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, 2006

                                       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 333-08878

                                       OR

[_]           SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
             Date of event requiring this shell company report: N/A

                          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.
                        Ocean Centre, Montague Foreshore
                                  East Bay St.
                                 Nassau, Bahamas
                                P.O. Box SS-19084
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Common Shares, $0.01 par value

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: 9% First Preferred Ship Mortgage Notes due 2014

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                     28,346,952 Shares Outstanding

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

                                 Yes  [_]        No  [X]

If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.

                                 Yes  [X]        No  [_]

Note - Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
from their obligations under those Sections.

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 whether registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [_]  Accelerated filer  [X]   Non-accelerated filer [X]

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

                                 Item 17 [_]    Item 18 [X]

If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

                                 Yes  [_]        No  [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.................................................. 1

   Item 4.  Information on the Company.......................................20

   Item 5.  Operating and Financial Review and Prospects.....................48

   Item 6.  Directors, Senior Management and Employees.......................70

   Item 7.  Major Shareholders and Related Party Transactions................72

   Item 8.  Financial Information............................................76

   Item 9.  The Offer and Listing............................................76

   Item 10.   Additional Information.........................................76

   Item 11.   Quantitative and Qualitative Disclosures about Market Risk.....80

   Item 12.   Description of Securities Other than Equity Securities.........80

Part II
   Item 13.   Defaults, Dividend Arrearages and Delinquencies................80

   Item 14.     Material Modifications to the Rights of
   Security Holders and Use of Proceeds......................................80

   Item 15.   Controls and Procedures........................................80

   Item 16A.  Audit Committee Financial Expert...............................81

   Item 16B.  Code of Ethics.................................................81

   Item 16C.  Principal Accountant Fees and Services.........................81

   Item 16D.  Exemption From Listing Standards for Audit Committees..........82

   Item 16E.  Purchases of Equity Securities by the Issuer and
              Affiliated Persons.............................................82

Part III
    Item 17.   Financial Statements...........................................82

    Item 18.   Financial Statements...........................................82

    Item 19.   Exhibits......................................................A-1


<PAGE>

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

     Our disclosure and analysis in this report concerning our operations, cash
flows and financial position, including, in particular, the likelihood of our
success in developing and expanding our business, include forward-looking
statements. Statements that are predictive in nature, that depend upon or refer
to future events or conditions, or that include words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates," "projects,"
"forecasts," "will," "may," "should," and similar expressions are
forward-looking statements. Although these statements are based upon assumptions
we believe to be reasonable based upon available information, including
projections of revenues, operating margins, earnings, cash flow, working
capital, and capital expenditures, they are subject to risks and uncertainties
that are described more fully in this report in the section titled "Risk
Factors" in Item 3.D of this report. These forward-looking statements represent
our estimates and assumptions only as of the date of this report and are not
intended to give any assurance as to future results. As a result, you should not
place undue reliance on any forward-looking statements. We assume no obligation
to update any forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors, except as required by applicable
securities laws. Factors that might cause future results to differ include, but
are not limited to, the following:

     o    future operating or financial results;

     o    pending or recent acquisitions, business strategy and expected capital
          spending or operating expenses, including drydocking and insurance
          costs;

     o    general market conditions and trends, including charter rates, vessel
          values, and factors affecting vessel supply and demand;

     o    our ability to obtain additional financing;

     o    our financial condition and liquidity, including our ability to obtain
          financing in the future to fund capital expenditures, acquisitions and
          other general corporate activities;

     o    our expectations about the availability of vessels to purchase, the
          time that it may take to construct new vessels, or vessels' useful
          lives;

     o    our dependence upon the abilities and efforts of our management team;

     o    changes in governmental rules and regulations or actions taken by
          regulatory authorities;

     o    adverse weather conditions that can affect production of some of the
          goods we transport and navigability of the river system on which we
          transport them;

     o    the highly competitive nature of the oceangoing transportation
          industry;

     o    the loss of one or more key customers;

     o    fluctuations in foreign exchange rates and devaluations of currencies;

     o    potential liability from future litigation; and

     o    other factors discussed in the section titled "Risk Factors" in Item
          3.D of this report.

<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, 2002,
2003, 2004, 2005 and 2006 and has been derived from the Company's Financial
Statements.

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                                 ----------------------------------------------------------------------------
                                                     2002            2003           2004(1)          2005            2006(2)
                                                 ------------    ------------    ------------    ------------    ------------

                                                                     (Dollars in thousands)
<S>                                              <C>             <C>             <C>             <C>             <C>
Statement of Income Data:
Revenues: ....................................   $     73,124    $     75,233    $     95,160    $    125,361    $    173,466
  Operating expenses(3) ......................        (37,582)        (41,303)        (40,815)        (73,061)        (97,610)
  Depreciation and amortization ..............        (24,807)        (22,567)        (18,688)        (21,333)        (28,340)
  Management fees to related parties(4) ......         (3,176)         (2,863)         (1,513)         (2,118)           (511)
  Administrative and commercial expenses .....         (3,642)         (4,955)         (7,494)         (7,617)        (13,905)
  Other operating income (expenses)(5) .......          1,741          (2,124)            784          22,021            (198)
  Loss on involuntary conversion of Argentine
   receivable(6) .............................         (2,704)             --              --              --              --
                                                 ------------    ------------    ------------    ------------    ------------
  Operating profit ...........................          2,954           1,421          27,434          43,253          32,902
  Financial expense ..........................        (16,763)        (16,207)        (16,134)        (19,141)        (19,025)
  Financial gain (loss) on extinguishment of
  debt(7) ....................................             --           1,782          (5,078)             --          (1,411)
  Financial income ...........................            326             201             119           1,152             733
  Investment in affiliates(8) ................            (45)          3,140             406            (497)            588
  Other income (expenses) ....................            (43)           (337)            174             384             859
                                                 ------------    ------------    ------------    ------------    ------------
  Income (loss) before income tax and minority
   interest ..................................        (13,571)        (10,000)          6,921          25,151          14,646
  Income taxes ...............................           (150)           (185)           (642)           (786)         (2,201)
  Minority interest(9) .......................           (132)         (1,333)         (1,140)         (9,797)         (1,919)
                                                 ------------    ------------    ------------    ------------    ------------
  Net income (loss) ..........................   $    (13,853)   $    (11,518)   $      5,139    $     14,568    $     10,526
                                                 ============    ============    ============    ============    ============

Basic net (loss) income per share ............          (0.89)   $      (0.74)   $       0.33    $       0.94    $       0.59
                                                 ============    ============    ============    ============    ============
Diluted net (loss) income per share ..........   $      (0.89)   $      (0.74)   $       0.33    $       0.94    $       0.58
                                                 ============    ============    ============    ============    ============
Basic weighted average number of shares ......     15,500,000      15,500,000      15,500,000      15,500,000      17,965,753
                                                 ============    ============    ============    ============    ============
Diluted weighted average number of shares ....     15,500,000      15,500,000      15,500,000      15,500,000      18,079,091
                                                 ============    ============    ============    ============    ============

Balance Sheet Data (end of period):
  Cash and cash equivalents ..................   $      4,724    $      8,248    $     11,602    $      7,914    $     20,648
  Current restricted cash ....................          1,662           1,155           2,975           3,638              --
  Working capital(10) ........................         21,013          15,416          13,441          26,723          31,999
  Vessels and equipment, net .................        134,797         120,803         160,535         182,069         333,191
  Total assets ...............................        213,546         208,161         273,648         278,282         426,379
  Total debt .................................        168,994         155,814         220,413         211,275         220,685
  Shareholders' equity .......................         35,089          23,793          28,910          43,474         179,429

  EBITDA(11)(12) .............................   $     27,867    $     25,659    $     45,681    $     55,828    $     62,417

     (1)  In a series of related transactions, on April 23, 2004, through two wholly owned subsidiaries, we acquired
          from American Commercial Barge Lines Ltd., or ACBL, the remaining 50% equity interest in UABL Limited, or
          UABL, that we did not previously own, along with a fleet of 50 river barges and seven river pushboats. The
          results of UABL's operations have been included in our consolidated financial statements since that date.

     (2)  On March 21, 2006, we acquired an additional 66.67% of UP Offshore, which is the holding company for our
          Offshore Supply Business, raising our ownership to 94.45%. The results of UP Offshore's operations have been
          included in our consolidated financial statements since that date.

     (3)  Operating expenses are voyage expenses and running costs. 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. Running
          costs, or vessel operating expenses, include the cost of all vessel management, crewing, repairs and
          maintenance, spares and stores, insurance premiums and lubricants and certain drydocking costs.

     (4)  Management fees to related parties included payments to our related companies Ravenscroft Shipping (Bahamas)
          S.A., or Ravenscroft, and Oceanmarine S.A., or Oceanmarine, for ship management and administration services
          that they provide to us. We purchased the business of Ravenscroft and hired the administrative personnel and
          purchased the administrative related assets of Oceanmarine on March 21, 2006; accordingly, ship management and
          administration costs appear as in-house expenses in our results from that date.

     (5)  Other operating income in 2005 includes approximately $21.8 million gain from the sale of our Capesize bulk
          carrier, the Cape Pampas. This vessel was owned directly by Ultracape (Holdings) Ltd., or Ultracape, a company
          of which we owned 60%. Accordingly, the gain on sale attributable to the remaining 40% that we did not own is
          deducted from income as minority interest.

     (6)  This relates to a loss resulting from the involuntary conversion of certain receivables from U.S. dollars to
          Argentine pesos. This conversion was the result of legislation passed by the Argentine government in January
          2002. Under this legislation, U.S. dollar obligations between private parties due after January 6, 2002 were
          to be liquidated in Argentine pesos at a negotiated rate of exchange which reflects a sharing of the impact of
          the devaluation. Our settlement in Argentine pesos of the U.S. dollar denominated agreements was completed in
          2002 and resulted in a loss of $2.7 million.

     (7)  During 2003, we repurchased $6.7 million principal amount of our 10 1/2 First Preferred Ship Mortgage Notes
          due 2008, or the Prior Notes, for a price of $4.8 million and realized a gain of $1.8.million.  During 2004,
          we repurchased $5.7 million principal amount of our Prior Notes for a price of $4.3 million and realized a
          gain of $1.3 million, and we incurred $6.4 million in expenses in relation to our tender offer and repurchase
          of our Prior Notes. During 2006, there was an early redemption of our indebtedness in our River Business and we
          incurred a loss of $1.4 million related to the unamortized balance of issuance costs.

     (8)  Prior to April 2004, we owned 50% of UABL through a joint venture with ACBL and, accordingly, we accounted for
          it using the equity method. Also, prior to March 2006, we owned 27.78% of UP Offshore (Bahamas) Ltd. and,
          accordingly, we accounted for it using the equity method.

     (9)  We own 60% of Ultracape, which owned the Capesize bulk carrier Cape Pampas prior to its sale in May 2005,
          and accordingly we recognized minority interest for the 40% we did not own. Figures in 2003 and 2004 principally
          represent 40% of the income earned by Ultracape, from operation of the Cape Pampas. The figure in 2005
          represents 40% of the income from operations of the Cape Pampas as well as 40% of the gain on the sale of the
          vessel in May 2005. Minority interest in 2006 includes a loss of $0.9 million incurred through redemption of
          the preferred shares issued by our subsidiary UP Offshore owned by IFC, which was part of the use of proceeds
          from our IPO.

     (10) Current assets less current liabilities.

     (11) EBITDA consists of net income (loss) prior to deductions for interest expense and other financial gains and
          losses, income taxes, depreciation of vessels and equipment and amortization of drydock expense, intangible assets,
          financial gain (loss) on extinguishment of debt and a premium paid for redemption of preferred shares. We have
          provided EBITDA in this report because we use it to, and believe it provides useful information to investors to
          measure our performance and evaluate our ability to incur and service indebtedness. We also use EBITDA to assess
          the performance of our business units. We believe that EBITDA is intended to exclude all items that affect results
          relating to financing activities. The gain and losses associated with extinguishment of debt including preferred
          shares issued for our subsidiaries, are a direct financing item that affects our results, and as such we exclude
          these items in our calculation of EBITDA. We do not intend for EBITDA to represent cash flows from operations,
          as defined by GAAP (on the date of calculation) and it 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.

The following table reconciles our EBITDA to our net income:

<CAPTION>
                                                                        Year ended December 31,
                                                                        -----------------------

                                                            2002        2003        2004        2005          2006
                                                            ----        ----        ----        ----          ----
                                                                         (Dollars in thousands)
<S>                                                     <C>         <C>           <C>        <C>           <C>
Net income (loss)                                       $(13,853)   $(11,518)     $5,139     $14,568       $10,526
    Plus


    Financial expense                                     16,763      16,207      16,134      19,141        19,025
    Financial gain on extinguishment of debts                 --      (1,782)     (1,344)         --            --
    Financial losses on extinguishment of debts               --          --       6,422          --         1,411(a)
    Income taxes                                             150         185         642         786         2,201
    Depreciation and amortization
                                                          24,807      22,567      18,688      21,333        28,340
    Premium paid for redemption of preferred shares(b)        --          --          --          --           914
                                                        -------------------------------------------------------------
    EBITDA                                               $27,867     $25,659     $45,681     $55,828(c)    $62,417
                                                        =============================================================

     (a)  Corresponds to the loss incurred in the fourth quarter of 2006 through the early repayment of the loans
          granted by IFC to UABL, which was part of the use of proceeds from our IPO.

     (b)  See note 9 above.

     (c)  EBITDA for 2005 includes $13.1 million, net of minority interest from the gain on the sale of Cape Pampas
          in May 2005. See Management Discussion and analysis of financial condition and results of
          operations-Developments in 2005.

     (12) The following table reconciles our EBITDA to our operating profit for each of our business segments:

<CAPTION>
                                                              Year Ended December 31, 2006
                                                              ----------------------------

                                                                 (Dollars in thousands)

                                                          Offshore
                                             River         Supply        Ocean       Passenger
                                            Business      Business      Business      Business      Total
                                           ----------    ----------    ----------    ----------   ----------
<S>                                        <C>           <C>           <C>           <C>          <C>
Segment operating profit ...............   $   10,755    $   11,480    $    5,566    $    5,101   $   32,902
Depreciation and amortization ..........        8,136         2,340        14,238         3,626       28,340
Minority interest ......................         (285)       (1,409)         (225)           --       (1,919)
(Loss) Income from investment in
  affiliates ...........................         (124)          328           384            --          588
Other, net (a) .........................           --           167           792            --         -859
Premium paid for redemption of preferred
shares(b) ..............................           --           914            --            --          914
Segment EBITDA .........................   $   18,482    $   13,720    $   20,755    $    8,727   $   61,684
Items not included in segment EBITDA
Financial income ..............................................................................          733
Consolidated EBITDA (c) .......................................................................   $   62,417

     (a)  Individually not significant.

     (b)  Represents a loss of $0.9 million incurred through redemption of the preferred shares issued by our
          subsidiary UP Offshore owned by IFC which was part of the use of proceeds of our IPO.

     (c)  The reconciliation of our consolidated EBITDA to our net income is set forth in note 11 above.

<CAPTION>
                                                              Year Ended December 31, 2005
                                                              ----------------------------

                                                                 (Dollars in thousands)

                                                   Offshore
                                         River      Supply      Ocean         Passenger
                                       Business    Business    Business       Business    Total
                                       --------    --------    --------       --------   --------
<S>                                    <C>         <C>         <C>            <C>        <C>
Segment operating profit ...........   $    366    $    183    $ 39,289(a)    $  3,415   $ 43,253
Depreciation and amortization ......      7,166          --      13,063          1,104     21,333
Minority interest ..................       (386)         --      (9,411)(a)         --     (9,797)
(Loss) Income from investment in
  affiliates .......................       (306)        (12)       (179)            --       (497)
Other, net (b) .....................         --          --         384             --        384
Segment EBITDA .....................   $  6,840    $    171    $ 43,146       $  4,519   $ 54,676
                                       --------    --------    --------       --------
Items not included in segment EBITDA
Financial income .....................................................................   $  1,152
Consolidated EBITDA (c) ..............................................................   $ 55,828
                                                                                         --------

     (a)  For our Ocean Business, segment operating profit includes a $21.8 million gain on the sale of the Cape
          Pampas, and minority interest includes a deduction of $8.7 million related to that sale as well as the
          operating income from the vessel prior to its sale. See notes 5 and 9 above.

     (b)  Individually not significant.

     (c)  The reconciliation of our consolidated EBITDA to our net income is set forth in note 11 above.
</TABLE>

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.

Risks Relating to Our Industry

The oceangoing cargo transportation industry is cyclical and volatile, and this
may lead to volatility in, and reductions of, our charter rates and volatility
in our results of operations.

     The oceangoing cargo transportation industry is both cyclical and volatile,
with frequent and large fluctuations in charter rates. The charter rates earned
by the vessels in our Ocean Business will depend in part upon the state of the
vessel market at the time we seek to charter them. We cannot control the forces
affecting the supply and demand for these vessels or for the goods that they
carry or predict the state of the vessel market on any future date. If the
vessel market is in a period of weakness when our vessels' charters expire, we
may be forced to re-charter our vessels at reduced rates or even possibly at a
rate at which we would incur a loss on operation of our vessels.

     Some of the factors that influence the demand for oceangoing vessel
capacity include:

     o    global production of and demand for petroleum and petroleum products
          and dry bulk commodities;

     o    the distance that these products and commodities must be transported
          by sea;

     o    the globalization of manufacturing and other developments in
          international trade;

     o    global and regional economic and political conditions;

     o    environmental and other regulatory developments;

     o    weather; and

     o    changes in seaborne and other transportation patterns and the supply
          of and rates for alternative means of transportation.

     Some of the factors that influence the supply of oceangoing vessel capacity
include:

     o    the number of newbuilding deliveries;

     o    the scrapping rate of older vessels;

     o    the price of steel;

     o    the number of vessels that are out of service at a given time;

     o    changes in environmental and other regulations that may limit the
          useful life of vessels; and

     o    port or canal congestion.

Our River Business can be affected by factors beyond our control, particularly
adverse weather conditions that can affect production of the goods we transport
and navigability of the river system on which we navigate.

     We derive a significant portion of our River Business revenue from
transporting soybeans and other agricultural products produced in the Hidrovia
Region. Droughts and other adverse weather conditions, such as floods, could
result in a decline in production of these products, which would likely result
in a reduction in demand for our services. In 2005, our results of operations
and financial condition were negatively impacted due to the decline in soybean
production associated with that year's drought. Drought conditions also affected
the size of the Paraguayan soybean crop in 2006. Further, most of the operations
in our River Business occur on the Parana and Paraguay Rivers, and any changes
adversely affecting navigability of either of these rivers, such as low water
levels, could reduce or limit our ability to effectively transport cargo on the
rivers.

     The rates we charge and the quantity of freight we transport in our River
Business can also be affected by:

     o    demand for the goods we ship on our barges;

     o    adverse river conditions, such as flooding or lock outages, that slow
          or stop river traffic;

     o    any accidents or operational disruptions to ports, terminals or
          bridges along the rivers on which we operate;

     o    changes in the quantity of barges available for river transport
          through the entrance of new competitors or expansion of operations by
          existing competitors;

     o    the availability of transfer stations and cargo terminals for loading
          of cargo on and off barges; and

     o    the availability and price of alternate means of transporting goods
          out of the Hidrovia Region.

A prolonged drought or other series of events that is perceived by the market to
have an impact on the region, the navigability of the Parana or Paraguay Rivers
or our River Business in general may, in the short term, result in a reduction
in the market value of the barges and pushboats that we operate in the region.
These barges and pushboats are designed to operate in wide and relatively calm
rivers, of which there are only a few in the world. If it becomes difficult or
impossible to operate our barges and pushboats profitably in the Hidrovia Region
and we are forced to sell them to a third party located outside of the region,
there is a limited market in which we would be able to sell these vessels, and
accordingly we may be forced to sell them at a substantial loss.

Demand for our PSVs depends on the level of activity in offshore oil and gas
exploration, development and production.

     The level of offshore oil and gas exploration, development and production
activity has historically been volatile and is likely to continue to be so in
the future. The level of activity is subject to large fluctuations in response
to relatively minor changes in a variety of factors. A prolonged, material
downturn in oil and natural gas prices is likely to cause a substantial decline
in expenditures for exploration, development and production activity, which
would likely result in a corresponding decline in the demand for PSVs and thus
decrease the utilization and charter rates of our PSVs. Such decreases could
have an adverse effect on our financial condition and results of operations.
Moreover, increases in oil and natural gas prices and higher levels of
expenditure by oil and gas companies may not result in increased demand for our
PSVs. The factors affecting the supply and demand for PSVs are outside of our
control, and the nature, timing and degree of changes in industry conditions are
unpredictable. If the PSV market is in a period of weakness when our vessels'
charters expire, we may be forced to re-charter our vessels at reduced rates or
even possibly at a rate at which we would incur a loss on operation of our
vessels.

     Some of the factors that influence the supply and demand for PSVs include:

     o    worldwide demand for oil and natural gas;

     o    prevailing oil and natural gas prices and expectations about future
          prices and price volatility;

     o    the cost of offshore exploration for, and production and
          transportation of, oil and natural gas;

     o    consolidation of oil and gas service companies operating offshore;

     o    availability and rate of discovery of new oil and natural gas reserves
          in offshore areas;

     o    local and international political and economic conditions and
          policies;

     o    technological advances affecting energy production and consumption;

     o    weather conditions;

     o    environmental regulation;

     o    volatility in oil and gas exploration, development and production
          activity;

     o    the number of newbuilding deliveries; and

     o    deployment of PSVs to areas in which we operate.

Our vessels and our reputation are at risk of being damaged due to operational
risks that may lead to unexpected consequences, which may adversely affect our
earnings.

     Our vessels and their cargos are at risk of being damaged or lost because
of events such as marine disasters, bad weather, mechanical failures, structural
failures, human error, war, terrorism, piracy and other circumstances or events.
All of these hazards can also result in death or injury to persons, loss of
revenues or property, environmental damage, higher insurance rates or loss of
insurance cover, damage to our customer relationships that could limit our
ability to successfully compete for charters, delay or rerouting, each of which
could adversely affect our business. Further, if one of our vessels were
involved in an accident with the potential risk of environmental contamination,
the resulting media coverage could adversely affect our business.

     If our vessels suffer damage, they may need to be repaired. The costs of
repairs are unpredictable and can be substantial. We may have to pay repair
costs that our insurance does not cover in full. The loss of revenue while these
vessels are being repaired and repositioned, as well as the actual cost of these
repairs, would decrease our earnings. In addition, space at repair facilities is
sometimes limited and not all repair facilities are conveniently located. We may
be unable to find space at a suitable repair facility or we may be forced to
travel to a repair facility that is not conveniently located near our vessels'
positions. The loss of earnings while these vessels are forced to wait for space
or to travel to more distant drydocking facilities would decrease our earnings.

Because the fair market value of vessels fluctuates significantly, we may incur
losses when we sell vessels.

     Vessel values have historically been very volatile. The market value of our
vessels may fluctuate significantly in the future, and we may incur losses when
we sell vessels, which would adversely affect our earnings. Some of the factors
that affect the fair market value of vessels, all of which are beyond our
control, are:

     o    general economic, political and market conditions affecting the
          shipping industry;

     o    number of vessels of similar type and size currently on the market for
          sale;

     o    the viability of other modes of transportation that compete with our
          vessels;

     o    cost and number of newbuildings and vessels scrapped;

     o    governmental or other regulations;

     o    prevailing level of charter rates; and

     o    technological advances that can render our vessels inferior or
          obsolete.

Compliance with safety, environmental, governmental and other requirements may
be very costly and may adversely affect our business.

     The shipping industry is subject to extensive and changing international
conventions and treaties, national, state and local environmental and
operational safety laws and regulations in force in international waters and the
jurisdictional waters of the countries in which the vessels operate, as well as
in the country or countries in which such vessels are registered. These laws and
regulations govern, among other things, the management and disposal of hazardous
materials and wastes, the cleanup of oil spills and other contamination, air
emissions, water discharges and ballast water management, and include (i) the
U.S. Oil Pollution Act of 1990, as amended, or OPA, (ii) the International
Convention on Civil Liability for Oil Pollution Damage of 1969, and its
protocols of 1976, 1984, and 1992, (iii) International Convention for the
Prevention of Pollution from Ships or, MARPOL, (iv) the International Maritime
Organization, or IMO, International Convention for the Safety of Life at Sea of
1974, or SOLAS, (v) the International Convention on Load Lines of 1966, (vi) the
U.S. Maritime Transportation Security Act of 2002 and (vii) the International
Ship and Port Facility Security Code, among others. In addition, vessel
classification societies also impose significant safety and other requirements
on our vessels. Many of these environmental requirements are designed to reduce
the risk of oil spills and other pollution, and our compliance with these
requirements can be costly.

