-YPF that could be
     considered a "take or pay" contract. The Company guaranteed the compliance
     with this contract and UABL S.A., a wholly-owned subsidiary of the Company,
     mortgaged its port tug "San Jose V" to secure such contract. These facts
     resulted in the noncompliance with sections 16 (g) and (h) of the Guarantee
     Agreement by UABL Limited in favor of IFC and KfW. On February 18, 2004,
     the IFC signed a waiver to sections 16 (g) and (h) of the Guarantee
     Agreement in order to allow UABL Paraguay S.A. to enter into the "take or
     pay" fuel supply contract with Repsol-YPF, allow UABL S.A. to mortgage its
     port tug "San Jose V" as a security for the fuel supply contract and the
     Company to guarantee the compliance with this contract. On February 12,
     2004, the KfW signed a waiver to sections 16 (g) and (h) Guarantee
     Agreement.

14)  SIGNIFICANT EVENTS AT ACL

     On January 31, 2003 ACL announced that it had filed a petition with the
     U.S. Bankruptcy Court for the Southern District of Indiana, New Albany
     Division, to reorganize under Chapter 11 of the U.S. Bankruptcy Code. ACL
     said that it filed to reorganize its capital and debt structure in an
     orderly fashion while continuing normal business operations. Included in
     the filing are ACL, ACL's parent American Commercial Lines Holdings LLC,
     American Commercial Barge Line LLC, Jeffboat LLC, Lousiana Dock Company LLC
     and ten other U.S. subsidiaries of ACL.

     The ACL Bankruptcy petition has not affected the Company's operations or
     its financial needs. As noted in Note 7, the Company's primary transaction
     with ACL and its subsidiaries include the hire of certain vessels according
     to the Charter Party Agreement dated as of October 24, 2000 and the
     management fee received by Lonehort S.A. related to the management
     compensation for crew, maintenance and operations of such vessels.
<PAGE>

     ITEM 19 - EXHIBITS

     EXHIBIT INDEX

Exhibits            DESCRIPTION
--------            -----------

     Number         Description of Exhibits
     ------         -----------------------

     3.1            Memorandum and Articles of Association of Ultrapetrol
                    (Bahamas) Limited*

     3.2            Articles of Incorporation and By-laws of Abbey Marine Inc.*

     3.3            Articles of Incorporation and By-laws of Baldwin Maritime
                    Inc.*

     3.4            Memorandum and Articles of Association of Kingly Shipping
                    Ltd.*

     3.5            Articles of Incorporation and By-laws of Kingsway Shipping
                    Inc.*

     3.6            Articles of Incorporation and By-laws of Oceanview Maritime
                    Inc.*

     3.7            Articles of Incorporation and By-laws of Panpetrol Shipping
                    S.A.*

     3.8            Memorandum and Articles of Association of Plate Princess
                    Shipping Limited*

     3.9            Articles of Incorporation of Princely International Finance
                    Corp.*

     3.10           Articles of Incorporation of Regal International Investments
                    S.A.*

     3.11           By-laws of Regal International Investments S.A.*

     3.12           Memorandum and Articles of Association of Sovereign Maritime
                    Ltd. as amended*

     3.13           Articles of Incorporation and By-laws of Tipton Marine Inc.*

     3.14           Articles of Incorporation of Ultrapetrol S.A.*

     3.15           By-laws of Ultrapetrol S.A.*

     3.16           Memorandum and Articles of Association of Noble Shipping
                    Ltd.*

     4.1            Indenture*

     10.1           Amended and Restated Stock Purchase Agreement by and among
                    Avemar Holdings (Bahamas) Limited, Ultrapetrol (Bahamas)
                    Limited, Trafigura Beheer B.V., Societe Internationale
                    D'Investissement S.A., Solimar Holdings LDC, and Inversiones
                    Los Avellanos S.A., dated October 12, 2000**

     10.2           Consolidation Agreement, by and between ACBL Hidrovias, Ltd.
                    and UP River (Holdings) Ltd., dated October 18, 2000**

     10.3           Stock Purchase Agreement by and among Ultrapetrol (Bahamas)
                    Limited, Inversiones Los Avellanos S.A., Societe
                    Internationale D'Investissements S.A., and Solimar Holdings
                    LDC**

     12.1           Statement re Computation of Ratios***

     21.1           Subsidiaries of Registrant*

     99.1           Section 302 Certification of Chief Executive Officer

     99.2           Section 302 Certification of Chief Financial Officer

     99.3           Section 906 Certification of Chief Executive Officer

     99.4           Section 906 Certification of Chief Financial Officer

     ----------
     *    Incorporated by reference to Exhibits of corresponding number in the
          Registration Statement of Ultrapetrol (Bahamas) Limited filed May 29,
          1998 (Reg. No. 333-8878).

     **   Incorporated by reference to Exhibits of corresponding number as part
          of the Form 20-F of Ultrapetrol (Bahamas) Limited filed May 1, 2001.

     ***  Incorporated by reference to Exhibits of corresponding number as part
          of the Form 20-F of Ultrapetrol (Bahamas) Limited filed May 1, 2002.

SIGNATURE

          Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized, on May 1, 2004.

ULTRAPETROL (BAHAMAS) LIMITED


/s/ Felipe Menendez Ross
-----------------------------
Felipe Menendez Ross
President

02351.0001 #483068v2