     These requirements can affect the resale value or useful lives of our
vessels, require a reduction in cargo-capacity or other operational or
structural changes, lead to decreased availability of insurance coverage for
environmental matters, or result in the denial of access to, or detention in,
certain ports. 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. We could also become subject to personal injury or property damage
claims relating to exposure to hazardous materials associated with our current
or historic operations. In addition, environmental laws require us to satisfy
insurance and financial responsibility requirements to address oil spills and
other pollution incidents, and subject us to rigorous inspections by
governmental authorities. Violations of such requirements can result in
substantial penalties, and in certain instances, seizure or detention of our
vessels. 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
vessels, 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, or to even scrap or sell certain vessels
altogether. For example, beginning in 2003 we sold all of our single hull
oceangoing tanker vessels in response to regulatory requirements in Europe and
the United States. In addition, Annex VI of MARPOL, which became effective May,
2005, sets limits on sulphur oxide, nitrogen oxide and other emissions from
vessel exhausts and prohibits deliberate emissions of ozone depleting
substances, such as chlorofluorocarbons. Future changes in laws and regulations
may require us to undertake similar measures, and any such actions may be
costly. We believe that regulation of the shipping industry will continue to
become more stringent and more expensive for us and our competitors. For
example, various jurisdictions are considering regulating the management of
ballast water to prevent the introduction of non-indigenous species considered
to be invasive, which could increase our costs relating to such matters.

     All of our vessels will be subject to Annex VI regulations. While we expect
that our newbuilding vessels will meet relevant Annex VI requirements at the
time of their delivery and that our existing fleet will comply with such
requirements, subject to classification society surveys, such compliance could
require modifications to the engines or the addition of expensive emissions
control systems, or both, as well as the use of low sulphur fuels. We expect
that any such modifications will be fitted to existing vessels in the next
intermediate or special survey for each vessel. We are still evaluating the
costs of implementing these requirements, but do not expect them to have a
material adverse effect on our operating costs.

     MARPOL requirements impose phase-out dates for vessels that are not
certified as double hull. Our new acquisition, Alejandrina, as well as our
Aframax vessel, Princess Marina, and two of our Suezmax vessels, Princess Nadia
and Princess Susana, are fully certified by class as double hull vessels. Our
Princess Katherine currently does not meet the configuration criteria and will
require modifications to comply with these criteria before the end of 2010.
These modifications will not involve major steel work. Our vessel Miranda I does
not currently comply with the double hull requirement unless she limits her
loading to center tanks only. However, we expect to retrofit her to full double
hull compliance during the second quarter of 2007. Our vessel Amadeo is
currently being retrofitted to double hull at a shipyard in Romania and we
expect to have her fully certified in the second quarter of 2007. Our oceangoing
barge Alianza G3, although of double hull construction, does not meet the
minimum height criteria in double bottoms required by Rule 13 and, therefore,
currently has a phase out date of December 2008. However, we are in the process
of applying for an exemption, which if granted, will permit this unit to operate
in her present state until the end of her useful life.

     In the United States, 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. 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 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. The IMO and the European Union, or EU, also have adopted
separate phase-out schedules applicable to non-double hull tankers operating in
international and EU waters. These regulatory programs may require us to
introduce modifications or changes to tank configuration to meet the EU double
hull standards for our vessels or otherwise remove them from operation.

     Under OPA, with certain limited exceptions, all newly built or converted
tankers operating in U.S. 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 U.S. waters in most cases by 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 applicable to new and existing vessels that are in
various stages of development by the U.S. Coast Guard, or USCG.

     Under OPA, and per USCG interpretations, our Aframax and Suezmax OBOs will
be precluded from operation in U.S. waters in 2014. The following information
has been extracted from the TVEL/COC corresponding to the vessels' last
inspection at a U.S. port.

Name                      Phase-out date*         Last TVEL/COC issuance date**
----                      ---------------         -----------------------------
Princess Katherine..............N/A.............          March 26, 2003
Princess Nadia.............January.2014.........         August 26, 2001
Princess Susana............November.2014........        February 18, 2003
Princess Marina.............March.2014..........         August 29, 2002
------------
*    As per the last Tank Vessel Examination Letter, or TVEL/Certificate of
     Compliance, or COC.
**   The USCG inspects vessels upon entry to U.S. ports and determines when such
     vessels will be phased out under OPA, the dates of which are recorded in
     the TVEL or the COC. On April 30, 2001, the USCG replaced the TVEL with a
     newly generated document, the COC. The USCG, issues the COC for each tanker
     if and when the vessel calls on a U.S. port and the COC is valid for a
     period of two years, with mid-period examination. All above TVEL are
     therefore expired and these vessels must be re-inspected upon their next
     entry into a U.S. port.

     There was no phase-out date imposed on Princess Katherine at the time of
its last inspection by the USCG. Although Princess Nadia, Princess Marina and
Princess Susana are double hull vessels, due to configuration requirements under
the U.S. double hull standards, the phase-out dates indicated above are
applicable. For the same reasons, Princess Katherine could be given a phase out
date if or when next inspected by the USCG.

     In 2010, the IMO will enforce mandatory SOLAS requirements so that all
passenger vessels operating must be built under regulation SOLAS 60, Part H,
restricting use of combustible material and requiring that all passenger vessels
be fully outfitted with sprinklers in both the passenger and engine room spaces.

     The Grand Victoria was built according to the rules of regulation SOLAS 60,
but using method II, along with a sprinkler system installed during
construction. However, under method II generally there was no restriction on any
type of internal division and this method allowed combustible material to be
used during construction which is now generally not permissible pursuant to the
SOLAS amendments. Therefore, for trading beyond 2010, this vessel will require a
complete refurbishment that we cannot assure you will be economically viable.

The oceangoing cargo transportation industry is highly competitive, and we may
not be able to compete successfully for charters with new entrants or
established companies with greater resources.

     We employ our vessels in highly competitive markets. The oceangoing market
is international in scope and we compete with many different companies,
including other vessel owners and major oil companies, such as Transpetro, a
subsidiary of Petrobras. In our Offshore Supply Business, we compete with
companies that operate PSVs, such as Maersk, Seacor and Tidewater. Some of these
competitors are significantly larger than we are and have significantly greater
resources than we do. This may enable these competitors to offer their customers
lower prices, higher quality service and greater name recognition than we do.
Accordingly, we may be unable to retain our current customers or to attract new
customers. Further, some of these competitors, such as Transpetro, are
affiliated with or owned by the governments of certain countries, and may
receive government aid or legally imposed preferences or other assistance, that
are unavailable to us.

Our OBOs are less desired by certain charterers in the tanker market.

     OBOs are versatile because they can transport both petroleum products and
dry bulk cargos. Unlike the more traditional type of tanker, an OBO has fewer
tanks, but each tank is generally larger. Prior to the advent of computerized
loading systems, the possibility of cargo shifting that could result in a vessel
becoming unstable, required the use of extra caution when loading an OBO. While
this issue, like other concerns originally linked to OBOs, has been solved with
new technology, OBOs are still less desired by certain charterers who prefer to
use the more traditional form of tanker to transport oil and other petroleum
products. To the extent any charterers elect not to use our OBOs and instead use
standard tankers, this could have a negative impact on our business and
financial results.

Increased inspection procedures and tighter import and export controls could
increase costs and disrupt our business.

     International shipping is subject to various security and customs
inspection and related procedures in countries of origin and destination.
Inspection procedures can result in the seizure of our vessels or their cargos,
delays in the loading, offloading or delivery and the levying of customs duties,
fines or other penalties against us.

     Future changes to inspection procedures could impose additional financial
and legal obligations on us. Furthermore, changes to inspection procedures could
also impose additional costs and obligations on our customers and may, in
certain cases, render the shipment of certain types of cargo uneconomical or
impractical. Any such changes or developments may have a material adverse effect
on our business, financial condition, results of operations and ability to pay
dividends.

Compliance with safety and other vessel requirements imposed by classification
societies or flag states may be very costly and may adversely affect our
business.

     The hull and machinery of our offshore supply fleet, ocean fleet, passenger
fleet and parts of our river fleet are classed by a classification society. The
classification society certifies that a vessel is in class, and may also issue
the vessel's safety certification in accordance with the applicable rules and
regulations of the country of registry of the vessel and SOLAS. Our classed
vessels are currently enrolled with classification societies that are members of
the International Association of Classification Societies.

     A classed vessel must undergo Annual Surveys, Intermediate Surveys and
Special Surveys. In lieu of a Special Survey, a vessel's machinery may be placed
on a continuous survey cycle, under which the machinery would be surveyed
periodically over a five-year period. Our vessels are on Special Survey cycles
for hull inspection and continuous survey cycles for machinery inspection.
Generally, classed vessels are also required to be drydocked every two to three
years for inspection of the underwater parts of such vessels. However, classed
vessels must be drydocked for inspection at least twice every five years.

     If a vessel does not maintain its class, that vessel will, in practical
terms, be unable to trade and will be unemployable, which would negatively
impact our revenues, and could cause us to be in violation of certain covenants
in our loan agreements and/or our insurance policies.

Our vessels could be subject to seizure through maritime arrest or government
requisition.

     Crew members, suppliers of goods and services to a vessel, shippers of
cargo, and other parties may be entitled to a maritime lien against a vessel for
unsatisfied debts, claims or damages. In many jurisdictions, a maritime
lienholder may enforce its lien by arresting the vessel or, under the "sister
ship" theory of liability followed in some jurisdictions, arrest the vessel that
is subject to the claimant's maritime lien or any other vessel owned or
controlled by the same owner. In addition, a government could seize ownership of
one of our vessels or take control of a vessel and effectively become her
charterer at charter rates dictated by the government. Generally, such
requisitions occur during a period of war or emergency. The maritime arrest,
government requisition or any other seizure of one or more of our vessels could
interrupt our operations, reducing related revenue and earnings, and may require
us to pay very large sums of money to have the arrest lifted.

The impact of terrorism and international conflict on the global or regional
economy could lead to reduced demand for our services, which would adversely
affect our revenues and earnings.

     Terrorist attacks such as the attacks on the United States on September 11,
2001, and the continuing response of the United States to these attacks, as well
as the threat of future terrorist attacks, continue to cause uncertainty in the
world markets and may affect our business, results of operations and financial
condition. The conflict in Iraq may lead to additional acts of terrorism,
regional conflict and other armed conflict around the world, which may
contribute to further instability in the global markets. In addition, future
terrorist attacks could result in an economic recession affecting the United
States or the entire world. The effects of terrorism on financial markets could
also adversely affect our ability to obtain additional financing on terms
acceptable to us or at all.

     Terrorist attacks have, in the past, targeted shipping interests, including
ports or vessels. For example in October 2002, there was a terrorist attack on
the VLCC Limburg, a vessel not related to us. Any future attack in the markets
we serve may negatively affect our operations or demand for our services, and
such attacks may also directly impact our vessels or our customers. Further,
insurance may not cover our loss or liability for terrorist attacks on our
vessels, cargo or passengers either fully or at all. Any of these occurrences
could have a material adverse impact on our operating results, revenue and
costs.

Demand for cruises in our Passenger Business may be affected by many factors
that are outside our control.

     Demand for cruises in our Passenger Business may be affected by a number of
factors. Sales are dependent on the underlying economic strength of the
countries in which we operate and the country of origin of our passengers, which
is currently primarily countries in Europe. Adverse economic conditions can
reduce the level of consumers' disposable income that is available for their
vacation choices. In addition, events or circumstances that make cruises
relatively less attractive relative to other vacation or leisure alternatives
will reduce consumer demand for cruises. Finally, the overall increase in
passenger capacity in the cruise industry could lead to reduced demand for our
vessels, and if the charterer of one of our vessels does not perform under the
charter, we will be unable to re-charter that vessel in the middle of a cruise
season. When our vessels are not operating under charter, we do not have a
guaranteed minimum number of passengers and we may not be able to attract enough
passengers to fully cover our costs.

     Moreover, adverse incidents involving passenger vessels and adverse media
publicity concerning the cruise industry in general or our vessels in particular
may reduce demand. The operation of passenger vessels involves the risk of
accidents, fires, sicknesses and other incidents, which may bring into question
passenger safety and security and adversely affect future industry performance.
Any accidents and other incidents involving our passenger vessels would
adversely affect our future revenues and earnings. In addition, accidents
involving other cruise businesses or other adverse media publicity concerning
the cruise industry in general could impact customer demand and, therefore, have
an adverse impact on our revenues and earnings.

     In addition, armed conflicts or political instability in areas where our
passenger vessels operate can adversely affect demand for our cruises to those
areas. Also, acts of terrorism and threats to public health can have an adverse
effect on the public's attitude toward the safety and security of travel and the
availability of air service and other forms of transportation, which some of our
passengers use to travel.

Environmental, health, safety and security legislation and regulation of
passenger vessels could increase our operating costs in our Passenger Business.

     Some environmental groups have lobbied for more stringent regulation of
passenger vessels. Some groups also have generated negative publicity about the
cruise industry and its environmental impact. As a result of these and other
actions, governmental and regulatory authorities around the world may enact new
environmental, health, safety and security legislation and regulations, such as
those governing wastewater discharges. Stricter environmental, health, safety
and security legislation and regulations could increase the cost of compliance
and adversely affect the cruise industry.

     In addition, as a result of the 2002 Protocol of the Athens Convention, and
any similar legislation, vessel operators are, and may be in the future,
required to adopt enhanced security procedures and approved vessel security
plans. Stricter environmental, health, safety, insurance and security
legislation and regulations could increase the cost of compliance and adversely
affect the cruise industry. We cannot assure you that our costs of complying
with current and future laws and regulations, or liabilities arising from past
or future releases of, or exposure to, hazardous substances, or to vessel
discharges, will not have a material adverse effect on our financial results.

Risks Relating to Our Company

We are an international company that is exposed to the risks of doing business
in many different, and often less developed and emerging market countries.

     We are an international company and conduct almost all of our operations
outside of the United States, and we expect to continue doing so for the
foreseeable future. Some of these operations occur in countries that are less
developed and stable than the United States, such as Argentina, Bolivia, Brazil,
Chile, China, Paraguay, South Africa and Uruguay. Some of the risks we are
exposed to by operating in these countries include among others:

     o    political and economic instability, changing economic policies and
          conditions, and war and civil disturbances;

     o    recessions in economies of countries in which we have business
          operations;

     o    the imposition of additional withholding taxes or other taxes on our
          foreign income, tariffs or other restrictions on foreign trade or
          investment, including currency exchange controls and currency
          repatriation limitations;

     o    the imposition of executive and judicial decisions upon our vessels by
          the different governmental authorities associated with some of these
          countries;

     o    the imposition of or unexpected adverse changes in foreign laws or
          regulatory requirements;

     o    longer payment cycles in foreign countries and difficulties in
          collecting accounts receivable;

     o    difficulties and costs of staffing and managing our foreign
          operations; and

     o    acts of piracy or terrorism.

     These risks may result in unforeseen harm to our business and financial
condition. Also, some of our customers are headquartered in South America, and a
general decline in the economies of South America, or the instability of certain
South American countries and economies, could adversely affect that part of our
business.

     Our business in emerging markets requires us to respond to rapid changes in
market conditions in these countries. Our overall success in international
markets depends, in part, upon our ability to succeed in different legal,
regulatory, economic, social and political conditions. We may not continue to
succeed in developing and implementing policies and strategies which will be
effective in each location where we do business. Further, the occurrence of any
of the foregoing factors may have a material adverse effect on our business and
results of operations.

Our earnings may be lower and more volatile if we do not efficiently deploy our
vessels between longer term and shorter term charters.

     We employ our ocean and offshore vessels on spot voyages, which are
typically single voyages for a period of less than 60 days for our ocean vessels
and five days for our PSVs, and on time charters and contracts of affreightment,
which are longer term contracts for periods of typically three months to three
years or more. As of December 31, 2006, four of our eight oceangoing vessels
were employed under time charters expiring on dates ranging between four and 20
months, the vast majority of our fleet of pushboats and barges in our River
Business were employed under contracts of affreightment ranging from one month
to four years, and both of our PSVs operating in the North Sea were chartered
for a period of three to five months. In addition, our two PSVs operating in
Brazil and our PSV to be delivered in the second quarter of 2007 were time
chartered to Petrobras for periods from eight to sixteen months.

     Although time charters and contracts of affreightment provide steady
streams of revenue, vessels committed to such contracts are unavailable for spot
voyages or for entry into new longer term time charters or contracts of
affreightment. If such periods of unavailability coincide with a time when
market prices have risen, such vessels will be unable to capitalize on that
increase in market prices. If our vessels are available for spot charter or
entry into new time charters or contracts of affreightment, they are subject to
market prices, which may vary greatly. If such periods of availability coincide
with a time when market prices have fallen, we may have to deploy our vessels on
spot voyages or under long term time charters or contracts of affreightment at
depressed market prices, which would lead to reduced or volatile earnings and
may also cause us to suffer operating losses.

We may not be able to grow our business or effectively manage our growth.

     A principal focus of our strategy is to continue to grow, in part by
increasing the number of vessels in our fleet. The rate and success of any
future growth will depend upon factors which may be beyond our control,
including our ability to:

     o    identify attractive businesses for acquisitions or joint ventures;

     o    identify vessels for acquisitions;

     o    integrate any acquired businesses or vessels successfully with our
          existing operations;

     o    hire, train and retain qualified personnel to manage and operate our
          growing business and fleet;

     o    identify new markets;

     o    expand our customer base;

     o    improve our operating and financial systems and controls; and

     o    obtain required financing for our existing and new operations.

We may not be successful in executing our growth plans and could incur
significant expenses and losses in connection therewith.

     Furthermore, because the volume of cargo we ship in our River Business is
at or near the capacity of our barges during the peak season, our ability to
increase volumes shipped in our River Business is limited by our ability to
increase our barge fleet's carrying capacity, either through purchasing
additional barges or increasing the size of our existing barges.

Our planned investments in our River Business vessels are subject to significant
uncertainty.

     We intend to invest in expanding the size of our barges, expanding our
Argentine shipyard to build new barges and installing new engines that burn less
expensive fuel in our line pushboats. It is possible that these initiatives will
fail to result in increased revenues and lower fuel costs, fail to result in
cost-effective barge construction, or that they will lead to other complications
that would adversely affect our business.

     The increased capacity created by expanding the size of our existing barges
and by building new barges may not be utilized by the local transportation
market at prevailing prices or at all. Our expansion activities may also be
subject to delays, which may result in cost overruns or lost revenues. Any of
these developments would adversely affect our revenue and earnings.

     While we expect the heavier fuel that our new engines burn to continue to
be available at a discount to the price of the fuel that we currently use, the
heavier fuel may not be available at such a large discount or at any discount at
all. In addition, operating our new engines will require specially trained
personnel, and such personnel may not be readily available. Higher fuel or
personnel costs would adversely affect our profitability. The operation of these
new engines may also result in other complications that cannot easily be
foreseen and that may adversely affect the quantity of cargo we carry or lead to
additional costs, which could adversely affect our revenue and earnings.

We may not be able to charter our new PSVs at attractive rates.

     We have contracted with a shipyard in Brazil to construct two new PSVs and
expect to take delivery of these vessels during the second quarter of 2007 and
in 2008 and have also contracted with a shipyard in India to construct two PSVs
for delivery commencing in 2009, with an option to build two additional vessels
beyond 2009. Most of these vessels are not currently subject to charters and may
not be subject to charters on their date of delivery. Although we intend to
charter these vessels to Petrobras and other charterers, we may not be able to
do so. Even if we do obtain charters for these vessels, the charters may be at
rates lower than those that currently prevail or those that we anticipated at
the time we ordered the vessels. If we fail to obtain charters or if we enter
into charters with low charter rates, our financial condition and results of
operations could suffer.

We may face delays in delivery under our newbuilding contracts for PSVs which
could adversely affect our financial condition and results of operations.

     Our four PSVs currently under construction and additional newbuildings for
which we may enter into contracts may be subject to delays in their respective
deliveries or non-delivery from the shipyards. The delivery of our PSVs could be
delayed, canceled, become more expensive or otherwise not completed because of,
among other things:

     o    quality or engineering problems;

     o    changes in governmental regulations or maritime self-regulatory
          organization standards;

     o    work stoppages or other labor disturbances at the shipyard;

     o    bankruptcy or other financial crises of the shipyard;

     o    economic factors affecting the yard's ability to continue building the
          vessels as originally contracted;

     o    a backlog of orders at the shipyard;

     o    weather interference or a catastrophic event, such as a major
          earthquake or fire or any other force majeure;

     o    our requests for changes to the original vessel specifications;

     o    shortages of or delays in the receipt of necessary construction
          materials, such as steel or machinery, such as engines;

     o    our inability to obtain requisite permits or approvals or to receive
          the required classifications for the vessels from authorized
          classification societies; or

     o    a shipbuilder's failure to otherwise meet the scheduled delivery dates
          for the PSVs or failure to deliver the vessels at all.

     If the delivery of any PSV is materially delayed or canceled, especially if
we have committed that PSV to a charter for which we become responsible for
substantial liquidated damages to the customer as a result of the delay or
cancellation, our business, financial condition and results of operations could
be adversely affected. Although the building contracts typically incorporate
penalties for late delivery, we cannot assure you that the vessels will be
delivered on time or that we will be able to collect the late delivery payment
from the shipyards.

     We cannot assure you that we will be able to repossess the vessels under
construction or their parts in case of a default of the shipyards and, in those
cases where we may have performance guarantees, we cannot assure that we will
always be able to collect or that it will be in our interest to collect these
guarantees.

We depend on a few significant customers for a large part of our revenues, and
the loss of one or more of these customers could adversely affect our revenues.

     In each of our business segments, we derive a significant part of our
revenues from a small number of customers. In 2006, our largest customer,
Cargill, accounted for 14% of our total revenues, our second largest customer,
Swissmarine Services, accounted for 11% of our total revenues, our third one,
Travelplan, accounted for 10% of our total revenue and our five largest
customers in terms of revenues, in aggregate, accounted for 48% of our total
revenues. In addition, some of our customers, including many of our most
significant customers such as Petrobras and Archer Daniels Midland, operate
vessels of their own. These customers may decide to cease or reduce the use of
our services for any number of reasons, including in order to utilize their own
vessels. The loss of any one or a number of our significant customers, whether
to our competitors or otherwise, could adversely affect our revenues and
earnings.

Rising fuel prices may adversely affect our profits.

     Fuel is the largest operating expense in our River Business where most of
our contracts are contracts of affreightment under which we are paid per ton of
cargo shipped. Currently, many of these agreements permit the adjustment of
freight rates based on changes in the price of fuel. We may not be able to
include this provision in these contracts when they are renewed or in future
contracts with new customers. In our Ocean, Offshore Supply and Passenger
Businesses, the risk of variation of fuel prices under the vessels' current
employment is generally borne by the charterers, since the charterers are
generally responsible for the supply of fuel, with the exception of our Blue
Monarch's employment in the Aegean in 2007, where we will bear the risk of
variation in fuel prices. In the future, we may become responsible for the
supply of fuel to such vessels, in which case variations in the price of fuel
could affect our earnings.

     To the extent our contracts do not pass on changes in fuel prices, we will
be forced to bear the cost of fuel price increases. We may hedge in the futures
market all or part of our exposure to fuel price variations. We cannot assure
you that we will be successful in hedging our exposure. In the event of a
default by our charterers or other circumstance affecting the performance of a
contract of affreightment, we are subject to exposure under, and may incur
losses in connection with, our hedging instruments.

     In certain jurisdictions, the price of fuel is affected by high local taxes
and may become more expensive than prevailing international prices. We may not
be able to pass onto our customers the additional cost of such taxes and may
suffer losses as a consequence.

Our success depends upon our management team and other employees, and if we are
unable to attract and retain key management personnel and other employees, our
results of operations may be negatively impacted.

     Our success depends to a significant extent upon the abilities and efforts
of our management team and our ability to retain them. In particular, many
members of our senior management team, including our CEO and Executive Vice
President, have extensive experience in the shipping industry and have held
their roles with us since our inception. If we were to lose their services for
any reason, it is not clear whether any available replacements would be able to
manage our operations as effectively. The loss of any of the members of our
management team could adversely affect our business prospects and results of
operations and could lead to an immediate decrease in the price of our common
stock. We do not maintain "key man" insurance on any of our officers. Further,
the efficient and safe operation of our vessels requires skilled and experienced
crew members. Difficulty in hiring and retaining such crew members could
adversely affect the operation of our vessels, and in turn, adversely affect our
results of operations.

Secondhand vessels are more expensive to operate and repair than newbuildings
and may have a higher likelihood of accidents.

     We purchased all of our oceangoing vessels, and substantially all of our
other vessels with the exception of our PSVs, secondhand and our current
business strategy generally includes growth through the acquisition of
additional secondhand vessels. While we inspect secondhand vessels prior to
purchase, we may not discover defects or other problems with such vessels prior
to purchase. Any such hidden defects or problems, when detected, may be
expensive to repair, and if not detected, may result in accidents or other
incidents for which we are liable to third parties.

New vessels may experience initial operational difficulties.

     New vessels, during their initial period of operation, have the possibility
of encountering structural, mechanical and electrical problems. Normally, we
will receive a warranty from the shipyard but we cannot assure you that it will
always be effective to resolve the problem without additional costs to us.

As our fleet ages, the risks and costs associated with older vessels increase.

     The costs to operate and maintain a vessel in operation increase with the
age of the vessel. Charterers may prefer newer vessels which carry lower cargo
insurance rates and are more fuel-efficient than older vessels. 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 these vessels may
engage. As our vessels age, market conditions may not justify the expenditures
necessary for us to continue operation of our vessels, and charterers may no
longer charter our vessels at attractive rates or at all. Either development
could adversely affect our earnings.

We may not have adequate insurance to compensate us if our vessels or property
are damaged or lost or if we harm third parties or their property or the
environment.

     We insure against tort claims and some contractual claims (including claims
related to environmental damage and pollution) through memberships in protection
and indemnity, or P&I, associations, or clubs. We also procure hull and
machinery insurance and war risk insurance for our fleet. In some instances, we
do not procure loss of hire insurance, which covers business interruptions that
result in the loss of use of a vessel. We cannot assure you that such insurance
will continue to be available on a commercially reasonable basis. All insurance
policies that we carry include deductibles (and some include limitations on
partial loss) and since it is possible that a large number of claims may be
brought, the aggregate amount of these deductibles could be material. Further,
our insurance may not be sufficient to fully compensate us against losses that
we incur, whether resulting from damage to or loss of our vessels, liability to
a third party, harm to the environment or other catastrophic claims. For
example, our protection and indemnity insurance has a coverage limit of $1.0
billion for oil spills and related harm to the environment, $2.0 billion for
passenger claims and $3.0 billion for passenger and seamen claims. Although the
coverage amounts are significant, the amounts may be insufficient to fully
compensate us, and, thus, any uninsured losses that we incur may be substantial
and may have a very significant effect on our financial condition. In addition,
our insurance may be voidable by the insurers as a result of certain of our
actions, such as our ships failing to maintain certification with applicable
maritime self-regulatory organizations or lack of payment of premiums.

     In addition to the P&I entry that we currently maintain for the PSVs in our
fleet, we maintain third party liability insurance covering contractual claims
that may not be covered by our P&I entry in the amount of $50.0 million. If
claims affecting such policy exceed the above amount, it could have a material
adverse effect on our business and the results of operations.

     We cannot assure you that we will be able to renew our existing insurance
policies on the same or commercially reasonable terms, or at all, in the future.
For example, more stringent environmental regulations have led in the past to
increased costs for, and in the future may result in lack of availability of,
protection and indemnity insurance against risks of environmental damage or
pollution. Each of our policies is also subject to limitations and exclusions,
and our insurance policies may not cover all types of losses that we could
incur. Any uninsured or under-insured loss could harm our business, financial
condition and operating results. Furthermore, we cannot assure you that the P&I
clubs to which we belong will remain viable. We may also become subject to
funding calls due to our membership in the P&I clubs which could adversely
affect our profitability. Also, certain claims may be covered by our P&I
insurance, but subject to the review and at the discretion of the board of the
P&I club. We can not assure you that the board will exercise its discretion to
vote to approve the claim.

Labor disruptions in the shipping industry could adversely affect our business.

     As of December 31, 2006, we employed 188 land-based employees and
approximately 667 seafarers as crew on our vessels. These seafarers are covered
by industry-wide collective bargaining agreements that set basic standards
applicable to all companies who hire such individuals as crew. Because most of
our employees are covered by these industry-wide collective bargaining
agreements, failure of industry groups to renew these agreements may disrupt our
operations and adversely affect our earnings. In addition, we cannot assure you
that these agreements will prevent labor interruptions. Any labor interruptions
could disrupt our operations and harm our financial performance.

Certain conflicts of interest may adversely affect us.

     Certain of our directors and officers hold similar positions with other
related companies. Felipe Menendez R., who is our President, Chief Executive
Officer, and a Director, is a Director of Oceanmarine, a related company that
previously provided administrative services to us and has entered into joint
ventures with us in salvage operations. Oceanmarine also operates slot charter
container services between Argentina and Brazil, an activity in which we do not
engage at the present time. Ricardo Menendez R., who is our Executive Vice
President and one of our Directors, is the President of Oceanmarine, and is also
the Chairman of The Standard Steamship Owners' Protection and Indemnity
Association (Bermuda) Limited, or Standard, a P&I club with which some of our
vessels are entered. Both Mr. Ricardo Menendez R. and Mr. Felipe Menendez R. are
Directors of Maritima SIPSA, a company owned 49% by us and 51% by SIPSA S.A. (a
related company), which has entered into agreements to purchase and resell from
and to our subsidiaries our vessel Princess Marina, and Directors of Shipping
Services Argentina S.A. (formerly I. Shipping Services), a company that provides
vessel agency services for third parties in Argentina and occasionally for our
vessels calling at Buenos Aires and other Argentinean ports. We are not engaged
in the vessel agency business and the consideration we paid for the services
provided by Shipping Services Argentina S.A. to us amounted to less than $0.1
million in 2006. Although these directors and officers attempt to perform their
duties within each company independently, in light of their positions with such
entities, these directors and officers may face conflicts of interest in
selecting between our interests and those of Oceanmarine, Shipping Services
Argentina S.A. and the Standard. In addition, Shipping Services Argentina S.A.
and Oceanmarine are indirectly controlled by the Menendez family, including
Felipe Menendez R. and Ricardo Menendez R. These conflicts may limit our fleet's
earnings and adversely affect our operations. We refer you to "Related Party
Transactions" in Item 7.B in this report for more information on related party
transactions.

To service our indebtedness, we will require a significant amount of cash. Our
ability to generate cash depends on many factors beyond our control.

     Our ability to make payments on and to refinance our indebtedness,
including the Notes and any amounts borrowed under any of our subsidiaries'
credit facilities, and to fund our operations, will depend on our ability to
generate cash in the future, which, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control. We cannot assure you that our business will generate
sufficient cash flow from operations, that currently anticipated business
opportunities will be realized on schedule or at all, or that future borrowings
will be available to us in amounts sufficient to enable us to service our
indebtedness, including the Notes and any amounts borrowed under our
subsidiaries' credit facilities, or to fund our other liquidity needs.

     If we cannot service our debt, we will have to take actions such as
reducing or delaying capital investments, selling assets, restructuring or
refinancing our debt, or seeking additional equity capital. We cannot assure you
that any of these remedies could, if necessary, be effected on commercially
reasonable terms, or at all. In addition, the indenture for the Notes and the
credit agreements governing our subsidiaries' various credit facilities may
restrict us from adopting any of these alternatives. If we are not successful
in, or are prohibited from, pursuing any of these remedies and cannot service
our debt, our secured creditors may foreclose on our assets over which they have
been granted a security interest.

We may not be able to obtain financing for our growth or to fund our future
capital expenditures, which could negatively impact our results of operations
and financial condition.

     In order to follow our current strategy for growth, we will need to fund
future vessel acquisitions, increased working capital levels and increased
capital expenditures. In the future, we will also need to make capital
expenditures required to maintain our current fleet and infrastructure. We do
not currently believe that cash generated from our earnings will be sufficient
to fund all of these measures. Accordingly, we will need to raise capital
through borrowings or the sale of debt or equity securities. Our ability to
obtain bank financing or to access the capital markets for future offerings may
be limited by our financial condition at the time of any such financing or
offering, as well as by adverse market conditions resulting from, among other
things, general economic conditions and contingencies and uncertainties that are
beyond our control. If we fail to obtain the funds necessary for capital
expenditures required to maintain our fleet and infrastructure, we may be forced
to take vessels out of service or curtail operations, which would harm our
revenue and profitability. If we fail to obtain the funds necessary to acquire
new vessels, or increase our working capital or capital expenditures, we would
not be able to grow our business and our earnings could suffer. Furthermore, any
issuance of additional equity securities could dilute your interest in us and
the debt service required for any debt financing would limit cash available for
working capital and the payment of dividends, if any.

We do not currently have a revolving credit facility that could fund any short
term liquidity needs.

     We do not currently have a revolving credit facility. Accordingly, if we
should need additional liquidity, we will need to obtain additional financing in
the form of debt or equity. Events that could require us to obtain such
financing include seasonal fluctuations, acquisitions of vessels or businesses,
interruptions in the operations of one or more of our businesses, market
downturns, growth in working capital demands, damage to our vessels or
infrastructure, and other events. Furthermore, any of these events could be
unforeseen or unexpected and require us to obtain additional financing in a very
short period of time. If we should require additional liquidity, we may not be
able to obtain necessary financing on attractive terms or at all due to a number
of factors that could exist at the time, including adverse financial markets,
adverse developments in our business or industry, a short time frame in which to
obtain such financing, and other factors. If we are unable to obtain any
financing required to fund our short term liquidity needs, our financial
condition and results of operations would be adversely affected, and we may be
unable to make required payments under some or all of our obligations.

We may not be able to fulfill our obligations in the event we suffer a change of
control.

     If we suffer a change of control, we will be required to make an offer to
repurchase the Notes at a price of 101% of their principal amount plus accrued
and unpaid interest. Under certain circumstances, a change of control of our
company may also constitute a default under our credit facilities resulting in
our lenders' right to accelerate their loans. We may not be able to satisfy our
obligations if a change of control occurs.

Our subsidiaries' credit facilities and the indenture governing our Notes impose
significant operating and financial restrictions on us that may limit our
ability to successfully operate our business.

     Our subsidiaries' credit facilities and the indenture governing the Notes
impose significant operating and financial restrictions on us, including those
that limit our ability to engage in actions that may be in our long term
interests. These restrictions limit our ability to, among other things:

     o    incur additional debt;

     o    pay dividends or make other restricted payments;

     o    create or permit certain liens;

     o    make investments;

     o    engage in sale and leaseback transactions;

     o    sell vessels or other assets;

     o    create or permit restrictions on the ability of our restricted
          subsidiaries to pay dividends or make other distributions to us;

     o    engage in transactions with affiliates; and

     o    consolidate or merge with or into other companies or sell all or
          substantially all of our assets.

     See "Description of Credit Facilities and Other Indebtedness." These
restrictions could limit our ability to finance our future operations or capital
needs, make acquisitions or pursue available business opportunities.

     In addition, some of our subsidiaries' credit facilities require that our
subsidiaries maintain specified financial ratios and satisfy financial
covenants. We may be required to take action to reduce our debt or to act in a
manner contrary to our business objectives to meet these ratios and satisfy
these covenants. Events beyond our control, including changes in the economic
and business conditions in the markets in which our subsidiaries operate, may
affect their ability to comply with these covenants. We cannot assure you that
our subsidiaries will meet these ratios or satisfy these covenants or that our
subsidiaries' lenders will waive any failure to do so. A breach of any of the
covenants in, or our inability to maintain the required financial ratios under,
our subsidiaries' credit facilities would prevent our subsidiaries from
borrowing additional money under the facilities and could result in a default
under them.

     If a default occurs under our credit facilities or of those of our
subsidiaries, the lenders could elect to declare that debt, together with
accrued interest and other fees, to be immediately due and payable and proceed
against the collateral securing that debt. Moreover, if the lenders under a
credit facility or other agreement in default were to accelerate the debt
outstanding under that facility, it could result in a default under other debt.
If all or any part of our debt were to be accelerated, we may not have or be
able to obtain sufficient funds to repay it or to repay the Notes upon
acceleration.

If we are unable to fund our capital expenditures, we may not be able to
continue to operate some of our vessels, which would have a material adverse
effect on our business and financial condition or our ability to pay dividends.

     In order to fund our capital expenditures, we may be required to incur
borrowings or raise capital through the sale of debt or equity securities. Our
ability to obtain credit facilities and access the capital markets through
future offerings may be limited by our financial condition at the time of any
such offering as well as by adverse market conditions resulting from, among
other things, general economic conditions and contingencies and uncertainties
that are beyond our control. Our failure to obtain the funds necessary for
future capital expenditures would limit our ability to continue to operate some
of our vessels and could have a material adverse effect on our business, results
of operations and financial condition and our ability to pay dividends. Even if
we are successful in obtaining such funds through financings, the terms of such
financings could further limit our ability to pay dividends.

We are a holding company, and we depend entirely 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 as such we have no significant assets other
than the equity interests of our subsidiaries. Our subsidiaries conduct all of
our operations and own all of our operating assets. As a result, our ability to
pay dividends and service our indebtedness 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 credit facilities and applicable laws of the
jurisdictions of their incorporation or organization. For example, some of our
subsidiaries' existing credit agreements contain significant restrictions on the
ability of our subsidiaries to pay dividends or make other transfers of funds to
us. See "Description of Credit Facilities and Other Indebtedness" in Item 5.B of
this report. Further, some countries in which our subsidiaries are incorporated
require our subsidiaries to receive central bank approval before transferring
funds out of that country. In addition, under limited circumstances, the
indenture governing the Notes permits our subsidiaries to enter into additional
agreements that can limit our ability to receive distributions from such
subsidiaries. If we are unable to obtain funds from our subsidiaries, we will
not be able to service our debt or pay dividends, should we decide to do so,
unless we obtain funds from other sources, which may not be possible.

We are exposed to U.S. dollar and foreign currency fluctuations and devaluations
that could harm our reported revenue and results of operations.

     We are an international company and, while our financial statements are
reported in U.S. dollars, some of our operations are conducted in foreign
currencies. For example, in 2006, 77% of our revenues were denominated in U.S.
dollars, 10% were denominated in Euros, 12% were denominated in British pounds
and 1% were denominated in Brazilian reais. If the value of the dollar
appreciates relative to the value of these other currencies, the U.S. dollar
value of the revenues that we report on our financial statements could be
materially adversely affected. Changes in currency exchange rates could
adversely affect our reported revenues and could require us to reduce our prices
to remain competitive in foreign markets, which could also have a material
adverse effect on our results of operations. Further, we incur costs in multiple
currencies that are different than, or in a proportion different to, the
currencies in which we receive our revenues. Accordingly, if the currencies in
which we incur a large portion of our costs appreciate in value against the
currencies in which we receive a large portion of our revenue, our margins could
be adversely affected. We have not historically hedged our exposure to changes
in foreign currency exchange rates and, as a result, we could incur
unanticipated losses.

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

     Under the United States Internal Revenue Code of 1986, as amended, or the
Code, 50% of the gross shipping income of our vessel owning or chartering for
non-U.S. subsidiaries attributable to transportation that begins or ends, but
that does not both begin and end, in the U.S. will be characterized as U.S.
source shipping income. Such income will be subject to a 4% U.S. federal income
tax without allowance for deduction, unless our subsidiaries qualify for
exemption from tax under Section 883 of the Code and the Treasury Regulations
promulgated thereunder, which became effective for our calendar year
subsidiaries on January 1, 2005.

     Our non-U.S. subsidiaries filed U.S. tax returns for 2004 and 2003 and took
the position on those returns that they qualified for the exemption on their
U.S. source shipping income under Section 883 based on the determination that
more than 50% of their stock was beneficially owned by qualified shareholders.
However, that claim for exemption by our non-U.S. subsidiaries may not prevail
if challenged on audit. In the absence of the availability of the exemption for
2004 and 2003, our non-U.S. subsidiaries would be subject to a 4% federal income
tax of approximately $0 and $249,264, respectively. For the calendar years 2005
and 2006, our non-U.S. subsidiaries did not derive any U.S. source shipping
income. Therefore our non-U.S. subsidiaries should not be subject to any U.S.
federal income tax for either 2005 or 2006 regardless of their qualification for
exemption under Section 883.

     For the 2007 tax year and each tax year thereafter, we believe that any
U.S. source shipping income of our non-U.S. subsidiaries will qualify for the
exemption from tax under Section 883 on the basis that our stock is primarily
and regularly traded on the Nasdaq. However, we cannot assure you that our
non-U.S. subsidiaries will qualify for that exemption. In addition, changes in
the Code, the Treasury Regulations or the interpretation thereof by the Internal
Revenue Service or the courts could adversely affect the ability of our non-U.S.
subsidiaries to qualify for such exemption. If our non-U.S. subsidiaries are not
entitled to that exemption, they would be subject to a 4% U.S. federal income
tax on their U.S. source shipping income. The imposition of this tax could have
a negative effect on our business and would result in decreased earnings.

Changes in tax laws or the interpretation thereof and other tax matters related
to our UK tonnage tax election may adversely affect our future results.

     We elected the application of the UK tonnage tax instead of the corporate
tax on income for the qualifying shipping activities of our PSVs in the North
Sea. Changes in tax laws or the interpretation thereof and other tax matters
related to our UK tax election may adversely affect our future results as a tax
on the income from qualifying shipping activities likely will be higher than the
UK tonnage tax to which are currently subject.

ITEM 4  - INFORMATION ON THE COMPANY

A.   HISTORY AND DEVELOPMENT OF THE COMPANY

     In this annual report, unless the context otherwise indicates, the terms
"we," "us" and "our" (and similar terms) refer to Ultrapetrol (Bahamas) Limited
and its subsidiaries and joint ventures.

     We were originally formed by members of the Menendez family with a single
ocean going vessel in 1992, and were incorporated in our current form as a
Bahamas corporation on December 23, 1997.

     Our Ocean Business has grown through the investment of capital from the
operation of our fleet along with other sources of capital to acquire additional
vessels. In 1998, we issued $135.0 million of 10 1/2% First Preferred Ship
Mortgage Notes due 2008, or the Prior Notes. By 2001, our fleet reached 13
oceangoing vessels with a total carrying capacity of 1.1 million dwt. During
2003, in an effort to remain ahead of changing environmental protection
regulations, we began to sell all of our single hull Panamax and Aframax tankers
(five vessels in total), a process that we completed in early 2004.

     We began our River Business in 1993 with a fleet consisting of one pushboat
and four barges. In October 2000, we formed a joint venture with American
Commercial Barge Lines Ltd., or ACL. From 2000 to 2004, we built UABL into the
leading river barge company in the Hidrovia Region of South America. Using some
of the proceeds from the sale of our single hull Panamax tankers, in 2004, we
purchased from ACL their 50% equity interest in UABL.

     During 2000, we received a $50.0 million equity investment from an
affiliate of Solimar Holdings, Ltd., or Solimar, a wholly-owned subsidiary of
the AIG-GE Capital Latin American Infrastructure Fund, or the Fund. The Fund was
established at the end of 1996 to make equity investments in South America,
Mexico, Central America and the Caribbean countries. The Fund was also our
partner in other ventures, including UP Offshore.

     In December 2002, we began our relationship with International Finance
Corporation, or IFC, which is the private sector arm of the World Bank Group
that provides loans, equity, and other services to support the private sector in
developing countries. In total, IFC, together with its participant banks and
co-lender, KfW, has provided us with $115.0 million of credit and equity
commitments to support our River and Offshore Supply Businesses.

     We formed our Offshore Supply Business during 2003 in a joint venture with
a wholly-owned subsidiary of the Fund, and Comintra Enterprise Ltd. We
capitalized the business with $ 45 million of common equity and $70 million of
debt and preferred equity from IFC to construct our initial fleet of six PSVs.
On March 21, 2006, we separately purchased 66.67% of the issued and outstanding
capital stock of UP Offshore (Bahamas) Ltd., or UP Offshore, a company through
which we operate our Offshore Supply Business from an affiliate of Solimar, one
of the selling shareholders, for a purchase price of $48.0 million. Following
this acquisition, we hold 94.45% of the issued and outstanding shares of UP
Offshore.

     In November 2004, we issued $180.0 million of 9% First Preferred Ship
Mortgage Notes due 2014, or the Notes. The proceeds of the Notes offering were
used principally to prepay the Prior Notes and to buy an additional Ocean
Business asset, further invest in our River Business and to diversify into the
Passenger Business with the acquisition of two passenger vessels.

     In March 2006, we also acquired Ravenscroft Shipping (Bahamas) S.A., or
Ravenscroft, the entity through which we manage the vessels in our Offshore
Supply, Ocean, and Passenger Businesses, from other related companies.

     On October 18, 2006, we completed the initial public offering of 12,500,000
shares of our common stock (our IPO), which generated gross proceeds of $137.5
million. On November 10, 2006, the Underwriters of our IPO exercised their
over-allotment option to purchase from the selling shareholders in our IPO an
additional 232,712 shares of our common stock. We did not receive any of the
proceeds from the sale of shares by these shareholders in the over-allotment
option.

B.   BUSINESS OVERVIEW

Our Company

     We are an industrial shipping company serving the marine transportation
needs of clients in the geographic markets on which we focus. We serve the
shipping markets for grain, forest products, minerals, crude oil, petroleum, and
refined petroleum products, as well as the offshore oil platform supply market,
and the leisure passenger cruise market through our operations in the following
four segments of the marine transportation industry.

     o    Our River Business, with 502 barges, is the largest owner and operator
          of river barges and pushboats that transport dry bulk and liquid
          cargos through the Hidrovia Region of South America, a large region
          with growing agricultural, forest and mineral related exports. This
          region is crossed by navigable rivers that flow through Argentina,
          Brazil, Bolivia, Paraguay and Uruguay to ports serviced by ocean
          export vessels. According to DSC, as a whole, these countries are
          estimated to account for approximately 47% of world soybean production
          in 2006, from 29% in 1995.

     o    Our Offshore Supply Business owns and operates vessels that provide
          critical logistical and transportation services for offshore petroleum
          exploration and production companies, in the North Sea and the coastal
          waters of Brazil. Our Offshore Supply Business fleet currently
          consists of proprietarily designed, technologically advanced platform
          supply vessels, or PSVs. We have four PSVs currently in operation and
          four currently under construction. Two PSVs are under construction in
          Brazil and are contracted to be delivered in the second quarter of
          2007 and 2008, respectively. We recently contracted with a shipyard in
          India to construct two PSVs for delivery commencing in 2009, with an
          option to build two more.

     o    Our Ocean Business owns and operates eight oceangoing vessels,
          including three Handysize/small product tankers that we intend to use
          in the South American coastal trade where we have preferential rights
          and customer relationships, three versatile Suezmax/Oil-Bulk-Ore, or
          Suezmax OBO, vessels, one Aframax tanker, and one semi-integrated
          tug/barge unit. Our Ocean Business fleet has an aggregate carrying
          capacity of approximately 651,000 deadweight tons and our three
          Suezmax OBOs are capable of carrying either dry bulk or liquid cargos,
          providing flexibility as dynamics change between these market sectors.

     o    Our Passenger Business fleet consists of two vessels with a total
          carrying capacity of approximately 1,600 passengers, and operates
          primarily in the European cruise market. We currently employ our
          largest passenger vessel under a multi-year seasonal charter with a
          European tour operator and the other vessel will be employed in the
          Aegean Sea for the European summer season of 2007. In addition, we
          have operated one of our vessels during periods outside the European
          travel season for certain events.

     We are focused on growing our businesses with an efficient and versatile
fleet that will allow us to provide an array of transportation services to
customers in several different industries. Our business strategy is to leverage
our expertise and strong customer relationships to grow the volume, efficiency,
and market share in a targeted manner. For example, we are currently increasing
the cargo capacity of our existing river barges to help increase our efficiency
and market share. In addition, we have commenced a program to replace the
current engines in our pushboats with new engines that will allow us to operate
using less expensive heavy fuel. We expect that the delivery of the two
additional PSVs we have under construction in Brazil as well as the new orders
placed in India will allow us to further capitalize on the attractive offshore
petroleum services market. We are also pursuing the expansion of our ocean fleet
through acquisitions of specific types of vessels to participate in identified
market segments. We believe that the versatility of our fleet and the diversity
of industries that we serve reduce our dependency on any particular sector of
the shipping industry and offer numerous growth opportunities.

     We have a diverse customer base including large and well-known petroleum,
agricultural, mining and tour operating companies. Some of our significant
customers in the last three years include affiliates of Archer Daniels Midland,
British Gas, Cargill, Chevron, Continental Grain, ENAP, Industrias Oleaginosas,
Panocean, Petrobras, the national oil company of Brazil, Petropar, the national
oil company of Paraguay, Rio Tinto, Swissmarine, Total, Trafigura, Travelplan
and Vicentin.

Our Lines of Business

     Revenues                                                     2006
                                                    ----------------------------

        Attributable to River Business                    $79,124          46%
        Attributable to Offshore Supply Business           26,289          15%
        Attributable to Ocean Business                     39,202          23%
        Attributable to Passenger Business                 28,851          16%
                                                          -------         ----
        Total                                            $173,466         100%


     River Business. We have developed our River Business from a single river
convoy comprising one pushboat and four barges in 1993 to the leading river
transportation company in the Hidrovia Region today. Our River Business, which
we operate through our subsidiary UABL, had 490 barges and 23 pushboats at the
end of 2006 and 502 barges and 24 pushboats as of March 21, 2007 with
approximately 798,000 dwt and 828,000 dwt capacity, respectively. We currently
own 458 dry barges that transport agricultural and forestry products, iron ore
and other cargos and 44 tanker barges that carry petroleum products, vegetable
oils and other liquids. We believe that we have more than twice the number of
barges and dwt capacity as our nearest competitor. In addition, we use one
35,000 dwt barge designed for ocean trading, the Alianza G2, as a transfer
station to provide storage and transshipment services of cargo from river barges
to ocean export vessels.

     We are in the process of expanding the size of some of our barges to
increase their cargo carrying capacity and maximize our fleet utilization. We
have begun a three year program to expand the size of approximately 130 of our
barges. We believe that enlarging our existing barges is the most cost-effective
way of growing our fleet's cargo carrying capacity. To date, we have expanded 12
barges and expect to have expanded a total of 62 by the end of 2007. We also
have begun a program to replace the engines in all 16 of our line pushboats and
in connection with that program have contracted to purchase six new engines from
MAN Diesel with an expected delivery dates of July and November 2007. The new
engines will consume heavier grades of fuel which have from 2001 to 2006, been
between 33.5% and 51.7% been less expensive than the diesel fuel we currently
consume.

     We operate our pushboats and barges on the navigable waters of the Parana,
Paraguay and Uruguay Rivers and part of the River Plate in South America, also
known as the Hidrovia Region. At over 2,200 miles in length, the Hidrovia Region
is comparable to the Mississippi River in the United States and produces and
exports a significant and growing amount of agricultural products. For example,
Argentina, Brazil, Paraguay, and Bolivia produced, in the aggregate, 39.9
million tons of soybeans in 1995 compared to an estimated 107.9 million tons in
2006, a compound annual growth rate of 9.8%. These countries accounted for over
47% of world soybean production in 2006, growing from only 29% in 1995. In
addition to agricultural products, companies in the Hidrovia Region are
expanding and initiating the production of other goods, including forest
products, iron ore, and pig iron. In order to maintain our existing fleet and
expand our capacity rapidly and cost effectively, we have doubled the capacity
of our Argentine facility effective the end of March 2007 and plan to enhance
this shipyard to allow for new constructions of barges and other vessels.
Today's available barge fleet in the Hidrovia Region consists of approximately
1,100 dry and tank barges compared to 26,500 barges in the Mississippi River
system.

     Through joint ventures, we own and operate terminals at certain key
locations to provide integral transportation services to our customers from
origin to destination. We also own a drydock and repair facility to carry out
fleet maintenance and have a long-term lease on another facility where we intend
to conduct part of the barge enlargement program. We utilize night-running
technology, which allows for night navigation and improves asset efficiency.

     As increasing agricultural production is expected to couple over the next
few years with new mining and pig iron facility production, the resulting
significant additional cargo volumes in the Hidrovia require an efficient
solution to create the capacity necessary for river transport.

     We believe that bringing barges from the United States, which has been the
source of the majority of the barges in the Hidrovia, is no longer a sustainable
economical option, given the current tightness of supply in the United States
market and the very high costs of transportation. Because we believe the
Hidrovia area does not have an industrial unit capable of building barges
efficiently on a larger scale, we plan to expand our shipyard and, with the
assistance of experienced United States consultants, construct a modern
shipbuilding unit capable of producing barges and other vessels in a timely and
cost efficient manner.

     Offshore Supply Business. Our Offshore Supply Business, which we operate
through UP Offshore, is focused on serving companies that are involved in the
complex and logistically demanding activities of deepwater oil exploration and
production. We have ordered the construction of six proprietarily designed and
technologically advanced PSVs. We received delivery of and placed into service
two of these vessels in 2005 and two in 2006, and we expect the remaining two to
be delivered and placed into service in the second quarter of 2007 and in 2008,
respectively and the two PSVs being constructed in India to be delivered
commencing in 2009. Our PSVs are designed to transport supplies, equipment,
drill casings and pipes on deck, along with fuel, water, drilling fluids and
bulk cement in under-deck tanks and a variety of other supplies to drilling rigs
and platforms. We employ two of these vessels in the spot market in the North
Sea and employ the other two on time charter in Brazil with Petrobras. Upon
delivery of the two PSVs we currently have under construction, we intend to
employ them in Brazil and other international markets. We have recently entered
into two contracts with a shipyard in India to construct two PSVs for delivery
in 2009, with an option to build two additional vessels for deliveries beyond
2009. If the option is exercised and the additional four vessels are built, our
Offshore Supply fleet will have a total of ten PSVs. Through one of our
Brazilian subsidiaries, we have the competitive advantage of being able to trade
a number of our PSVs in the Brazilian market with cabotage trading privileges,
enabling the PSVs to obtain employment in preference to non-Brazilian flagged
vessels.

     The trend for offshore petroleum exploration has been to move toward
deeper, larger and more complex projects, which has resulted in increased demand
for more sophisticated and technologically advanced PSVs to handle the more
challenging environments and greater distances. Our PSVs are equipped with
dynamic positioning capabilities, dedicated oil recovery tanks for the
performance of oil recovery duties, and greater cargo capacity and deck space,
all of which provide us a competitive advantage in efficiently servicing our
customers' needs.

     Ocean Business. In our Ocean Business, we own and operate eight oceangoing
vessels including one semi-integrated oceangoing tanker barge unit under the
trade name, Ultrapetrol. Our three Suezmax OBO vessels transport liquid cargo,
such as petroleum and petroleum products, as well as dry cargo, such as iron ore
and coal, on major routes around the globe. Our Aframax tanker carries both
crude oil and a variety of refined petroleum products internationally. Our
product tankers are employed primarily in South American cabotage. Our
semi-integrated tug barge Alianza G-3/Alianza Campana operates under long-term
charter as a support vessel in North Brazil up to February 2007 and, after a
period of dry dock and refurbishment will continue to provide service in South
America. Our current ocean fleet has an aggregate cargo carrying capacity in
excess of 651,000 dwt and an average age of approximately 15.5 years.

     We presently employ our Suezmax OBO vessels in the carriage of dry bulk
cargos on trade routes around the world, mostly transporting coal and iron ore
from South America, Australia and South Africa to Europe, China and other Far
East countries. During 2006, we derived over 69% of our Ocean Business revenues
from charterers in Europe and Asia, some of which are SwissMarine and Pan Ocean
Shipping. Over the same period, we derived approximately 75% of our Ocean
Business revenues from time charters with at least three months duration and 25%
from spot voyages.

     Our Aframax tanker, Princess Marina, has been employed for the past 4 years
under successive charters in Chile with ENAP which have now been extended until
August 2007.

     We currently employ Miranda I, our chemical/product carrier, on a
three-year charter with an option for an additional two years to Petrobras, a
major oil company serving the regional trade of Argentina and Brazil, through
September 2008. In November 2006 we entered into a Memorandum of Agreement to
purchase the Alejandrina, a 9,219 dwt product tanker which we will employ in the
cabotage trade in South America. Similarly, in October 2006 we entered into a
contract to purchase the Amadeo, a 39,530 dwt Handysize crude and product tanker
which will also be employed in the cabotage trade in Argentina, Brazil and
Chile.

     Our Miranda I and Amadeo, originally built as single hull vessels, are in
the process of being converted to double hull in Argentina and Romania,
respectively, and we expect both conversions to be completed in the second
quarter of 2007. Our vessels Princess Nadia and Princess Susana, as of the end
of 2006, have been certified by Class as double hull vessels, thus, all of the
remaining ocean ships are double hull with the exception of Princess Katherine
which, although generally of double hull design, needs reconfiguration of some
service tanks to comply with the double hull requirements. This vessel is
currently employed in dry cargo, and we are planning to reconfigure her if /
when she returns to tanker trade.

     Passenger Business. In our Passenger Business, we own and operate two
vessels that we purchased in 2005, the New Flamenco, with a 1,010 person
capacity and 401 cabins, and the Grand Victoria (which we have renamed Blue
Monarch for her 2007 employment), with a 575 person capacity and 242 cabins. In
February 2006, we completed an extensive refurbishment of the New Flamenco,
including all passenger areas, and we conducted work to recertify the Grand
Victoria and upgraded some of her passenger areas. We employ the New Flamenco
under a seasonal charter with a European tour operator cruising the
Mediterranean Sea

     The remainder of the charter for the New Flamenco is a one-year,
"full-service charter," extendable for an additional year at the charterer's
option, pursuant to which we are responsible for operating and maintaining the
vessel, paying the full vessel's staff and providing passenger services such as
entertainment and food and beverages, while our charterer is responsible for
marketing and ticket sales as well as fuel and port charges. Pursuant to the
charter, our charterer pays us an agreed amount per passenger, per day, which
escalates each year, and is subject to a guaranteed minimum occupancy equivalent
to an average of approximately 80% of the lower berth capacity. We also receive
the revenues, as applicable, from on board sales of goods and services, a
portion of which are shared with the charterer or concessionaire.

     In the current employment for the Blue Monarch, on 7-day cruises in the
Aegean, we will market the ship through Monarch Classic Cruises. Under this
arrangement, where we own one third of Monarch Classic Cruises, but we have no
guaranteed minimum income.

     The structure of our seasonal contracts for our Passenger Business provides
us with a stable revenue stream as well as the flexibility to operate the
vessels in other regions of the world at the end of the seasonal contract term.
We have operated one of our vessels during periods outside the European travel
season for certain events.

<PAGE>
<TABLE>
Ultrapetrol Fleet Summary
<CAPTION>

                                        Number of
River Fleet                              Vessels            Capacity                    Description

<S>                                      <C>              <C>                   <C>
Alianza G2/Alianza Rosario                   1             35,000 tons               Transfer Station
Pushboat Fleet                              24              77,752 HP          Various Sizes and Horse Power
                                                                               Carry Liquid Cargo (Petroleum
Tank Barges                                 44             95,578 m(3)              Products, Veg. Oil)
                                                                                      Carry Dry Cargo
Dry Barges                                 458            732,700 tons                (Soy, Iron Ore)
---------------------------------     --------------
Total                                      527                 N/A
---------------------------------     --------------    ------------------   -------------------------------- -------------

Offshore Supply Fleet                 Year Built            Capacity                     Delivery
                                                              (DWT)                        Date

In Operation
------------
UP Esmeralda                              2005                4,200                        2005
UP Safira                                 2005                4,200                        2005
UP Agua-Marinha                           2006                4,200                        2006
UP Topazio                                2006                4,200                        2006

On Order
--------
UP Diamante                               2007                4,200                         2007(e)
UP Rubi                                   2008                4,200                         2008(e)
TBN                                       2009                4,200                         TBD
TBN                                       2009                4,200                         TBD
                                                             ------
Total                                                        33,600
                                                             ======

Ocean Fleet                            Year Built              DWT                      Description
---------------------------------     --------------    ------------------    --------------------------------

Princess Nadia                            1987              152,328                     Suezmax OBO
Princess Susana                           1986              152,301                     Suezmax OBO
Princess Katherine                        1986              164,100                     Suezmax OBO
Princess Marina(1)                        1986               83,930                   Aframax Tanker
Alianza/G-3                               1993(2)            43,164                Semi Integrated Tug/
                                                                                        Barge Unit
Miranda I                                 1995                6,575                  Product Carrier/
                                                                                      Chemical Tanker
Amadeo                                    1996               39,530              Handysize product tanker
Alejandrina                               2006                9,219                   Product tanker
                                                            -------
Total                                                       651,147
                                                            =======

(1)  We currently hold the Princess Marina through our 49% ownership of Maritima SIPSA S.A., a company controlled
     by Chilean citizens, to whom we sold the Princess Marina upon the beginning of her charter in Chile in May
     2003. As part of this arrangement, we have contracted to repurchase the Princess Marina on September 25, 2007.
     We recognize as charter revenue on this transaction the difference between our sale price to Maritima SIPSA
     and their sale price back to us, of this vessel. See "Related Party Transactions - Maritima SIPSA S.A." in
     Item 7.B of this report.

(2)  Originally built in 1982, converted in 1993 to product tank barge.
</TABLE>

                                          Total                 Total
                                        Capacity                Number
Passenger Fleet                       (Passengers)            of Cabins
---------------------------------- --------------------   -------------------
New Flamenco                           1,010                     401
Blue Monarch (ex Grand Victoria)         575                     242
                                       -----                     ---
Total                                  1,585                     643
                                       =====                     ===

Chartering Strategy

     We continually monitor developments in the shipping industry and make
charter-related decisions based on an individual vessel and segment basis, as
well as on our view of overall market conditions. In our River Business, we have
contracted a substantial portion of our fleet's capacity on a one- to four-year
basis to major clients. These contracts provide fixed pricing, minimum volume
requirements and fuel price adjustment formulas, and we intend to develop new
customers and cargos as we grow our fleet capacity.

     In our Offshore Supply Business, we plan to charter our PSV fleet in Brazil
for medium-term (one to six months) charters or long-term employment (up to
seven years). Currently there is no spot market in Brazil for PSVs. In the North
Sea, we intend to continue to operate our PSVs in the spot market (short
duration, one day or more) combined with longer-term charters.

     We historically have operated our Ocean Business vessels in both the spot
market, which allows us to take advantage of potentially higher market rates,
and under period charters, which allows us to achieve high utilization rates. We
intend to continue to operate some of our ocean vessels in the spot market and
others under period charters. We believe that this balanced approach to
chartering will provide us with relatively stable revenue streams while enabling
us to participate in favourable market developments.

     We intend to employ our passenger vessels primarily in conjunction with
tour operators that will at least partially guarantee the vessels' revenue.

Our Fleet Management

     We conduct the day-to-day management and administration of our operations
in-house and through our wholly-owned subsidiaries.

     Following our acquisition of Ravenscroft and after acquiring the
administrative-related assets and the hiring of personnel of Oceanmarine
associated with the administration and accounting services, all technical,
commercial and administrative management functions are conducted in-house.

     Ravenscroft, operating from its office in Coral Gables, Florida, employs 34
persons and will continue to undertake all technical and marine related
management for our offshore, ocean and passenger vessels including the
purchasing of supplies, spare parts and husbandry items, crewing,
superintendency and preparation and payment of all related accounts on our
behalf. Ravenscroft also continues to be responsible for the administration and
execution of the onboard services and management accounting system on our
Passenger vessels New Flamenco and Blue Monarch (ex Grand Victoria). For the New
Flamenco, Ravenscroft monitors the shore excursion sales, the performance of the
Food & Beverage and Entertainment concessionaires and also controls certain
aspects of onboard revenue such as the duty free shop which generate additional
income for us. Ravenscroft is a self-contained full service ship management
company which includes a commercial department and is certified for ISM and is
also ISO 9001:2000 certified. It holds Documents of Compliance for the
management and operation of OBOs, tankers, bulk carriers, PSVs, general cargo
vessels, passenger vessels and also for the ship management of vessels sold for
demolition.

     Ravenscroft will continue to manage vessels for and on behalf of vessels
owners who are not related to us and will actively pursue new business
opportunities.

     In the case of our River Business, our commercial and technical management
continues to be performed in-house by UABL personnel.

Competition

     River Business

     We maintain a leading market share in our River Business. We own the
largest fleet of pushboats and barges in the Hidrovia Region. We believe that we
have more than twice the number of barges and dwt capacity than our nearest
competitor. We compete based on reliability, efficiency and price. Key
competitors include Horamar, and Fluviomar. In addition, some of our customers,
including Archer Daniels Midland and Rio Tinto, have some of their own dedicated
barge capacity, which they can use to transport cargo in lieu of hiring a third
party. Our River Business also indirectly competes with other forms of
land-based transportation such as truck and rail.

Offshore Supply Business

     In our Offshore Supply Business, our main competitors are the Brazilian
offshore companies that own and operate modern PSVs. The largest of these
companies is CBO, which currently owns four modern PSVs and is building an
additional four PSV in Brazil. Also, some of the international offshore owners,
such as Tidewater and Maersk have built Brazilian-flagged PSVs.

Ocean Business

     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, as well as in Chile, is Antares
Naviera S.A. and its affiliated companies, including Ultragas, Lauderdale
Tankers Corp., and Sonap S.A., an independent tanker owner and operator. The
other major participant in the Argentina/Brazil trade is Transpetro. Transpetro
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. In our dry bulk trades, we operate our vessels
internationally where we compete against the main fleets of Capesize ships, with
companies such as the Offer Group, Frontline, Bocimar and others.

Passenger Business

     The tour operators that are our clients in the Passenger Business compete
for consumers' leisure-time dollars with both other cruise lines and a wide
array of other vacation options located throughout the world, including numerous
land-based destinations and package holiday, tour and timeshare vacation
operators. Many of these operators attempt to obtain a competitive advantage by
lowering prices and/or by improving their products, such as by offering
different vacation experiences and locations. In the event that we or the tour
operators that are our clients do not compete effectively with other cruise
companies and other vacation operators, our results of operations from our
Passenger Business would be adversely affected.

<PAGE>

Industry Conditions

River Industry

     Key factors driving cargo movements in the Hidrovia Region are agricultural
production and exports, particularly soybeans, from Argentina, Brazil, Paraguay
and Bolivia, exports of Brazilian iron ore, regional demand and Paraguay and
Bolivia imports of petroleum products. Exports of Argentine forest products and
other commodities are also significant. Practically all the cargos transported
in the Hidrovia Region are export or import-related cargos.

     The Parana/Paraguay, the High Parana and the Uruguay rivers consist of over
2,200 miles of a single natural interconnected navigable river system serving
five countries namely Brazil, Bolivia, Paraguay, Uruguay and Argentina. The size
of this river system is comparable to the Mississippi river in the United
States.

Dry Bulk Cargo

     Soybeans. Argentina, Brazil, Paraguay, and Bolivia produced about 39.9
million tons, or mt, of soybeans in 1995 and 101.6 mt in 2005, a compound annual
growth rate, or CAGR, of 9.8% from 1995. Production for these countries for 2006
is estimated at 107.9 mt. These countries accounted for about 47% of world
soybean production in 2005, growing from only 29% in 1995.

     The Hidrovia Region is one of the few areas left in the world where unused
farmland is available. Within the ?ve countries of the Hidrovia Region, acreage
harvested in soybeans has increased from approximately 18.4 Mha (million
hectares, 1 hectare = 2.47 acres) in 1995 to 40.5 Mha in 2005, a CAGR of 8.2%.
Further, with advances in technology, productivity of farmland has also
improved.

     The growth in soybean production has not occurred at the expense of other
key cereal grains. Production of corn (maize) in Argentina, Bolivia, Brazil and
Paraguay combined grew from 44.8 mt in 1995 to 59.3 mt in 2005, a CAGR of 2.8%.
Production of wheat in these countries grew from 10.4 mt in 1995 to 20.3 mt in
2005, a CAGR of 6.9%.

     The installation of crushing plants in Bolivia and Paraguay has generated a
large volume of vegetable oils and soybean meal that are also shipped via the
river for export. According to industry sources, Soybean meal exports from
Bolivia and Paraguay totaled about 1.8 mt in 2005, while soybean oil exports
were about 0.3 mt.

     Iron Ore. In the Corumba area in Brazil near the High Paraguay River, two
existing large iron ore mines owned by international mining companies Rio Tinto
and Companhia Vale do Rio Doce (CVRD) have been joined by a new mine under
construction owned by MMX Mineracao & Metalicos S.A. (MMX). Their combined
production of iron ore, which is entirely transported by barge, has grown from
about 1.1 million mt (mmt) since 1999 to a 2006 estimate of about 3.6 mmt per
year, a CAGR of 19%. Estimated production in 2007 is about six million tons per
annum, based on the MMX mine reaching its announced targets of 3.3 mmt in 2007
and 4.9 mmt in 2008, and could further increase as Rio Tinto is considering
expansion of its mine.

     Forest Products. Areas adjacent to the Hidrovia Region in Northern
Argentina comprise most of Argentina's forest and forest product producing
areas. Higher value added sectors of the forest products industry have grown at
high rates, while lower value added sectors (e.g. logs, fuel wood) have remained
stable or declined. Wood-based panel and sawnwood export quantities grew by a
CAGR of about 21% from 1994-2004, while paper and paperboard exports grew by a
CAGR of about 16%. Wood-based panels, sawnwood, paper, paperboard, and wood pulp
sectors comprise about 97% of 2004 (the last year for which data is available)
export value (total forest product export value $565 million). The value of
exports of these products reached $546 million in 2004, a CAGR of 18.7% from
1994.

Oil transportation

     The Hidrovia Region is a key link in Argentina's oil supply network. In
2004, Argentine oil demand was estimated at about 480,000 barrels per day, or
bpd, while production for 2006 was estimated at approximately 770,000 bpd. Total
re?ning capacity is estimated at about 625,000 bpd.

     Paraguay has no indigenous sources of petroleum. Barges using the rivers in
the Hidrovia Region are currently the preferred method of supplying Paraguay
with crude and petroleum products, according to industry sources totaling
between 1.1 million cubic meters to 1.3 million cub meters per year in the last
six years.

     All the petroleum products travel north to destinations in Northern
Argentina, Paraguay and Bolivia, creating synergies with dry cargo volumes that
mostly travel south.

     Brazil does not yet transport any significant quantity of petroleum
products via the rivers in the Hidrovia Region, mainly due to lack of discharge
facilities. However, incentives exist to switch to barge transportation for
petroleum product distribution to Brazilian cities near the river. Currently,
interior regions of Brazil near the Hidrovia are supplied over land by truck.

Fleet developments and utilization

     In the last 10 years the barge fleet in the Hidrovia Region has more than
doubled, maintaining a high level of utilization. This has occurred not only due
to the growth of production in the area, but also because cargo that in the past
was transported by truck started to shift to river transport as the
infrastructure developed. We believe that the available barge fleet in the area
consists approximately of 1,100 dry and tank barges, in contrast with
approximately 26,500 barges in the Mississippi River System in the United
States.

     UABL owns and operates approximately 43% of total dry cargo capacity. The
closest competitor, Fluviomar, operates approximately 19% of the dry cargo
tonnage capacity. There are approximately 10 different companies operating dry
cargo barges in the Hidrovia Region.

     The barge business in the Parana River has seasonal fluctuations due to the
agricultural aspect of the trade. The high season in 1993 was from March through
July, and in 2003 the high season had extended from February through September.
However, the October through January period is now much more active due to the
construction of a large soybean crushing plant along the Parana River that works
most of the year.

     Freight levels are much less cyclical than in ocean transportation and are
based on local supply and demand factors that are generally not related to ocean
freights.

Mode Comparison

     Along with growth in production of commodities transported by barge in the
Hidrovia Region, cost, safety and environmental incentives exist to shift
commodity transport to barges.

     Inland barge transportation is generally the most cost efficient, safest
and cleanest means of transporting bulk commodities as compared with railroads
and trucks.

     One barge has the carrying capacity of approximately 15 railcars or
approximately 58 tractor-trailer trucks and is able to move 514 ton-miles per
gallon of fuel compared to 202 ton-miles per gallon of fuel for rail
transportation or 59 ton-miles per gallon of fuel for tractor-trailer
transportation. On a cost per ton-mile basis in the United States, rail
transportation is 3.1 times more expensive and truck transportation is 37.0
times more expensive than barge transportation. In addition, when compared to
inland barges, trains and trucks produce 3.5 times and 19.0 times, respectively,
the amount of certain smog-causing chemicals when moving equivalent amounts of
cargo over equivalent distances. According to the U.S. Bureau of Transportation
Statistics, barge transportation is also the safest mode of cargo
transportation, based on the percentage of fatalities and the number of
hazardous materials incidents, fatalities and injuries from 1999 through 2002.
Inland barge transportation predominantly operates away from population centers,
which generally reduces both the number and impact of waterway incidents.

     According to industry sources, in terms of unit transportation cost for
most dry bulk cargos, barge is cheapest, rail is second cheapest, and truck is
third cheapest. There are clear and significant incentives to build port
infrastructure and switch from truck to barge to reduce cost.

Offshore Supply Business

     The market for offshore supply vessels, or OSVs, both on a worldwide basis
and within Brazil, is driven by a variety of factors. On the demand side, the
driver is the growth in offshore oil development/production activity, which in
the long term is driven by the price of oil and the cost of developing the
particular offshore reserves. Demand for OSVs is further driven by the location
of the reserves, with fields located further offshore and in deeper waters
requiring more vessels per field and larger, more technologically sophisticated
vessels. The supply side is driven by the availability of the vessel type needed
(i.e., appropriate size and technology), which in turn is driven by historical
newbuilding patterns and scrapping rates as well as the current employment of
vessels in the worldwide fleet (i.e., whether under long-term charter) and the
rollover schedule for those charters. Technological developments also play an
important role on the supply side, with technology such as dynamic positioning
better able to meet certain support requirements.

     Both demand for and supply of OSVs are heavily influenced by cabotage laws.
Since most offshore supply activities occur within the jurisdiction of a
country, they fall within that country's cabotage laws. This distinguishes the
OSV sector from most other types of shipping. Cabotage laws may restrict the
supply of tonnage, give special preferences to locally flagged ships or require
that any vessel working in that country's waters be flagged, crewed, and in some
cases, constructed in that country.

     OSVs generally support oil exploration, production, construction and
maintenance activities on the continental shelf and have a high degree of cargo
capacity and flexibility relative to other offshore vessel types. They utilize
space above and below deck to transport dry and liquid cargo, including heavy
equipment, pipe, drilling fluids, provisions, fuel, dry bulk cement and drilling
mud.

     The OSV sector includes conventional supply vessels, or SVs, and platform
supply vessels, or PSVs. PSVs are large and often sophisticated vessels
constructed to allow for economic operation in environments requiring some
combination of deepwater operations, long distance support, economies of scale,
and demanding operating conditions. PSVs serve drilling and production
facilities and support offshore construction and maintenance work for clusters
of offshore locations and/or relatively distant deepwater locations. They have
larger deck space and larger and more varied cargo handling capabilities
relative to other offshore support vessels to provide more economic service to
distant installations or several locations. Some vessels may have dynamic
positioning which allows close station keeping while underway. PSVs can be
designed with certain characteristics required for specific offshore trades such
as the North Sea or deepwater Brazilian service.

     The industry OSV fleet (SVs and PSVs) has approximately 1,452 vessels, with
about 184 vessels on order.

     The industry SV fleet has approximately 1,026 vessels with about 53 vessels
on order. The average of age of the industry SV fleet is 24 years, with
approximately three quarters of the vessels in the industry fleet being age 20
years or older.

     The industry PSV fleet has approximately 426 vessels, with approximately
131 vessels on order. The average age of the industry PSV fleet is approximately
9 years.

     Typically, larger and newer PSVs support facilities that are located in
more demanding environments are often more distant from shore. The large PSV
segment is the youngest portion of the industry fleet. Large PSVs typically are
equipped with the advanced technological and cargo handling features noted above
that allow service in demanding offshore areas while realizing efficiencies by
supplying large cargoes to multiple offshore areas.

     There are approximately 106 offshore drilling rigs of various types on
order. Typically, 1.5 to 2 PSV's are needed to service an offshore drilling rig,
due to operating requirements and safety standby vessel requirements that
require a vessel in the area of the rig at all times. (Note: This is a "rule of
thumb" based on industry experience. Actual requirements will vary.) These 106
rigs on order would result in an indicative estimated requirement of about 180
PSV's, using a basis of 1.7 PSVs per rig.

     As noted above, the industry trend towards more technically demanding
drilling activity at distances farther offshore using existing rigs would also
increase demand for PSVs.

Brazilian Offshore Industry

     Driven by Brazil's policy of becoming energy self-sufficient as well as by
oil price and cost considerations, offshore exploration, development, and
production activities within Brazil have grown. Since most Brazilian reserves
are located far offshore in deep waters, where large,
technologically-sophisticated vessels are needed, today, Brazil is a world
leader in deep drilling technology.

     The primary customer for PSVs in Brazil is Petrobras, the Brazilian
national oil company. The Brazilian government has also allowed foreign
companies to participate in offshore oil and gas exploration and production
since 1999. Other companies active in Brazil in offshore oil and gas exploration
and production industry include Total, Shell, BP and ChevronTexaco. The
deepwater Campos Basin, an area located about 80 miles offshore, has been the
leading area for offshore activity. Activities have been extended to the
deepwater Santos and Espirito Santo Basins as well with activities now taking
place in areas of water depths of over 9,000 ft.

     Deepwater service favors modern vessels that can provide a full range of
flexible services while providing economies of scale to installations distant
from shore. Cabotage laws favor employment of Brazilian flag vessels. However,
many of the Brazilian flag PSV's and supply vessels are old, with approximately
42% of the national fleet are at least 20 years of age. Temporary authority is
granted for foreign vessels to operate only if no Brazilian flag vessels are
available.

     There are a total of approximately 82 Brazilian Flag offshore vessels
excluding pure crewboats and well stimulation vessels, including four large
PSVs of 4,000 dwt or more. The current order book for Brazilian flag PSVs and
SVs is eight vessels, including five large PSVs.

The North Sea Market

     The North Sea is a similarly demanding offshore market due to difficult
weather and sea conditions, significant water depths, long distances to be
traveled, and sophisticated technical requirements.

     In 2000 and 2001, increases in oil prices led to increased North Sea
exploration activity and higher OSV demand. Oil prices fell in early 2002,
leading to questions regarding the sustainability of the higher oil prices and
reduced exploration and development activity. Even with recovery in the Brent
price to an average of about $29 per barrel in 2003, North Sea exploration and
development activity remained low. Low oil prices and availability of more
attractive opportunities elsewhere resulted in a shift of activities by oil
majors towards other regions. Oil prices continued their increase, with average
Brent crude prices of about $38 per barrel in 2004, $55 per barrel in 2005, and
$65 per barrel in 2006. Exploration and development activities increased. Major
oil companies returned to the North Sea while the independents remained and
increased their activities.

     High demand led to increases in large PSV rates, averaging approximately
$15,900 per day in 2004, $30,400 per day in 2005, and $48,600 in 2006. Large
PSVs do not have a long rate history due to their relatively recent entry into
service. Rates continued at high levels in January and February 2007, averaging
$53,300.

Oil Tanker Industry Overview

     The demand for tankers is a function of the volume of crude oil and
petroleum products to be transported by sea and the distance between areas of
oil consumption and oil production. The volume of crude oil and petroleum
products transported is affected by overall demand for these products, which in
turn is influenced by, among other things, general economic conditions, oil
prices, weather, competition from alternative energy sources, and environmental
concerns.

     World oil demand increased from about 71.9 million barrels per day, or MBD,
in 1996 to 84.5 MBD in 2006, a compounded annual growth rate, or CAGR, of
approximately 1.6%. Oil demand increased in all regions of the world except for
the former Soviet Union and non-OECD Europe. In 2006 oil demand grew by
approximately 0.9 MBD.

     During this same period, world oil supply increased from about 72.5 MBD in
1996 to 85.3 MBD in 2006, a CAGR of about 1.6%. In 2006 oil production grew by
0.8 MBD. OPEC crude oil production increased from 25.8 MBD in 1996 to 29.7 MBD
in 2006-5, a CAGR of approximately 1.4%. Non-OPEC crude oil production increased
from 43.8 MBD to 50.9 MBD, a CAGR of about 1.5%.

     Benchmark West Texas Intermediate crude, or WTI, averaged $18.43 per barrel
in 1995 (all crude prices are expressed in United States dollars) and averaged
between approximately $14 and $23 through the rest of the 1990's. WTI prices
increased in 2003 to an average of $31.08 per barrel, and continued to increase
to an average $41.50 per barrel in 2004, $56.64 per barrel in 2005, and $66.04
per barrel in 2006. Price volatility was high, with 2006 monthly average $ per
barrel prices ranging from about $59 to $74. WTI prices in the first two months
of 2007 averaged about $57 per barrel.

Tanker Classifications and Primary Trade Routes

     The world oil tanker fleet is generally divided into six vessel sizes
classified by dwt, which is an approximate measure of a vessel's cargo carrying
capacity. In general, VLCC's/ULCC's primarily transport crude oil on long-haul
trade routes (where oil producers are located more than approximately 5,000
miles from the end user, such as from the Arabian Gulf to the Far East, from the
Arabian Gulf to Rotterdam via the Cape of Good Hope, from the Arabian Gulf to
the Red Sea, and from the Arabian Gulf to the US Gulf/Caribbean. Suezmax tankers
trade on long-haul and short-haul routes as discussed below, while Aframax,
Panamax, and Handy tankers serve routes typically in short-haul, regional
markets (e.g., Latin America, Mediterranean, Southeast Asia).

     Suezmax vessels are active in dirty trades (i.e., the transportation of
crude oil and dirty petroleum products) from West Africa to the Americas, and in
some Latin American dirty trades, including backhauls (return trips with a short
ballast leg) to Europe and North America. Other major Suezmax trades include
cross Mediterranean and intra-European trades.

     Aframax tankers are active in Latin American dirty trades. Since Aframax
tankers are the largest vessels capable of entering many U.S. ports, these
vessels are often utilized on Latin America to U.S. trade routes to take
advantage of economies of scale. Other major Aframax dirty trades include
intra-European and cross-Mediterranean trades. In Aframax clean trades, major
routes include voyages from the Middle East to Japan, Southeast Asia, and South
Asia.

Factors Affecting Supply of Oil Tankers

     The supply of tankers is determined by the size and technical suitability
of the available fleet (i.e., size of a vessel versus port constraints, clean
versus dirty cargo capabilities, charterer acceptability, etc.). Tanker owners
include oil companies, government-owned shipping companies and independent
vessel owners. There are also operators who do not own vessels but who charter
their tonnage from independent vessel owners. The existing tanker fleet
increases by newbuilding deliveries and decreases by the number of tankers
scrapped or otherwise removed from the fleet. Fleet size also decreases when
vessel tonnage becomes unavailable due to floating storage, layup, or repair.
Newbuilding, scrapping, and vessel unavailability are affected by current and
expected future vessel prices, charter hire rates, operating costs, age profile
of the fleet, and government and industry regulation. For example, compared to
historical averages, 2004-2006 earnings were high, while scrapping was low. If
vessel earnings were to decrease, repair and retention of older vessels would
become less economically attractive, and industry scrapping could increase.

     The International Maritime Organization, or IMO, adopted accelerated
phase-out regulations for single hull tankers of 5,000 dwt or more carrying
petroleum or petroleum products which entered into force in April 2005. The
regulations are a complex set of requirements that accelerate the phase-out of
pre-International Convention for the Prevention of Pollution from Ships, or
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 the year 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 phase-out dates. The effects of
the regulations are complex but will tend to accelerate the phase-out 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.

     The European Union has had regulations in effect since 2003 that require
double hull vessels be used for certain heavy oils, with no exceptions. These
regulations apply to tankers of 5,000 dwt or more registered in European Union
countries or entering waters within jurisdiction of European Union countries.

     Along with mandatory regulations, other factors encourage scrapping of
single hull tankers. Many charterers require or show preference for double hull
vessels. This preference tends to reduce utilization of single hull vessels and
to encourage scrapping.

     Also, port congestion and canal congestion serve to limit effective supply
at any one time.

Fleet Development

     In 2005, 0.4 million dwt, or Mdwt, of Suezmaxes were scrapped, while 4.0
Mdwt were delivered. During 2006, none were scrapped, while 4.1 Mdwt were
delivered. During the first two months of 2007, none were scrapped, while 0.9
Mdwt were delivered. The current orderbook is 18.2 Mdwt (115 vessels) with 3.4
Mdwt due for delivery this year, 3.1 Mdwt next year and 8.4 Mdwt in 2009. The
remainder are scheduled to be delivered in 2010 and 2011. About 43.2 Mdwt of
Suezmaxes have double hulls, 2.6 Mdwt have double bottoms or double sides, and
7.7 Mdwt have single hulls.

Charter Hire Rates

     One-year time charter rate assessments for a standard Suezmax vessel type
are shown below. Time charter rate assessments ignore the wide variation in time
charter rates based on different vessel specifications and performance, and are
intended to demonstrate trends. Time charter rates tend to be less volatile than
spot charter rates as they incorporate rate expectations, which change less
quickly than the day to day spot freight market.

     During 2004, 2005, 2006, and early 2007, the concurrence of a number of
positive factors resulted in high tanker earnings. Tanker demand increased while
the industry fleet grew moderately. Growth in long-haul trades to Asia and the
United States (including ongoing substitution of long-haul oil for short-haul
Venezuelan oil) and high U.S. oil import requirements were positive factors, all
resulting in strong tanker earnings. Suezmax one-year time charter rates
averaged about $$24,800 per day in 2003, and increased to an average of about
$33,900 per day in 2004 and $34,900 per day in 2005. Rates decreased slightly to
an average of about $32,400 per day in 2006 and $31,000 per day in the first two
months of 2007, but remain at historically high levels.

Chemical Tankers

     Vessels with IMO Chemical Classification are required for transport of
chemicals. International regulations for the transportation of chemicals specify
protective location, stability requirements, safety criteria for survivability
and containment in certain damage cases, maximum tank sizes and other criteria.
These standards are grouped into IMO Chemical Classifications. A "Type 1" vessel
is a chemical tanker intended for the transportation of products considered to
present the greatest overall hazard and "Type 2" and "Type 3" vessels for
products of progressively lesser hazards. Vessels may have tank capacity on
board meeting different IMO classifications. For example, a vessel may have Type
1 and Type 2 cargo tanks or Type 2 and Type 3 tanks. Type 1 and Type 2 capacity
vessels have protective location requirements that require void spaces between
bottom and side shell plating of the vessels, effectively requiring double
bottoms or double hulls. Type 3 capacity vessels do not have protective location
requirements.

     Revised MARPOL Annex 2 regulations took effect on January 1, 2007,
requiring Type 2 or double hull Type 3 vessels for the transport of vegetable
and other edible oils (vegoils) and expanding IMO class chemical transport
requirements.

     There are 2,277 Handysize tankers (from 10,000 dwt to 49,999 dwt) totalling
69.5 million dwt, or Mdwt. 1,484 vessels, or 44.0 Mdwt, are chemical tankers
(certificated to carry Type 1, 2, or 3 cargos.) Type 1, Type 2, and Type 3
capacity totals 0.4 million metric tons, or mmt, 16.5 mmt, and 27.1 mmt
respectively. Included in the Handysize chemical tanker totals is about 7.5 mmt
of stainless steel capacity.

     The current orderbook for Handysize tankers totals about 830 vessels of
approximately 25.2 Mdwt, approximately 36% of the existing fleet. Scheduled
deliveries for 2007, 2008 and 2009 are 7.8, 7.8 and 6.5 Mdwt, respectively.
Included are about 698 chemical tankers, or 19.2 Mdwt. Scheduled chemical tanker
deliveries for 2007, 2008 and 2009 are about 6.7, 5.9 and 4.5 Mdwt,
respectively. Type 1, Type 2, and Type 3 capacity on order totals about 0.07
mmt, 10.0 mmt, and 9.2 mmt, respectively. Included in the Handysize chemical
tanker orderbook is approximately 2.7 mmt of stainless steel capacity.

     There are 4,375 small tankers (from 1,000 dwt to 9,999 dwt) totalling 15.8
Mdwt. About 1,199 vessels or 6.4 Mdwt are chemical tankers (certificated to
carry Type 1, 2, or 3 cargos.) Type 1, Type 2, and Type 3 capacity totals about
0.01 mmt, 4.0 mmt, and 2.4 mmt respectively. Included in the small chemical
tanker totals is approximately 2.6 mmt of stainless steel capacity.

     The current orderbook for small tankers totals about 402 vessels, or
approximately 2.2 Mdwt, about 14% of the existing fleet. Scheduled deliveries
for 2007, 2008 and 2009 are 1.3, 0.7 and 0.2 Mdwt, respectively. Included are
about 232 chemical tankers, or 1.4 Mdwt. Scheduled chemical tanker deliveries
for 2007, 2008 and 2009 are 0.8, 0.5 and 0.2 Mdwt, respectively. Type 1, Type 2,
and Type 3 capacity on order totals about 0.0 mmt, 0.9 mmt, and 0.5 mmt
respectively. Included in the small chemical tanker orderbook is approximately
0.2 mmt of stainless steel capacity.

     Chemical tankers of 5,000 to 20,000 dwt typically trade in intraregional
and in short to medium haul interregional markets for specialized cargoes.
Typical intraregional trades for these vessels would include intraregional
trades in Latin America, the Caribbean, Northern Europe and the Mediterranean,
Southeast Asia, and Northeast Asia. Typical interregional trades would be
North-South trades in the Americas, the Mediterranean to and from Northern
Europe, South East Asia to Australia, and trades to and from adjacent Asian
regions (e.g. Southeast Asia to South Asia).

     Chemical tanker capacity is in excess of chemical tanker requirements and
is projected to remain in excess of future chemical tanker requirements.
Therefore many chemical tankers will spend all or part of their lives in clean
product trades. Vessel characteristics that allow transport of more demanding
chemicals, such as stainless steel capacity, would increase the likelihood of
the vessel trading in chemicals.

     While the changes in regulations by themselves are not projected to cause a
shortage of tonnage, product tanker time charter rates and chemical tanker
freight rates have been at historically high levels during 2004, 2005, and 2006,
indicating high levels of demand versus supply. High petroleum product demand in
Asia and the United States required local refineries to run at or near capacity,
leading to high product prices and attractive margins for product imports.
Growth in product imports to the U.S. was supplied by Russia and Europe, while
imports from Latin America were stable. Damage to refineries in the Gulf of
Mexico from the hurricanes in the United States in the fall of 2005 further
increased demand for product imports in the United States. High motor gasoline
demand and prices in the U.S. have supported continued high U.S. imports in
2006.

Dry Bulk Industry

     The international dry bulk cargo market is a global industry and is
affected by many factors throughout the world. Important industry conditions for
dry bulk shipping include world dry bulk commodity production and demand, the
size of the international dry bulk vessels and combination carrier fleet, the
new production and scrapping of oceangoing dry bulk vessels and freight rates.
Both Capesize dry bulk vessels and combination carriers transport dry bulk
cargos, such as iron ore and coal.

Dry Bulk Demand and Production

     Seaborne iron ore trade grew from an estimated 392 mmt in 1996-5 to about
721 mmt in 2006, a CAGR of 6.3%. High demand for steel in China has led to
growth in Chinese iron ore imports from about 44 mmt in 1996 to 326 mmt in 2006,
a CAGR of 22.2%. This increase includes growth of about 51 mmt in 2006, a year
on year increase of about 18%.

     Other Asian countries, such as Japan and Korea, have required increasing
iron ore imports. The top iron ore exporters are Australia and Brazil,
accounting for about 74% of estimated 2006 seaborne iron ore trade. Australian
exports grew from 132 mmt in 1996 to 270 mmt in 2006, including 29 mmt of growth
in 2006. Brazil's iron ore exports increased from 129 mmt in 1996 to 249 mmt in
2006, which includes 25 mmt of growth in 2006.

     Coal trade is made up of thermal coal (steam coal), burned for its heat
value primarily in power generation, and metallurgical coal (coking coal, met
coal), used in steelmaking. Estimated seaborne steam coal trade grew from about
260 mmt in 1996 to about 522 mmt in 2006, a CAGR of 7.2%, which includes 24 mmt
of growth in 2006. Leading coal exporters are Indonesia, Australia, South
Africa, Colombia and China.

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 based on representative sizes of vessels too
large to pass through the Panama Canal. However, most Capesize tonnage (about
91%) is comprised of vessels of 100,000 dwt or greater. Capesizes primarily
transport iron ore and coal on trade routes where lack of port constraints
(especially depth of water) and cargo parcel size limits allow realization of
economies of scale.

     As of March 1, 2007, there were 843 Capesize dry bulk vessels comprising
approximately 132.6 Mdwt. In 2005, 0.2 Mdwt of Capesizes were scrapped, while
10.1 Mdwt were delivered. During 2006, 0.3 Mdwt were scrapped and 0.5 Mdwt were
lost in casualties, while 14.5 Mdwt were delivered. During the first two months
of 2007, none were scrapped, while 1.9 Mdwt were delivered. The current
orderbook is 50.6 Mdwt (334 vessels) with 11.1 Mdwt due for delivery this year,
12.4 Mdwt next year and 11.9 Mdwt in 2009. The remainder are scheduled to be
delivered in 2010 and 2011. Total Capesize combination carrier dwt is 6.3
million, with an estimated 4.4 Mdwt (70%) currently employed in dry bulk trades.
None were delivered since 2003 or are currently on order. None were scrapped in
2005. About 0.3 Mdwt were scrapped during 006. None were scrapped in the first
two months of 2007.

     Improved trade in year 2000 resulted in average one-year time charter rates
of about $17,100 per day. Slower trade growth and high fleet growth in 2001 and
2002 resulted in lower time charter rates, with average one-year time charter
rates of $12,800 per day in 2001 and $12,300 per day in 2002. Throughout 2003,
there were large increases in dry bulk trade and tonnage demand that offset
fleet growth, with one-year time charter rates averaging $26,400 per day. In
2004, led by high Chinese iron ore import growth and strong coal markets,
Capesize one-year time charter rates increased to an average $49,100 per day.
High Chinese imports of iron ore and other dry bulk commodities continued in
2005 and 2006, supported by commodity trade growth elsewhere. Port delays have
further increased vessel demand. Even so, high vessel demand was outpaced by dry
bulk fleet growth in 2005, and dry bulk vessel time charter rates decreased,
with one year Capesize time charter rates decreasing to an average $42,500 per
day in 2005 and $37,300 in 2006. Capesize one year time charter rates have
averaged about $54,000 per day during the first two months of 2007, due to high
winter seasonal demand and ongoing high commodity trade and port congestion.

Industry Scrapping

     In 2004, 2005, and 2006, industry scrapping has been low compared to
historical standards. For example, during the years 1993 through 2003, tanker
scrapping averaged about 11.9 Mdwt per year, while in 2004, 2005, and 2006
tanker scrappings were approximately 7.8 Mdwt, 4.1 Mdwt, and 3.1 Mdwt,
respectively. During the years 1993 through 2003, dry bulk vessel scrapping
averaged approximately 5.8 Mdwt per year, while in 2004, 2005, and 2006 dry bulk
vessel scrappings were about 0.4 Mdwt, 0.7 Mdwt, and 1.9 Mdwt, respectively.
Scrapping during the first two months of 2007 totalled approximately 1.2 Mdwt
for tankers and 0.1 Mdwt for dry bulk vessels.

Passenger Vessel Industry

     Passenger vessel demand is a function of overall demand for the global
cruise industry. Principal sources of cruise passengers are North America,
Europe, Asia and the South Pacific (including Australia and New Zealand), and
South America.

     The estimated number of cruise passengers in North America has grown from
4.9 million in 1997 to 9.7 million in 2005, a CAGR of 9.0%. This increase
includes growth of 0.8 million in 2005, an annual increase of 9.0%. The total
population of North America (excluding Mexico) is estimated at about 329
million. The number of cruise passengers in 2004 comprises an estimated 2.9% of
total population in North America.

     The estimated number of cruise passengers in major European markets is also
growing. The number of cruise passengers from Europe grew from 2.8 million in
2004-3 to 3.2 million in 2005, representing annual growth of 13.5%. In the
United Kingdom, the number of cruise passengers grew from about 1.03 million in
2004 to 1.07 million in 2005, an annual increase of 4%. In Germany, the number
of cruise passengers grew from 583,000 in 2004 to 639,000 in 2005, an annual
increase of 10%. In Italy, the number of passengers grew from 400,000 in 2004 to
514,000 in 2005, an annual increase of 29%, while in Spain the number grew from
300,000 to 379,000, an increase of 26%.

     The total population of Western Europe is estimated at about 396 million,
and the number of cruise passengers in 2005 comprises an estimated 0.8% of total
population in Western Europe.

     As of March 1, 2007, there were approximately 265 vessels engaged in
international ocean cruise service with a standard lower berth capacity of
approximately 313,000. This figure represents the total number of lower berths,
estimated at two passengers per cabin; the actual passenger count may be higher
due to the availability of upper berths, cots, or other arrangements. In 2005,
approximately four vessels with a standard lower berth capacity of 9,456 were
delivered, and five vessels with a standard lower berth capacity of 4,282 were
scrapped. In 2006, seven vessels with a standard passenger capacity of
approximately 18,360 were delivered, and none were scrapped. No deliveries or
scrapping have occurred in the first two months of 2007.

     The current orderbook is approximately 32 vessels with a standard lower
berth capacity of approximately 95,906. In 2007, about nine vessels with a
standard lower berth capacity of approximately 26,538 are under contract to be
delivered. In 2008, approximately nine vessels with a standard lower berth
capacity of approximately 24,584 are scheduled to be delivered, and in 2009
approximately eight vessels, with a standard lower berth capacity of
approximately 26,716, are scheduled to be delivered. In 2010, five vessels with
a standard lower berth capacity of 14,416 are scheduled to be delivered. In
2011, one vessel with a standard lower berth capacity of 3,652 is scheduled to
be delivered. All of these vessels have a standard lower berth capacity of 2,000
or more.

Environmental and Government Regulation

     Government regulation significantly affects our operations, including the
ownership and operation of our vessels. Our operations are subject to
international conventions, national, state and local laws, and regulations in
force in international waters and the jurisdictional waters of the countries in
which our vessels may operate or are registered, including OPA, the
Comprehensive Environmental Response, Compensation, and Liability Act, or
CERCLA, the U.S. Port and Tanker Safety Act, the Act to Prevent Pollution from
Ships, regulations adopted by the IMO and the European Union, various volatile
organic compound emission requirements, the IMO/U.S. Coast Guard pollution
regulations and various SOLAS amendments, as well as other regulations.
Compliance with these requirements entails significant expense, including vessel
modifications and implementation of certain operating procedures.

     A variety of governmental and private entities, each of which may have
unique requirements, subject our vessels to both scheduled and unscheduled
inspections. These entities include the local port authorities (U.S. Coast
Guard, harbor master or equivalent), classification societies, flag state
administration (country of registry) and charterers, particularly terminal
operators. Certain of these entities require us to obtain permits, licenses and
certificates for the operation of our vessels. Failure to maintain necessary
permits or approvals could require us to incur substantial costs or temporarily
suspend operation of one or more of our vessels.

     We believe that the heightened level of environmental and quality concerns
among insurance underwriters, regulators and charterers is leading to greater
inspection and safety requirements on all vessels and may accelerate the
scrapping of older vessels throughout the industry. Increasing environmental
concerns have created a demand for vessels that conform to the stricter
environmental standards. We are required to maintain operating standards for all
of our vessels for operational safety, quality maintenance, continuous training
of our officers and crews, and compliance with U.S. and international
regulations. We believe that the operation of our vessels is in substantial
compliance with applicable environmental laws and regulations; however, because
such laws and regulations are frequently changed and may impose increasingly
stricter requirements, such future requirements may limit our ability to do
business, increase our operating costs, force the early retirement of our
vessels, and/or affect their resale value, all of which could have a material
adverse effect on our financial condition and results of operations.

Environmental Regulation--International Maritime Organization, or IMO

     The IMO has negotiated international conventions that impose liability for
oil pollution in international waters and a signatory's territorial waters. For
example, the International Convention for the Prevention of Pollution from Ships
or MARPOL, imposes environmental standards on the shipping industry relating to
oil spills, management of garbage, the handling and disposal of noxious liquids,
harmful substances in packaged forms, sewage and air emissions. In particular,
MARPOL requirements impose phase-out dates for vessels that are not certified as
double hull. Two of our Suezmax OBO vessels currently do not meet the
configuration criteria and will require modifications to comply with these
criteria before the end of 2010. These modifications will not involve major
steel work. Our vessel, Miranda I, does not currently comply with the double
hull requirement unless she limits her loading to center tanks only. However, we
expect to retrofit her to full double hull compliance by the second quarter of
2007. Annex III of MARPOL regulates the transportation of marine pollutants,
including standards on packing, marking, labeling, documentation, stowage,
quality limitations and pollution prevention. These requirements have been
expanded by the International Maritime Dangerous Goods Code, which imposes
additional standards for all aspects of the transportation of dangerous goods
and marine pollutants by sea. 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 was ratified in May 2004, and became
effective in May 2005. Annex VI sets limits on sulphur oxide and nitrogen oxide
emissions from vessel exhausts and prohibits deliberate emissions of ozone
depleting substances, such as chlorofluorocarbons. Annex VI also includes a
global cap on the sulphur content of fuel oil and allows for special areas to be
established with more stringent controls on sulphur emissions. Additional or new
conventions, laws and regulations may be adopted that could adversely affect our
ability to manage our ships.

     The operation of our vessels is also affected by the requirements set forth
in the ISM Code. The ISM Code requires vessel owners and bareboat charterers to
develop and maintain 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 safe operation and describing
procedures for dealing with emergencies. The ISM Code requires that vessel
operators obtain a safety management certificate for each vessel they operate.
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. The
failure of a vessel owner or bareboat charterer to comply with the ISM Code may
subject such party to increased liability, may decrease available insurance
coverage for the affected vessels, and may result in a denial of access to, or
detention in, certain ports. Currently, each of the vessels in our fleet is ISM
code-certified. However, there can be no assurance that such certification will
be maintained indefinitely.

Environmental Regulations--The United States Oil Pollution Act of 1990, or OPA

     The United States Oil Pollution Act of 1990, or OPA, established an
extensive regulatory and liability regime for the protection and cleanup of the
environment from oil spills. OPA affects all owners and operators whose vessels
trade in the United States, its territories and possessions or whose vessels
operate in United States waters, which includes the United States territorial
sea and its 200 nautical mile exclusive economic zone.

     Under OPA, vessel owners, operators and bareboat charterers are
"responsible parties" and are liable without regard to fault (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 discharges or threatened discharges of oil from their vessels, including
bunkers (vessel fuel).

     OPA limits liability of a responsible party 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). OPA also limited the liability of
responsible parties to the greater of $600 per gross ton or $0.5 million per dry
bulk vessel that is over 300 gross tons (subject to possible adjustment for
inflation). Amendments to OPA signed into law on July 11, 2006 increased the
limits on the liability of responsible parties to the greater of $1,900 per
gross ton or $16.0 million per tanker that is over 3,000 gross tons (effective
October 9, 2006), and $950 per gross ton or $800,000 per dry bulk vessel that is
over 300 gross tons (effective immediately). These OPA liability limits do not
apply if an incident was caused by a violation of certain construction or
operating regulations or a responsible party's gross negligence or willful
misconduct, or if the responsible party fails or refuses to report the incident
or to cooperate and assist in connection with oil removal activities. In
addition, CERCLA, which applies to the discharge of hazardous substances (other
than oil) whether on land or at sea, 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, unless the
incident is caused by gross negligence, willful misconduct, or a violation of
certain regulations, in which case liability is unlimited.

     We currently maintain, for each of our vessels, pollution liability
coverage insurance in the amount of $1 billion per incident. If the damages from
a catastrophic spill exceeded our insurance coverage, it could have a material
adverse effect on our business and the results of operations.

     The financial responsibility regulations issued under OPA require owners
and operators of vessels to establish and maintain with the United States Coast
Guard evidence of financial responsibility in the amount of $1,500 per gross
ton, which combines the OPA limitation on liability of $1,200 per gross ton and
the CERCLA limit of $300 per gross ton. The U.S. Coast Guard has indicated that
it intends to propose a rule that will increase the amount of required evidence
of financial responsibility to $2,200 per gross ton, to reflect the increase in
liability limits under OPA as described above. Under the regulations, vessel
owners and operators may evidence their financial responsibility by showing
proof of insurance, surety bond, self-insurance, or guaranty and are required
only to demonstrate evidence of financial responsibility in an amount sufficient
to cover the vessels in the fleet having the greatest maximum liability under
OPA.

     The Coast Guard's regulations concerning certificates of financial
responsibility provide, in accordance with OPA, that claimants may bring suit
directly against an insurer or guarantor that furnishes certificates of
financial responsibility. In the event that such insurer or guarantor is sued
directly, it is prohibited from asserting any contractual defense that it may
have had against the responsible party and is limited to asserting those
defenses available to the responsible party and the defense that the incident
was caused by the willful misconduct of the responsible party. Certain
organizations, which had typically provided certificates of financial
responsibility under pre-OPA laws, including the major protection and indemnity
organizations have declined to furnish evidence of insurance for vessel owners
and operators if they are subject to direct actions or required to waive
insurance policy defenses. Under the self-insurance provisions, the vessel owner
or operator must have a net worth and working capital, measured in assets
located in the United States against liabilities located anywhere in the world,
that exceeds the applicable amount of financial responsibility. We have complied
with the Coast Guard regulations by providing a financial guaranty evidencing
sufficient self-insurance.

     OPA expressly 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 oil spills. In some cases, states which have enacted such
legislation, have not yet issued implementing regulations defining vessels
owners' responsibilities under these laws. OPA also amended the Federal Water
Pollution Control Act to require owners and operators of vessels to adopt
contingency plans for reporting and responding to oil spill scenarios up to a
"worst case" scenario and to identify and ensure, through contracts or other
approved means, the availability of necessary private response resources to
respond to a "worst case discharge." In addition, periodic training programs for
shore and response personnel and for vessels and their crews are required. The
U.S. Coast Guard has approved our vessel response plans.

     OPA also requires that tankers over 5,000 gross tons calling at U.S. ports
have double hulls if contracted after June 30, 1990 or delivered after January
1, 1994. Furthermore, under OPA, oil tankers without double hulls will not be
permitted to come to U.S. ports or trade in U.S. waters by 2015. Although all of
our oceangoing vessels are double hull, four of these vessels are subject to
phase-out under OPA due to configuration requirements. Based on current OPA
requirements, these four vessels will not be eligible to carry oil as cargo
within the 200 nautical mile United States exclusive economic zone starting in
2014, except that these tankers may trade in U.S. waters until 2015 if their
operations are limited to discharging their cargos at the Louisiana Offshore Oil
Port of off-loading by lightering within authorized lightering zones more than
60 miles offshore.

     We believe we are in substantial compliance with OPA, CERCLA and all
applicable state regulations in the ports where our vessels call.

Environmental Regulation--Other Environmental Initiatives

     In July 2003, in response to the Prestige oil spill in November 2002, the
European Union adopted regulation that accelerates the IMO single hull tanker
phase-out timetable. The European Union is also considering legislation that
will affect the liability of owners for oil pollution. It is difficult to
predict what legislation, if any may be promulgated by the European Union or any
other country or authority.

     Although the United States is not a party thereto, many countries have
ratified and follow the liability scheme adopted by the IMO and set out in the
International Convention of Civil Liability for Oil Pollution Damage, or the
CLC, and the Convention for the Establishment of an International Fund for Oil
Pollution of 1971, as amended. Under these conventions, a vessel's registered
owner is strictly liable for pollution damage caused on the territorial waters
of a contracting state by discharge of persistent oil, subject to certain
complete defenses. Many of the countries that have ratified the CLC have
increased the liability limits through a 1992 Protocol to the CLC. The liability
limits in the countries that have ratified this Protocol are, currently,
approximately $6.6 million plus approximately $931 per gross registered ton
above 5,000 gross tons with an approximate maximum of $132.5 million per vessel.
As the CLC calculates liability in terms of a basket of currencies, these
figures are based on currency exchange rates as of July 14, 2006. The right to
limit liability is forfeited under the CLC where the spill is caused by the
owner's actual fault or privity and, under the 1992 Protocol, where the spill is
caused by the owner's intentional or reckless conduct. Vessels trading to
contracting states must provide evidence of insurance covering the limited
liability of the owner. In jurisdictions where the CLC 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 the CLC.

     In addition, the U.S. Clean Water Act, or CWA, prohibits the discharge of
oil or hazardous substances to navigable waters without a permit, and imposes
strict liability in the form of penalties for any unauthorized discharges. The
CWA also imposes substantial liability for the costs of removal, remediation and
damages and compliments the remedies available under the more recent OPA and
CERCLA, discussed above. Currently, under U.S. Environmental Protection Agency,
or EPA, regulations, vessels are exempt from the requirement to obtain CWA
permits for the discharge in U.S. ports of ballast water and other substances
incidental to the normal operation of vessels. However, on March 30, 2005, a
U.S. District Court ruled that the EPA exceeded its authority in creating an
exemption for ballast water. On September 18, 2006, the court issued an order
invalidating the blanket exemption in the EPA's regulations for all discharges
incidental to the normal operation of a vessel as of September 30, 2008, and
directing the EPA to develop a system for regulating all discharges from vessels
by that date. Under the court's ruling, owners and operators of vessels visiting
U.S. ports would be required to comply with the CWA permitting program to be
developed by the EPA or face penalties. Although the EPA has appealed this
decision, if the court's order is ultimately upheld, we will incur certain costs
to obtain CWA permits for our vessels. This could require the instillation of
equipment on our vessels to treat ballast water before it is discharged at
substantial cost and/or otherwise restrict some or all of our vessels from
entering waters of the United States that are subject to this ruling.

     At the international level, the IMO adopted an International Convention for
the Control and Management of Ships' Ballast Water and Sediments in February
2004 (the "BWM Convention"). The BWM Convention's implementing regulations call
for a phased introduction of mandatory ballast water exchange requirements
(beginning in 2009), to be replaced in time with mandatory concentration limits.
The BWM Convention will not enter into force until 12 months after it has been
adopted by 30 member states, the combined merchant fleets of which represent not
less than 35% of the gross tonnage of the world's merchant shipping.

     If the mid-ocean exchange of ballast water is made mandatory throughout the
United States or at the international level, or if water treatment requirements
are implemented, the cost of compliance could increase for ocean carriers.
Although we do not believe that the costs of compliance with a mandatory
mid-ocean ballast exchange would be material, it is difficult to predict the
overall impact of such a requirement on the business.

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 U.S. 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 SOLAS created a
new chapter of the convention dealing specifically with maritime security. The
new chapter went into effect in July 2004 and imposes various detailed security
obligations on vessels and port authorities, most of which are contained in the
newly created International Ship and Port Facilities Security, or the ISPS Code.
We are in compliance with the 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 vessel security alert systems;

     o    the development of vessel security plans; and

     o    compliance with flag state security certification requirements.

Inspection by Classification Societies

     Every oceangoing vessel must be "classed" by a classification society. The
classification society certifies that the vessel is "in class," signifying that
the vessel has been built and maintained in accordance with the rules of the
classification society and complies with applicable rules and regulations of the
vessel's country of registry and the international conventions of which that
country is a member. In addition, where surveys are required by international
conventions and corresponding laws and ordinances of a flag state, the
classification society will undertake them on application or by official order,
acting on behalf of the authorities concerned.

     The classification society also undertakes on request other surveys and
checks that are required by regulations and requirements of the flag state.
These surveys are subject to agreements made in each individual case and/or to
the regulations of the country concerned.

     For maintenance of the class, regular and extraordinary surveys of hull,
machinery, including the electrical plant, and any special equipment classed are
required to be performed as follows:

     Annual Surveys. For oceangoing vessels, annual surveys are conducted for
the hull and the machinery, including the electrical plant, and, where
applicable, for special equipment classed, at intervals of 12 months from the
date of commencement of the class period indicated in the certificate.

     Intermediate Surveys. Extended annual surveys are referred to as
intermediate surveys and typically are conducted two and one-half years after
commissioning and each class renewal. Intermediate surveys may be carried out on
the occasion of the second or third annual survey.

     Special Surveys. Special surveys, also known as class renewal surveys, are
carried out every five years for the vessel's hull, machinery, including the
electrical plant, and for any special equipment classed, at the intervals
indicated by the character of classification for the hull. At the special
survey, the vessel is thoroughly examined, including audio-gauging to determine
the thickness of the steel structures. Should the thickness be found to be less
than class requirements, the classification society would prescribe steel
renewals. The classification society may grant a one-year grace period for
completion of the special survey. Substantial amounts of funds may have to be
spent for steel renewals to pass a special survey if the vessel experiences
excessive wear and tear. In lieu of the special survey, a vessel owner has the
option of arranging with the classification society for the vessel's hull or
machinery to be on a continuous survey cycle, in which every part of the vessel
would be surveyed within a five-year cycle. This process is also referred to as
continuous class renewal. We have made arrangements with the classification
societies for our vessels to be on a continuous survey cycle.

     Currently our oceangoing vessels are scheduled for intermediate surveys and
special surveys as follows:

              Intermediate survey                Special survey
              -------------------                --------------

          Year        No. of vessels        Year        No. of vessels
          ----        --------------        ----        --------------
          2006                 0            2006                 3
          2007                 3            2007                 4
          2008                 2            2008                 0
          2009                 8            2009                 1
          2010                 0            2010                 4
          2011                 0            2011                 4

     All areas subject to survey as defined by the classification society are
required to be surveyed at least once per class period, unless shorter intervals
between surveys are prescribed elsewhere. The period between two subsequent
surveys of each area must not exceed five years.

     Most oceangoing vessels are also drydocked every 30 to 36 months for
inspection of the underwater parts and for repairs related to inspections. If
any defects are found, the classification surveyor will issue a "recommendation"
which must be rectified by the vessel owner within prescribed time limits.

     Most insurance underwriters make it a condition for insurance coverage that
a vessel be certified as "in class" by a classification society which is a
member of the International Association of Classification Societies. All our
oceangoing vessels are certified as being "in class."

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.

     We believe that we maintain insurance coverage against various casualty and
liability risks associated with our business that we consider to be adequate
based on industry standards and the value of our fleet, including hull and
machinery and war risk insurance, loss of hire insurance at certain times for
certain vessels, protection and indemnity insurance against liabilities to
employees and third parties for injury, damage or pollution, strike covers for
certain vessels and other customary insurance. While we believe that our present
insurance coverage is adequate, we cannot 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 and War Risk Insurance

     We maintain marine hull and machinery and war risk insurance, which
includes the risk of actual or constructive total loss, for our wholly-owned
vessels. At times, we also obtain for part of our fleet increased value coverage
and additional freight insurance during periods of improved market rates, where
applicable. This increased value coverage and additional freight coverage
entitles us, in the event of total loss of a vessel, to some recovery for
amounts not otherwise recoverable under the hull and machinery policy. When we
obtain these additional insurances, our vessels will each be covered for at
least their fair market value, subject to applicable deductibles (and some may
include limitations on partial loss). We cannot assure you, however, that we
will obtain these additional coverages on the same or commercially reasonable
terms, or at all, in the future.

Loss of Hire

     We maintain loss of hire insurance at certain times for certain vessels.
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 loss of time to the vessel. Although loss of hire insurance will cover
up to ninety days of lost earnings, we must bear the applicable deductibles
which generally range between the first 14 to 30 days of lost earnings. 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, fines and other penalties imposed by customs or other
authorities, 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, wreck removal and other risks. Coverage
is limited for vessels in our Ocean Business to approximately $4.25 billion with
the exception of oil pollution liability, which is limited to $1.0 billion per
vessel per incident. Vessels in our River Business have lower amounts of
coverage.

     This protection and indemnity insurance coverage is provided by protection
and indemnity associations, 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. The P&I
Clubs in which our vessels are entered are currently members of the
International Group of P&I Associations, or the International Group and are
reinsured themselves and through the International Group in Lloyds of London and
other first class reinsurance markets. We may be subject to calls based on each
Club's yearly results. Similarly, the same P&I Clubs provide freight demmurage
and defense insurance which, subject to applicable deductibles, covers all legal
expenses in case of disputes, arbitrations and other proceedings related to our
vessels.

Legal Proceedings

     Ultrapetrol S.A. is involved in a customs dispute with the Brazilian
Customs Tax Authorities over the alleged infringement of customs regulations by
the Alianza G-3 and Alianza Campana (collectively, the "Alianza Campana") in
Brazil during 2004. As a result, the Brazilian Customs Tax Authorities commenced
an administrative proceeding and applied the penalty of apprehension of the
Alianza Campana which required the Alianza Campana to remain in port or within a
maximum of five nautical miles from the Brazilian maritime coast. The maximum
customs penalty that could be imposed would be confiscation of the Alianza
Campana, which is estimated by the Brazilian Customs tax authorities to be
valued at $4.56 million. The Secretary of the Brazilian Federal Revenue decided
to cancel the penalty of confiscation of the Alianza Campana by means of a
decision issued on August 14, 2006. However, the Secretary conditioned his
decision on the compliance with the following requirements: (1) the
classification of the Alianza Campana under the REPETRO regime and, if such
classification is confirmed; (2) the payment, by Ultrapetrol S.A. of a penalty
in the amount of one percent (1%) of the customs value of the Alianza Campana,
or $45,600.

     In order to comply with the above described requirements, our customer
Petroleo Brasileiro S.A. ("Petrobras"), presented, on September 15, 2006, a
formal request to obtain from Brazilian Customs Tax Authorities the recognition
of the classification of the Alianza Campana under the REPETRO regime. The
customs authorities recognized the classification of the Alianza Campana under
the REPETRO regime. Upon formal recognition we subsequently paid the penalty
mentioned above, and, therefore, the confiscation penalty was automatically
canceled and the administrative proceeding finalized with no further
consequences to us.

     On September 21, 2005, the local Customs Authority of Ciudad del Este,
Paraguay issued a finding that certain UABL entities owe taxes to that authority
in the amount of $2.2 million, together with a fine for non-payment of the taxes
in the same amount, in respect of certain operations of our River Business for
the prior three-year period. This matter was referred to the Central Customs
Authority of Paraguay (the "Paraguay Customs Authority"). We believe that this
finding is erroneous and UABL has formally replied to the Paraguay Customs
authority contesting all of the allegations upon which the finding was based.

     After review of the entire case the Paraguayan Central Tax Authorities who
have jurisdiction over the matter have confirmed we have no liability with
respect to two of the three matters at issue, while they held a dissenting view
on the third issue. Through a Resolution which was provided to UABL on October
13, 2006, the Paraguayan Undersecretary for Taxation has confirmed that, in his
opinion, the Company is liable for a total of approximately $0.5 million and has
applied a fine of 100% of this amount. On November 24, 2006, a court confirmed
that UABL is not liable for the first two issues. The Company has entered a plea
with the respective court contending the interpretation of the third issue where
the Company claims to be equally non-liable. We have been advised by UABL's
counsel in the case that there is only a remote possibility that a court would
find UABL liable for any of these taxes or fines.

     On November 3, 2006 the Bolivian Tax Authority (Departamento de
Inteligencia Fiscal de la Gerencia Nacional de Fiscalizacion) issued a notice in
the Bolivian press advising that UABL International S.A. (a Panamanian
subsidiary of the Company) would owe taxes to that authority in the amount of
approximately $ 2.5 million (including interest) together with certain fines
that have not been determined yet. We have not yet received notice of any claim.
We believe that this finding is incorrect and UABL International S.A. will
formally reply to the Bolivian Tax Authority contesting the allegations of the
finding when we are notified by the Bolivian Authority. We have been advised by
our local counsel in the case that there is only a remote possibility that UABL
International S.A. would be found liable for any of these taxes or fines.

     Various other legal proceedings involving us may arise from time to time in
the ordinary course of business. However, we are not presently involved in any
other legal proceedings that, if adversely determined, would have a material
adverse effect on us.

Dividend Policy

     The payment of dividends is in the discretion of our board of directors. We
have not paid a dividend to date, and we anticipate retaining most of our future
earnings, if any, for use in our operations and the expansion of our business.
Any determination as to dividend policy will be made by our board of directors
and will depend on a number of factors, including the requirements of Bahamian
law, our future earnings, capital requirements, financial condition and future
prospects and such other factors as our board of directors may deem relevant.
Bahamian law generally prohibits the payment of dividends other than from
surplus, when a company is insolvent or if the payment of the dividend would
render the company insolvent.

     Our ability to pay dividends is restricted by the Notes, which we issued in
2004. In addition, we may incur expenses or liabilities, including extraordinary
expenses, which could include costs of claims and related litigation expenses,
or be subject to other circumstances in the future that reduce or eliminate the
amount of cash that we have available for distribution as dividends or for which
our board of directors may determine requires the establishment of reserves. The
payment of dividends is not guaranteed or assured and may be discontinued at any
time at the discretion of our board of directors. Because we are a holding
company with no material assets other than the stock of our subsidiaries, our
ability to pay dividends is dependent upon the earnings and cash flow of our
subsidiaries and their ability to pay dividends to us. If there is a substantial
decline in any of the markets in which we participate, our earnings will be
negatively affected, thereby limiting our ability to pay dividends.

C.   ORGANIZATIONAL STRUCTURE

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

     Ultrapetrol (Bahamas) Limited has ownership in the following companies:

<TABLE>
<CAPTION>
    COMPANY NAME                                                     INCORPORATION JURISDICTION
    <S>                                                                  <C>
    Ultrapetrol (Bahamas) Limited                                                Bahamas
       - 100% of Kattegat Shipping Inc.                                           Panama
       - 100% of Majestic Maritime Ltd.                                          Bahamas
       - 100% of Moorfields Trading Inc.                                          Panama
       - 100% of Stanyan Shipping Inc.                                            Panama
       - 100% of Hallandale Comercial Corp.                                       Panama
       - 100% of Avemar Holdings (Bahamas)  Ltd.                                 Bahamas
       - 100% of Mansan S.A.                                                     Uruguay
       - 100% of Massena Port S.A.                                               Uruguay
          - 100% of Dampierre Holdings Spain S.L.                                  Spain
             - 99% of Oceanpar S.A.                                             Paraguay
                - 7% of Ultrapetrol S.A.                                       Argentina
             - 50% of Parfina S.A.                                              Paraguay
             - 93% of Ultrapetrol S.A.                                         Argentina
       - 100% of Internationale Maritime S.A.                                    Bahamas
       - 100% of Parkwood Commercial Corp.                                        Panama

       - 100% of Princely International Finance Corp.                             Panama
          - 100% of Baldwin Maritime Inc.                                         Panama
          - 100% of Corporacion de Navegacion Mundial S.A.                         Chile
             - 49% of Maritima SIPSA S.A.                                          Chile
             - 50% of Parfina S.A.                                              Paraguay
          - 100% of Danube Maritime Inc.                                          Panama
          - 100% of General Ventures Inc.                                        Liberia
          - 100% of Imperial Maritime Ltd.                                       Bahamas
          - 100% of Imperial Maritime Ltd. (Bahamas) Inc.                         Panama
          - 100% of Fulton Shipping Inc.                                          Panama
          - 100% of Brinkley Shipping Inc.                                        Panama
          - 100% of Pelorus Maritime Inc.                                         Panama
          - 100% of Panpetrol Shipping S.A.                                       Panama
          - 100% of Kingly Shipping Ltd.                                         Bahamas
          - 100% of Monarch Shipping Ltd.                                        Bahamas
          - 100% of Noble Shipping Ltd.                                          Bahamas
          - 1% of Oceanpar S.A.                                                 Paraguay
          - 100% of Oceanview Maritime Inc.                                       Panama
          - 100% of Regal International Investments S.A.                          Panama
             - 100% of Bayham Investments S.A.                                    Panama

             - 100% of Draco Investments S.A.                                     Panama
                - 100% of Cavalier Shipping Inc.                                  Panama
          - 100% of Riverview Commercial Corp.                                    Panama
          - 100% of Sovereign Maritime Ltd.                                      Bahamas
          - 100% of Tipton Marine Inc.                                            Panama
          - 100% of Ultrapetrol International S.A.                                Panama
          - 100% of Ultrapetrol de Venezuela C.A.                              Venezuela
          - 100% of Stately Shipping Ltd.                                        Bahamas
       - 100% of Stanmore Shipping Inc.                                           Panama
       - 60% of Ultracape (Holdings) Ltd.                                        Bahamas


          - 100% of Palmerston Shipping Inc.                                      Panama
          - 100% of Ultracape International S.A.                                  Panama
             - 100% of Invermay Shipping Inc.                                     Panama
             - 100% of Braddock Shipping Inc.                                     Panama
          - 100% of Wallasey Shipping Inc.                                        Panama
       - 94.45% of UP Offshore (Bahamas) Ltd.                                    Bahamas
          - 100% of UP Offshore (Panama) S.A.                                     Panama
             - 100% of Castlestreet Shipping LLC                           Delaware, USA
             - 100% of Packet Maritime Inc.                                       Panama
             - 100% of Padow Shipping Inc.                                        Panama
             - 100% of Pampero Navigation Inc.                                    Panama
             - 100% of UP Offshore (UK) Ltd.                              United Kingdom
          - 100% of UP Offshore Uruguay S.A.                                     Uruguay
             - 100% of Agriex Agenciamentos,
               Afretamentos e Apoio Maritimo Ltda                                 Brazil
             - 99.99% of UP Offshore Apoio Maritimo Ltda.                         Brazil
                - 100% of UP Offshore Apoio Maritimo (Panama) Inc.                Panama
          - 100% of UP Offshore (Holdings) Ltd.                                  Bahamas
       - 100% of UP River (Holdings) Ltd.                                        Bahamas
          - 50% of UABL Limited                                                  Bahamas
       - 100% of UP River Terminals (Panama) S.A.                                 Panama
          - 50% of UABL Terminals Ltd.                                           Bahamas
             - 100% of UABL Terminals (Paraguay) S.A.                             Panama
                - 50% of Obras Terminales y Servicios S.A.                      Paraguay
                - 50% of Puertos del Sur S.A.                                   Paraguay
       - 100% of UPB (Panama) Inc.                                                Panama
          - 50% of UABL Terminals Ltd.                                           Bahamas
          - 50% of UABL Limited                                                  Bahamas
             - 100% of Arlene Investment Inc.                                     Panama
                - 1% of Compania Naviera del Magdalena S.A.                     Colombia
             - 100% of Blueroad Finance Inc.                                      Panama
                - 100% of Candies Paraguayan Ventures LLC                 Louisiana, USA
                - 1% of Compania Naviera del Magdalena S.A.                     Colombia
             - 100% of Marine Financial Investment Corp.                          Panama
                - 1% of Compania Naviera del Magdalena S.A.                     Colombia
             - 100% of Corydon International S.A.                                Uruguay
                - 100% of Cedarino S.L.                                            Spain
                   - 90% of Parabal S.A.                                        Paraguay
                   - 97.5% of Riverpar S.A.                                     Paraguay
                   - 99.6% of Sernova S.A.                                     Argentina
                   - 97.5% of UABL Paraguay S.A.                                Paraguay
                   - 96.6% of UABL S.A.                                        Argentina
                   - 90% of Yataity S.A.                                        Paraguay
                   - 63.3% of Agencia Maritima Argenpar S.A.                   Argentina
             - 100% of Lonehort S.A.                                             Uruguay
             - 100% of UP River Ltd.                                             Bahamas
                - 100% of UABL International S.A.                                 Panama
                   - 96% of Compania Naviera del Magdalena S.A.                 Colombia
                - 100% of Thurston Shipping Inc.                                  Panama
                   - 47.1% of Compania Paraguaya de
                     Transporte Fluvial S.A.                                    Paraguay
                   - 10% of Parabal S.A.                                        Paraguay
                   - 2.5% of Riverpar S.A.                                      Paraguay
                   - 0.4% of Sernova S.A.                                      Argentina
                   - 2.5% of UABL Paraguay S.A.                                 Paraguay
                   - 3.4% of UABL S.A.                                         Argentina
                      - 36.7% of Agencia Maritima Argenpar S.A.                Argentina
                   - 10% of Yataity S.A.                                        Paraguay
                      - 1% of Compaoia Naviera del Magdalena S.A.               Colombia
             - 100% of UABL Barges (Panama) Inc.                                  Panama
                - 52.9% of Compania Paraguaya de Transporte
                  Fluvial S.A.                                                  Paraguay
             - 100% of UABL S.A.                                                  Panama
       - 100% of Ravenscroft Shipping (Bahamas) S.A.                             Bahamas
          - 100% of Ravenscroft Ship Management Ltd.                             Bahamas
             - 100% of Ravenscroft Ship Management Ltd.                  United Kingdom)
          - 100% of Zulia Shipping Inc.                                           Panama
             - 100% of Zulia Ship Management Ltd.                                Bahamas
          - 100% of Tecnical Services S.A.                                       Uruguay
          - 100% of Ravenscroft Holdings Inc.                               Florida, USA
             - 100% of Ravenscroft Ship Management Inc.                     Florida, USA
             - 100% of Elysian Ship Management Inc.                         Florida, USA
          - 100% of Elysian Ship Management Ltd.                                 Bahamas
</TABLE>

D.   PROPERTY PLANTS, AND EQUIPMENT

     Ravenscroft is headquartered in our own 16,007 square foot building located
at 3251 Ponce de Leon Boulevard, Coral Gables, Florida, United States of
America.

     In addition we own a repair facility and dry dock at Pueblo Esther,
Argentina, and through 50% joint venture participations, two grain loading ports
in Paraguay. We also own land large enough for the construction of two terminals
in Argentina. We also rent offices in Argentina, Brazil, and Paraguay and a
shipyard in Argentina.

ITEM 4A - UNRESOLVED STAFF COMMENTS

None.

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The following discussion should be read in conjunction with the information
included under the caption "Selected Financial Data," our historical
consolidated financial statements and their notes included elsewhere in this
annual report. This discussion contains forward-looking statements. For a
discussion on the accuracy of these statements please refer to the section of
this report titled "Cautionary Statement Regarding Forward Looking Statements"
that reflect our current views with respect to future events and financial
performance. Our actual results may differ materially from those anticipated in
these forward-looking statements as a result of certain factors, such as those
set forth in the section entitled "Risk Factors" in Item 3.D of this report and
elsewhere in this annual report.

A.   OPERATING RESULTS

Our Company

     We are an industrial shipping company serving the marine transportation
needs of clients in the markets on which we focus. We serve the shipping markets
for grain, forest products, minerals, crude oil, petroleum, and refined
petroleum products, as well as the offshore oil platform supply market, and the
leisure passenger cruise market through our operations in the following four
segments of the marine transportation industry.

     o   Our River Business, with 502 barges, is the largest owner and operator
         of river barges and pushboats that transport dry bulk and liquid cargos
         through the Hidrovia Region of South America, a large area with growing
         agricultural, forest and mineral related exports. This region is
         crossed by navigable rivers which flow through Argentina, Bolivia,
         Brazil, Paraguay and Uruguay, to ports serviced by ocean export
         vessels. According to Doll Shipping Consultancy, or DSC, as a whole,
         these countries are estimated to account for approximately 47% of world
         soybean production in 2006, from 29% in 1995.

     o   Our Offshore Supply Business owns and operates vessels that provide
         critical logistical and transportation services for offshore petroleum
         exploration and production companies, in the North Sea and the coastal
         waters of Brazil. Our Offshore Supply Business fleet currently consists
         of proprietarily designed, technologically advanced platform supply
         vessels, or PSVs, including four in operation and four under
         construction. Two PSVs are under construction in Brazil and are
         contracted to be delivered in the second quarter of 2007 and in 2008,
         respectively. We recently contracted with a yard in India to construct
         two PSVs for delivery commencing in 2009, with an option to build two
         more.

     o   Our Ocean Business owns and operates eight oceangoing vessels,
         including three Handysize/small product tankers that we intend to use
         in the South American coastal trade where we have preferential rights
         and customer relationships, three versatile Suezmax/Oil-Bulk-Ore, or
         Suezmax OBO, vessels, one Aframax tanker and one semi-integrated
         tug/barge unit. Our Ocean Business fleet has an aggregate capacity of
         approximately 651,000 dwt, and our three Suezmax OBOs are capable of
         carrying either dry bulk or liquid cargos, providing flexibility as
         dynamics change between these market sectors.

     o    Our Passenger Business fleet consists of two vessels with a total
          carrying capacity of approximately 1,600 passengers, and operates
          primarily in the European cruise market. We currently employ our
          largest passenger vessel under a multi-year seasonal charter with a
          European tour operator and the other vessel will be employed in the
          Aegean Sea for the European summer season of 2007. In addition, we
          have operated one of our vessels during periods outside the European
          travel season for certain events.

     Our business strategy is to continue to operate as a diversified marine
transportation company with an aim to maximize our growth and profitability
while limiting our exposure to the cyclical behavior of individual sectors of
the transportation industry.

Developments in 2006

     On March 20, 2006, we purchased all of the issued and outstanding capital
stock of Ravenscroft Shipping (Bahamas) S.A., or Ravenscroft, from two of our
related parties, Crosstrade Maritime Inc., and Crosstrees Maritime Inc., for the
purchase price of $11.5 million. The purchase price included a building in Coral
Gables, Florida, U.S., independently valued at $4.5 million. Ravenscroft
Shipping (Bahamas) S.A. is a holding company that is the ultimate parent of our
vessel managers, Ravenscroft Ship Management Inc., which manages the vessels in
our Ocean Business and Offshore Supply Business, and Elysian Ship Management
Inc., which manages the vessels in our Passenger Business. The purchase price
was paid in full with the proceeds of our initial public offering of 12,500,000
shares which closed on October 18, 2006 (our "IPO"). In compliance with the
requirements of our indenture related to the Notes, we obtained a fairness
opinion from an internationally recognized accounting firm in connection with
this acquisition.

     On March 20, 2006, Los Avellanos and Avemar Holdings (Bahamas) Ltd., or
Avemar, two of our shareholders, cancelled their agreement pursuant to which
Avemar had previously granted Los Avellanos an irrevocable proxy to vote our
shares owned by Avemar and agreed to cancel the shares owned by Avemar upon the
closing of our IPO.

     On March 20, 2006, we exercised our option to repurchase from Los Avellanos
25,212 shares of our common stock for a total consideration of $0.9 million, and
the $0.9 million note originally issued in connection with the option was
cancelled.

     On March 21, 2006, we separately purchased 66.67% of the issued and
outstanding capital stock of UP Offshore (Bahamas) Ltd., or UP Offshore, a
company through which we operate our Offshore Supply Business, from an affiliate
of Solimar, one of our shareholders, for a purchase price of $48.0 million.
Following this acquisition, we hold 94.45% of the issued and outstanding shares
of UP Offshore. The purchase price was paid in full with the proceeds of our
IPO. In compliance with the requirements of our indenture related to the Notes,
we obtained a fairness opinion from an internationally recognized accounting
firm in connection with this acquisition.

     On May 3, 2006, we signed an agreement with International Finance
Corporation, or IFC, to purchase from IFC the 7.14% of UP River (Holdings) Ltd.,
or UP River, an entity that owned the 50% of UABL Limited that we did not own,
for the price of $6.2 million. As part of this agreement, IFC agreed to waive
its option to convert its interest in UP River to shares in our company and its
right to participate in our IPO. Our obligation under this agreement was paid
from proceeds of our IPO.

     On August 8, 2006, we took delivery of the fourth PSV in our Offshore
Supply Business fleet, UP Topazio, from EISA - Estaleiro Ilha S.A. in Rio de
Janeiro, Brazil.

     On September 8, 2006, we entered into a Memorandum of Agreement with the
Argos Group to form a joint venture to establish a river transportation company
on the Magdalena River in Colombia.

     On October 18, 2006, we completed our IPO. The gross proceeds of our IPO to
us were $137.5 million.

     On October 20, 2006, UP Offshore (Bahamas) Ltd. redeemed all of the
outstanding Series A Preferred Shares held by IFC for an amount of $4.3 million
with proceeds from our IPO.

     On October 23, 2006, we signed a Memorandum of Agreement to purchase the
Rea (which we renamed Amadeo), a 39,530 dwt. crude oil and product tanker for a
purchase price of $19.1 million. On December 1, 2006 we took delivery of the
Amadeo and took her to a yard in Romania where she is undergoing conversion to
double hull prior to her employment in the South American cabotage trade.

     On October 31, 2006, we announced in Athens, Greece, that one of our
subsidiaries in the Passenger Business would employ our vessel Grand Victoria
(to be renamed Blue Monarch) on 7-day cruises in Greece and Turkey. Monarch
Classical Cruises will be responsible for the marketing of these cruises, and
the Blue Monarch will not have a guaranteed minimum income for the European
Summer of 2007.

     On November 10, 2006, the underwriters of our IPO exercised their
over-allotment option to purchase from the selling shareholders in our IPO an
additional 232,712 shares of our common stock. We did not receive any of the
proceeds from the sale of shares by these shareholders in the over-allotment
option.

     On November 20, 2006, we signed a Memorandum of Agreement to purchase the
Cadenza (which we renamed Alejandrina), a 9,219 dwt. oil tanker, for a purchase
price of $17.0 million.

     On December 28, 2006, we entered into a $61.3 million senior secured term
loan agreement with DVB Bank AG to refinance our four PSVs currently in
operation (UP Esmeralda, UP Safira, UP Agua-Marinha and UP Topazio), which was
drawn down in two installments in January and March 2007, respectively. We used
the proceeds from this loan primarily to pay off outstanding financings for
these vessels and cash to fund our acquisition program.

Recent Developments

     On January 5, 2007, we took delivery of the Alejandrina and she was
positioned for employment in the South American cabotage trade where she
commenced service in March 2007.

     On January 27, 2007, we entered into a $13.6 million senior secured term
loan agreement with Natixis as post delivery finance for the acquisition of the
Alejandrina.

     On February 21, 2007, we entered into two shipbuilding contracts with a
yard in India to construct two PSVs with deliveries commencing in 2009. The
price for each new PSV to be built in India is $21.7 million.

     On March 7, 2007, we executed a Stock Purchase Agreement and other
complementary agreements with the Shareholders of Compania Paraguaya de
Transporte Fluvial S.A. ("CPTF") and Candies Paraguayan Ventures LLC ("CPV")
whereby we purchased 100% of the stock of CPTF and CPV. Through the purchase of
these two companies, we acquired ownership of one 4,500 HP pushboat (the Captain
Otto Candies) and twelve Jumbo 2,500 dwt barges (the Parana barges) all built in
the United States in 1995. The total purchase price paid by us for the shares
under the respective agreements was $13.8 million.

Factors Affecting Our Results of Operations

     We organize our business and evaluate performance by the following business
segments: the Ocean Business, River Business and, beginning in 2005, the
Offshore Supply Business and Passenger Business. The accounting policies of the
reportable segments are the same as those for the consolidated financial
statements. We do not have significant intersegment transactions.

Revenues

     In our River Business, we contract for the carriage for cargos, in
substantially all cases, under contracts of affreightment, or COAs. Most of
these COAs currently provide for adjustments to the freight rate based on
changes in the price of fuel.

     In our Offshore Business, we contract substantially all of our capacity
under time charters to charterers in the North Sea and Brazil. During the first
quarter of 2006, prior to the acquisition of 66.67% of the stock of UP Offshore,
the revenues and expenses of UP Offshore were not consolidated with ours.
However, two PSVs owned by UP Offshore were operated by us in the North Sea
under charters. The revenues of these charters were recognized in our financial
statements.

     In our Ocean Business, we contract our cargo vessels either on a time
charter basis or COA basis. Some of the differences between time charters and
COAs are summarized below.

          Time Charter
          ------------

               o    We derive revenue from a daily rate paid for the use of the
                    vessel, and

               o    the charterer pays for all voyage expenses, including fuel
                    and port charges.

          Contract of Affreightment (COA)
          -------------------------------

               o    We derive revenue from a rate based on tonnage shipped
                    expressed in dollars per metric ton of cargo, and

               o    we pay for all voyage expenses, including fuel and port
                    charges.

     Our ships on time charters generate both lower revenues and lower expenses
for us than those under COAs. At comparable price levels both time charters and
COAs result in approximately the same operating income, although the operating
margin as a percentage of revenues may differ significantly.

     The structure of our seasonal contracts for our Passenger Business provides
us with a stable revenue stream as well as the flexibility to operate the
vessels in other regions of the world at the end of the contract term. We have
operated one of our vessels during periods outside the European travel season
for certain events.

     Time charter revenues accounted for 54% of the total revenues from our
businesses for 2006, and COA revenues accounted for 46%. With respect to COA
revenues in 2006, 77% were in respect of repetitive voyages for our regular
customers and 23% were in respect of single voyages for occasional customers.

     In our River Business, demand for our services is driven by agricultural,
mining and forestry activities in the Hidrovia Region. Droughts and other
adverse weather conditions, such as floods, could result in a decline in
production of the agricultural products we transport, which would likely result
in a reduction in demand for our services. In 2005, our results of operations
were negatively impacted due to the decline in soybean production associated
with that year's drought. Continuing drought conditions have also affected the
size of the Paraguayan soybean crop in 2006. Further, most of the operations in
our River Business occur on the Parana and Paraguay Rivers, and any changes
adversely affecting navigability of either of these rivers, such as low water
levels, could reduce or limit our ability to effectively transport cargo on the
rivers.

     In our Ocean Business, we employed a significant part of our ocean fleet on
time charter to different customers during 2006. In the first half of 2006, the
international dry bulk freight market maintained average rates below those
experienced in the first half of 2005. However, in the second half of 2006,
those average freight rates generally increased above the levels experienced in
the same period of 2005.

     In our Passenger Business, demand for our services is driven primarily by
movements of tourists during the European summer cruise season.

Expenses

     Our operating expenses generally include the cost of all vessel management,
crewing, spares and stores, insurance, lubricants, repairs and maintenance.
Generally, the most significant of these expenses are repairs and maintenance,
wages paid to marine personnel, catering and marine insurance costs. However,
there are significant differences in the manner in which these expenses are
recognized in the different segments in which we operate.

     In addition to the vessel operating expenses, our other primary operating
expenses in 2006 included general and administrative expenses related to ship
management and administrative functions. During the first quarter of 2006, we
acquired Ravenscroft and the administrative-related assets and personnel of
Oceanmarine. Accordingly, going forward, we do not expect to pay significant
fees to any third party for ship management and administrative functions.

     In our River Business, our voyage expenses include port expenses and
bunkers as well as charter hire paid to third parties.

     In our Offshore Supply Business, voyage expenses include offshore and
brokerage commissions paid by us to third parties including Gulf Offshore North
Sea (UK) which provide brokerage services.

     In our Passenger Business, operating expenses include all vessel
management, crewing, stores, insurance, lubricants, repairs and maintenance,
catering, housekeeping and entertainment staff. Voyage expenses may include port
expenses and bunkers if such services are for our account. Similarly, they may
include the cost of food and beverages if such amounts are for our account under
the charter agreement.

     Through our River Business, we own a floating drydock and a repair facility
for our river fleet at Pueblo Esther, Argentina, land for the construction of
two terminals in Argentina and 50% joint venture participations in two grain
loading terminals in Paraguay. UABL also rents offices in Asuncion, Paraguay and
Buenos Aires, Argentina and a repair and shipbuilding facility in Argentina.

     Through our acquisition of UP Offshore, we now hold a lease for office
space in Rio de Janeiro, Brazil. In addition, through our recent acquisition of
Ravenscroft, we own a building located at 3251 Ponce de Leon Boulevard, Coral
Gables, Florida, United States. Through our acquisition of the administrative
functions of Oceanmarine, a related party, we now hold a sublease to an office
in Buenos Aires, Argentina.

Foreign Currency Transactions

     During 2006, 78% of our revenues were denominated in U.S. dollars. Also,
for the year ended December 31, 2006, 10% of our revenues were denominated and
collected in Euros, 12% of our revenues were denominated and collected in
British Pounds and 1% of our revenues was denominated and collected in Reais
(Brazil). However, 15% of our total revenues were denominated in U.S. dollars
but collected in Argentine Pesos, Brazilian Reais and Paraguayan Guaranies.
Significant amounts of our expenses were denominated in U.S. dollars and 31% of
our total out of pocket operating expenses were paid in Argentine Pesos,
Brazilian Reais and Paraguayan Guaranies.

     Our operating results, which we report in U.S. dollars, may be affected by
fluctuations in the exchange rate between the U.S. dollar and other currencies.
For accounting purposes, we use U.S. dollars as our functional currency.
Therefore, revenue and expense accounts are translated into U.S. dollars at the
average exchange rate prevailing during the month of each transaction.

Inflation and Fuel Price Increases

     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 drydocking costs) are subject to fluctuations as a result of market forces.

     In 2005 and prior, in our River Business, we adjusted the fuel component of
our cost into the freights on a seasonal or yearly basis, and therefore we were
adversely affected during that particular period by rising bunker prices which
are only partially offset by a hedge of a minor part of our fuel consumption and
by bunker price adjustment formulas in some of our contracts. In 2006 and
thereafter, we have negotiated fuel price adjustment clauses in most of our
contracts.

     In the Offshore Supply and Passenger Businesses, the risk of variation of
fuel prices under the vessels' current employment is generally borne by the
charterers, since the charterers are generally responsible for the supply of
fuel.

     In our Ocean Business, inflationary pressures on bunker (fuel oil) costs
are not expected to have a material effect on our immediate future operations,
because our vessels are currently chartered to third parties and it is the
charterers' responsibility to pay for fuel. When our ocean vessels are employed
under COAs, freight rates for voyage charters are generally sensitive to the
price of a vessel's fuel. However, a sharp rise in bunker prices may have a
temporary negative effect on results since freights generally adjust only after
prices settle at a higher level.

Seasonality

     Each of our businesses has seasonal aspects, which affect their revenues on
a quarterly basis. The high season for our River Business is generally between
the months of March and September, in connection with the South American harvest
and higher river levels. However, growth in the soy pellet manufacturing,
minerals and forest industries may help offset some of this seasonality. The
Offshore Supply Business operates year-round, particularly off the coast of
Brazil, although weather conditions in the North Sea may reduce activity from
December to February. In the Ocean Business, demand for oil tankers tends to be
strongest during the winter months in the Northern hemisphere. Demand for
drybulk transportation tends to be fairly stable throughout the year, with the
exceptions of the Chinese New Year in our first quarter and the European summer
holiday season in our third quarter, which generally show lower charter rates.
Under existing arrangements, our Passenger Business currently generates its
revenue during the European cruise season, which runs from May through October
of each year.

<PAGE>

Results of Operations

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

     The following table sets forth certain historical income statement data for
the periods indicated derived from our statements of income expressed in
thousands of dollars.

                                                         Year ended December 31,
                                                         -----------------------

                                                                         Percent
                                                 2006          2005       Change
                                               -------       -------     -------

Revenues
   Attributable to River Business              $79,124       $54,546         45%
   Attributable to Offshore Supply Business     26,289         6,532        302%
   Attributable to Ocean Business               39,202        49,874       -21%
   Attributable to Passenger Business           28,851        14,409        100%
                                               -------       -------

Total revenues                                 173,466       125,361         38%
                                               -------       -------
   Voyage expenses
   Attributable to River Business              (33,536)      (25,710)        30%
   Attributable to Offshore Supply Business     (3,451)       (4,980)      -31%

   Attributable to Ocean Business                 (602)       (1,371)      -56%
   Attributable to Passenger Business           (5,856)       (1,766)       232%
                                               -------       -------

Total voyage expenses                          (43,445)      (33,827)        28%
                                               -------       -------

Running cost
   Attributable to River Business              (20,595)      (17,820)        16%
   Attributable to Offshore Supply Business     (6,264)       (1,218)       414%
   Attributable to Ocean Business              (13,788)      (12,636)         9%
   Attributable to Passenger Business          (13,518)       (7,560)        79%
                                               -------       -------

Total running costs                            (54,165)      (39,234)        38%
                                               -------       -------

   Amortization of drydocking
     expense                                    (7,830)       (6,839)        14%
   Depreciation of vessels and
     equipment                                 (19,920)      (14,494)        37%
   Amortization of intangible assets              (590)           --         --
   Management fees and
     administrative and commercial
     expenses                                  (14,416)       (9,735)        48%
Other operating income (expenses)                 (198)       22,021         --
                                               -------       -------
Operating profit                                32,902        43,253       -24%
                                               -------       -------
Financial expense                              (19,025)      (19,141)       -1%

Financial gain (loss) on
extinguishment of debt                          (1,411)           --         --

Other income (expenses)                          2,180         1,039        110%
                                               -------       -------
Total other expenses                           (18,256)      (18,102)         1%
                                               -------       -------

Income before income taxes and
minority interest                               14,646        25,151       -42%
Income taxes                                    (2,201)         (786)       180%
Minority interest                               (1,919)       (9,797)      -80%
                                               -------       -------
Net income                                     $10,526        14,568       -28%
                                               =======       =======
<PAGE>

     Revenues. Total revenues from our River Business increased by 45% from
$54.5 million in 2005 to $79.1 million in 2006. This increase is primarily
attributable to a 19% increase in volumes transported and a 24% increase in unit
prices.

     Total revenues from our Offshore Supply Business increased from $6.5
million in 2005 to $26.3 million in 2006. This increase is attributable to
higher time charter rates of our existing PSVs UP Esmeralda and UP Safira as
well as their being in service for a full year compared to less than half a year
in 2005, and the operations of two new PSVs placed into service during 2006, UP
Agua-Marinha and UP Topazio.

     Total revenues from our Ocean Business decreased from $49.9 million in 2005
to $39.2 million in 2006, or a decrease of 21%. This decrease is mainly
attributable to the lower time charter rates of Princess Nadia, Princess Susana
and Princess Katherine, as well as the lesser number of operational days of the
vessels in 2006 due to the fact that all three of the vessels underwent special
survey and drydocking in the fourth quarter of 2006, partially offset by higher
time charter rates of Princess Marina and a full year operation of the Miranda
I, which had started operations in October 2005.

     Total revenues from our Passenger Business were $28.9 million in 2006, as
compared to $14.4 million in 2005. This 100% increase is mainly attributable to
higher contractual revenue per passenger from, and a larger number of
operational days for, our New Flamenco in 2006 and to the entry in operation of
the Grand Victoria in 2006.

     Voyage expenses. In 2006, voyage expenses of our River Business were $33.5
million, as compared to $25.7 million for 2005, an increase of $7.8 million. The
increase is mainly attributable to an increase in fuel expense due to a
combination of larger volumes consumed consistent with the larger volumes of
cargo carried and higher fuel prices.

     In 2006, voyage expenses of our Offshore Supply Business were $3.5 million,
as compared to $5.0 million in 2005. The decrease is primarily attributable to
the effect of the bareboat charter paid for our new PSVs UP Esmeralda and UP
Safira during the last six months of 2005 whereas the effect of those bareboat
charters in 2006 occurred only in the first quarter prior to the consolidation
of UP Offshore as well as the incurrence of $1.0 million in expenses primarily
related to the transport of these vessels from China, where they were
constructed, to their deployment in the North Sea.

     In 2006, voyage expenses of our Ocean Business were $0.6 million, as
compared to $1.4 million for 2005. The decrease is primarily attributable to the
decrease in brokerage commissions of our Princess Nadia, Princess Katherine and
Princess Susana.

     In 2006, voyage expenses of our Passenger Business were $5.9 million, as
compared to $1.8 million in 2005. The increase of $4.1 million is mainly
attributable to increased voyage expenses of our New Flamenco, consistent with
the larger number of operational days and the entry into operation of our Grand
Victoria in 2006.

     Running costs. In 2006, running costs of our River Business were $20.6
million, as compared to $17.8 million in 2005, an increase of $2.8 million. This
increase is primarily attributable to higher boat costs due to an increased
utilization of pushboats (approximately 1.5 extra pushboats per month)
consistent with the larger volumes of cargo carried.

     In 2006, running costs of our Offshore Supply Business were $6.3 million,
as compared to $1.2 million in 2005. This increase is mainly attributable to the
running cost incurred with the new PSVs UP Agua-Marinha and UP Topazio delivered
to us in March and September 2006, respectively as well as a full year operation
of our UP Esmeralda and UP Safira compared to less than half a year in 2005.

     In 2006, running costs of our Ocean Business were $13.8 million, as
compared to $12.6 million in 2005, an increase of 9%. This increase is mainly
attributable to higher running costs on our Princess Susana and Princess
Katherine, and Alianza G3, and a full year operation of the Miranda I against
only one quarter in 2005.

     In 2006, running costs of our Passenger Business were $13.5 million,
compared to $7.6 million in 2005. This increase is attributable to an increase
in the running costs for the New Flamenco primarily due to a larger number of
operating days in 2006, as well as the entry into operations of our Grand
Victoria (which was recertified during 2005).

     Amortization of drydocking expense. Amortization of drydocking and special
survey costs increased by $1.0 million, or 14%, to $7.8 million in 2006 as
compared to $6.8 million in 2005. The increase is primarily attributable to the
higher amortization of expenses for our Princess Marina, partially offset by the
decrease in amortization due to the sale of our Cape Pampas in 2005.

     Depreciation of vessels and equipment. Depreciation increased by $5.4
million, or 37%, to $19.9 million in 2006 as compared to $14.5 million in 2005.
This increase is primarily due to a full year depreciation for our Miranda I
(which we purchased in September 2005), the increase in depreciation of some of
our River Business equipment, increase in depreciation of our New Flamenco
(which was fully refurbished between November 2005 and February 2006), the
depreciation of our Grand Victoria after being recertified in 2005, and the
consolidation of UP Offshore since March 2006.

     Amortization of intangible assets. Amortization of intangible assets was
$0.6 million in 2006, as compared to $0.0 million in 2005. This increase is
attributable to the purchase of our subsidiary Ravenscroft in March 2006.

     Management fees and administrative and commercial expenses. Management fees
and administrative expenses were $14.4 million in 2006 as compared to $9.7
million in 2005. This increase of $4.7 million is attributable mainly to an
increase in the overhead expenses on our River Business and to the consolidation
of UP Offshore since March 2006.

     Other operating income (expenses). Other operating income (expenses) were
expenses of $0.2 million in 2006 as compared to income of $22.0 million in 2005.
This income change is attributable mainly to the effect of the sale of the
vessel Cape Pampas in 2005.

     Operating profit. Operating profit for the year 2006 was $32.9 million, a
decrease of $10.4 million from 2005. The difference is mainly attributable to
the effect of the sale of the Cape Pampas in 2005, lower charter rates obtained
by our three Suezmax OBOs, partially offset by higher operating profit from the
Passenger Business and River Business, and by the consolidation of UP Offshore
since March 2006.

     Financial expense. Financial expense had no significant variation from
$19.0 million in 2006 as compared to $19.1 million in 2005.

     Financial gain (loss) on extinguishment of debt. Financial loss on
extinguishments of debt for 2006 was $1.4 million, as compared to $0.0 million
in 2005. This increase is mainly attributable to the loss recognized during the
fourth quarter of 2006 in connection with the early repayment of our
indebtedness related to our River Business with funds from our IPO.

     Minority interest. Minority interest decreased by $7.9 million to $1.9
million in 2006 as compared to $9.8 million in 2005. This variation is mainly
attributable to 40% of the gain of the sale of the Cape Pampas in 2005 and
partially offset by the consolidation of UP Offshore since March 2006 and $0.9
million attributable to the premium paid on the early redemption of UP
Offshore's preferred shares to IFC with funds from our IPO.

     Income taxes. The charge for income taxes in 2006 was $2.2 million,
compared with $0.8 million in 2005. The higher charge in 2006 compared with 2005
reflects the significantly higher operating income in our Offshore Supply
Business (which is consolidated since March 2006) subject to the determination
of taxable income in Chile and Brazil. Some of our income was subject to Chilean
income tax due to a charter of two of our vessels to our Chilean subsidiary,
which expired on January 31, 2007. The income from these vessels will no longer
be subject to Chilean income taxes beginning February 1, 2007. In addition, our
deferred income tax charge increased from excess accelerated tax depreciation
over book depreciation and from unrealized foreign currency exchange gains on US
dollar denominated debt of our Brazilian subsidiary, which is partially offset
by the impact of the tax rate on the intangible amortization.
<PAGE>

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

     The following table sets forth certain historical income statement data for
the periods indicated derived from our statements of income expressed in
thousands of dollars.

<TABLE>
<CAPTION>
                                                Year Ended December 31,
                                                ------------------------
                                                2005           2004           Percent Change
                                                ---------      ---------      --------------
<S>                                             <C>            <C>                <C>
Revenues
   Attributable to River Business               $  54,546      $  41,111             33%
   Attributable to Offshore Supply Business         6,532             --             --
   Attributable to Ocean Business                  49,874         54,049             -8%
   Attributable to Passenger Business              14,409             --             --
                                                ---------      ---------
                             Total revenues       125,361         95,160             32%
                                                ---------      ---------

Voyage expenses
   Attributable to River Business                 (25,710)       (15,340)            68%
   Attributable to Offshore Supply Business        (4,980)            --             --
   Attributable to Ocean Business                  (1,371)          (583)           135%
   Attributable to Passenger Business              (1,766)            --             --
                                                ---------      ---------
                      Total voyage expenses       (33,827)       (15,923)           112%
                                                ---------      ---------

Running costs
   Attributable to River Business                 (17,820)       (12,512)            42%
   Attributable to Offshore Supply Business        (1,218)            --             --
   Attributable to Ocean Business                 (12,636)       (12,380)             2%
   Attributable to Passenger Business              (7,560)            --             --
                                                ---------      ---------
                        Total running costs       (39,234)       (24,892)            58%
                                                ---------      ---------

Amortization of drydocking expense                 (6,839)        (5,195)            32%
Depreciation of vessels and equipment             (14,494)       (13,493)             7%
Management fees and administrative and
commercial expenses                                (9,735)        (9,007)             8%
                                                ---------      ---------
Other operating income                             22,021            784          2,709%
                                                ---------      ---------
Operating profit                                   43,253         27,434             58%
                                                ---------      ---------
Financial expense                                 (19,141)       (16,134)            19%

Financial gain (loss) on extinguishment
of debt                                                --         (5,078)            --

Other income (expenses)                             1,039            699             49%
                                                ---------      ---------
                       Total other expenses       (18,102)       (20,513)           -12%
                                                ---------      ---------

Income before income taxes and
minority interest                                  25,151          6,921            263%
Income taxes                                         (786)          (642)            22%
Minority interest                                  (9,797)        (1,140)           759%
                                                ---------      ---------
Net Income                                      $  14,568      $   5,139            183%
                                                =========      =========
</TABLE>

<PAGE>

     Revenues. Total revenues from our River Business increased by 33% from
$41.1 million in 2004 to $54.6 million in 2005. This increase is primarily
attributable to the consolidation of UABL since the second quarter of 2004,
while in the first quarter of 2004 revenues from our river fleet only included
the net charter proceeds which we received from chartering some of our vessels
from UABL.

     Total revenues from our Offshore Supply Business increased from $0.0 in
2004 to $6.5 million in 2005. This increase is attributable to the time charter
revenues of our new PSVs UP Esmeralda and UP Safira, which we operated
temporarily under a bareboat charter by our subsidiary Corporacion de Navegacion
Mundial S.A. during the last six months of 2005.

     Total revenues from our Ocean Business decreased from $54.0 million in 2004
to $49.8 million in 2005, or a decrease of 8%. This decrease is attributable to
the sale of the Cape Pampas in May 2005 and the lower time charter rate of the
Princess Susana. These decreases were partially offset by the higher time
charter rates of the Princess Nadia and the Princess Katherine during the first
six months of 2005 and by the revenues generated by our newly acquired vessel,
Miranda I, in the fourth quarter of 2005.

     Total revenues from our Passenger Business were $14.4 million in 2005. We
did not earn revenues in our Passenger Business in 2004. We did not operate any
passenger vessels in 2004. The new revenue is attributable to the effect of the
revenues of the New Flamenco, which was acquired and first placed in service
during 2005.

     Voyage expenses. In 2005, voyage expenses of our River Business were $25.7
million, as compared to $15.3 million for 2004, an increase of $10.4 million.
The increase is attributable to the consolidation of UABL as our subsidiary in
the second quarter of 2004 and the increase of the price of fuel oils.

     In 2005, voyage expenses of our Offshore Supply Business were $5.0 million,
as compared to $0.0 in 2004. The increase is primarily attributable to the
bareboat charter of $4.0 million paid for our new PSVs UP Esmeralda and UP
Safira during the last six months of 2005 as well as the incurrence of $1.0
million in expenses primarily related to the transport of these vessels from
China, where they were constructed, to their deployment in the North Sea.

     In 2005, voyage expenses of our Ocean Business were $1.4 million, as
compared to $0.6 million for 2004. The increase is primarily attributable to
higher brokerage commissions partially offset by a decrease primarily
attributable to the voyage expenses of the Princess Eva, which was sold during
2004.

     In 2005, voyage expenses of our Passenger Business were $1.8 million. We
did not operate any passenger vessels in 2004.

     Running costs. In 2005, running costs of our River Business were $17.8
million, as compared to $12.5 million in 2004, an increase of $5.3 million. The
increase is primarily attributable to the effect of the consolidation of UABL as
our subsidiary since the second quarter of 2004.

     In 2005, running costs of our Offshore Supply Business were $1.2 million,
as compared to $0.0 in 2004. This increase is attributable to the running cost
incurred with the new PSVs UP Esmeralda and UP Safira owned by UP Offshore and
operated temporarily by our subsidiary Corporacion de Navegacion Mundial S.A.
under a bareboat charter during the second half of 2005.

     In 2005, running costs of our Ocean Business were $12.6 million, as
compared to $12.4 million in 2004, an increase of 2%. This increase is mainly
attributable to the operation of our newly acquired vessel Miranda I and was
partially offset by the decrease of running cost attributable to the sale of the
vessels Princess Eva in 2004 and by the sale of the Cape Pampas in 2005.

     In 2005, running costs of our Passenger Business were $7.6 million,
compared to $0.0 in 2004. This increase is attributable to the effect of the
running cost of our vessel New Flamenco, which we acquired in 2005. We did not
operate any passenger vessels in 2004.

     Amortization of drydocking. Amortization of drydocking and special survey
costs increased by $1.6 million, or 32%, to $6.8 million in 2005 as compared to
$5.2 million in 2004. The increase is primarily attributable to the amortization
expenses of the vessels Alianza G-3, Princess Katherine, Princess Susana and
Princess Nadia and the increase in the numbers of vessels in our river fleet,
partially offset by the decrease of amortization of drydocking expense
attributable to the sale of the vessels Princess Eva in 2004 and Cape Pampas in
2005.

     Depreciation of vessels and equipment. Depreciation increased by $1.0
million, or 7%, to $14.5 million in 2005 as compared to $13.5 million in 2004.
This increase is primarily due to the purchase of new tugs and river barges, the
additional passenger vessel New Flamenco as well as the depreciation of the UABL
fleet attributable to the effect of the consolidation of UABL as our subsidiary,
which was partially offset by the sale of the vessels Princess Eva in 2004 and
Cape Pampas in 2005.

     Management fees and administrative expenses. Management fees and
administrative expenses were $9.7 million in 2005 as compared to $9.0 million in
2004. This increase of $0.7 million is attributable mainly to an increase in the
overhead expenses produced by the consolidation of UABL and the management fees
attributable to the new passenger vessel.

     Other operating income (expenses). Other operating income was $22.0 million
in 2005 as compared to $0.8 million in 2004. This increase is attributable to
the effect of the sale of the vessel Cape Pampas in 2005.

     Operating profit. Operating profit for the year 2005 was $43.2 million, an
increase of $15.8 million from 2004. The difference is mainly attributable to
the effect of the sale of the Cape Pampas in 2005, higher charter rates obtained
for the vessel Princess Nadia, the sale of the vessels Princess Marisol and
Princess Laura in 2004, as well as the results attributable to our new passenger
vessel, partially offset by a decrease in our River Business results.

     Financial expense. Financial expense increased by approximately $3.0
million or 19%, to $19.1 million in 2005 as compared to $16.1 million in 2004.
This variation is mainly attributable to the higher level of financial debt
related to the acquisition of our new vessels, as well as an increase in the
interest rate of our variable rate debt in our River Business.

     Financial gain (loss) on extinguishment of debt. In 2004, we recognized a
gain of $1.3 million from repurchases of our Prior Notes and paid $6.4 million
in expenses in connection with our tender offer and repurchase of our Prior
Notes.

     Minority interest. Minority interest increased by $8.7 million to $9.8
million in 2005 as compared to $1.1 million in 2004. This variation is mainly
attributable to 40% of the gain of the sale of the Cape Pampas in 2005.
<PAGE>

B. LIQUIDITY AND CAPITAL RESOURCES

     We are a holding company and 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.

     The ability of our subsidiaries to make distributions to us may be
restricted by, among other things, restrictions under our credit facilities and
applicable laws of the jurisdictions of their incorporation or organization.

     At December 31, 2006, we had aggregate indebtedness of $220.7 million,
consisting of $180.0 million aggregate principal amount of our First Preferred
Ship Mortgage Notes due 2014, or the Notes, and indebtedness of our new
subsidiary UP Offshore of $39.0 million under two senior loan facilities with
DVB NV and DVB Bank AG, plus accrued interest of $1.7 million.

     At December 31, 2006, we had cash and cash equivalents on hand of $20.6
million.

     As a result of the early repayment of our indebtedness related to our River
Business and the early redemption of UP Offshore's preferred shares held by IFC
paid with funds from proceeds of our IPO, we incurred a loss of $2.3 million
that was recorded in the fourth quarter of 2006.

     On December 28, 2006, we entered into a $61.3 million senior secured term
loan agreement with DVB Bank AG. We drew on this facility in January and March
2007 to its full amount primarily to pay off outstanding indebtedness for our
PSVs in an amount of $25.3 million and to fund our acquisition program.

     On January 24, 2007, we entered into a $13.6 million senior secured term
loan agreement with Natixis as post-delivery financing for the acquisition of
the Alejandrina.

Operating Activities

     During the year ended December 31, 2006, we generated $28.8 million in cash
flow from operations compared to $16.7 million in the year ended December 31,
2005. Net income for the year ended December 31, 2006 was $10.5 million as
compared to $14.6 million in the year ended December 31, 2005, a decrease of
$4.1 million.

     The increase in cash flow from operations is mainly attributable to higher
income from operations, excluding depreciation, amortization and the gain on
sale of assets, offset somewhat by greater working capital needs.

Investing Activities

     During the year ended December 31, 2006, we disbursed $10.2 million to
refurbish the New Flamenco and to recertify and recommission the Grand Victoria,
$9.7 million to enlarge and refurbish barges and pushboats as well as to
purchase a new crane and associated equipment in our River Business, and $9.0
million in respect of PSV vessels under construction, $1.8 million on double
hull works for the Miranda I, $1.8 million as an advance for the purchase of the
Alejandrina and $20.2 million to purchase the Amadeo.

     In addition, in 2006 we disbursed $65.2 million (net of $.05 million cash
acquired) for the acquisition of 66.67% of UP Offshore, all of the shares of
Ravenscroft and the minority interest in our River Business.

     In 2005, we received net proceeds of $37.9 million from the Cape Pampas
sale.

Financing Activities

     Net cash provided by financing activities was $88.0 million during the year
ended December 31, 2006, compared to net cash provided by financing activities
of $6.4 million during the year ended December 31, 2005. The increase in cash
provided by financing activities from 2005 to 2006 is mainly attributable to the
net proceeds of our IPO for $125.2 million when partially offset by the early
repayment of principal of our outstanding debt in our River Business of $33.1
million, the early redemption of UP Offshore's preferred shares to IFC of $4.3
million and $2.6 million in cash used for the retirement of minority interests
in our subsidiary Ultracape (Holdings) Ltd.

Future Capital Requirements

     Our near-term cash requirements are related primarily to funding
operations, constructing new vessels, potentially acquiring second-hand vessels,
increasing the size of many of our barges and replacing the engines in our line
pushboats with new engines that burn less expensive heavy fuel oil. We currently
estimate that the construction of new vessels that are currently on order in
India will require additional funds of approximately $34.6 million, the cost of
increasing the size of many of our barges will cost approximately $30.0 million
and the cost of replacing the engines in our line pushboats will cost
approximately $46.0 million. In addition, amounts to be paid in connection with
the construction of our PSVs in Brazil. In addition, we expect to pay
approximately $6.0 million to expand our shipyard in Argentina to adequately
equip it to build new barges. We will also make capital expenditures to fund the
building of these new barges beginning in 2008. These expenses will be incurred
at various times over the next few years and, accordingly, are subject to
significant uncertainty. We may in the future incur indebtedness to fund some of
our other initiatives, which we are currently funding through our cash flow from
operations. We cannot provide assurance that our actual cash requirements will
not be greater than we currently expect. If we cannot generate sufficient cash
flow from operations, we may obtain additional sources of funding through
capital market transactions, although it is possible these sources will not be
available to us.
<PAGE>

Critical Accounting Policies and Estimates

     This discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with U.S. GAAP. The preparation of these financial
statements requires us 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 our
estimates, including those related to bad debts, useful lives of vessels,
deferred tax assets, and certain accrued liabilities. We base our estimates on
historical experience and on various other assumptions that we believe 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 our more significant judgments and estimates
used in the preparation of our consolidated financial statements.

     Critical accounting policies are those that reflect significant judgments
or uncertainties, and potentially lead to materially different results under
different assumptions and conditions. We have described below what we believe
are our most critical accounting policies that involve a high degree of judgment
and the methods of their application. For a description of all of our
significant accounting policies, see note 2 to our audited consolidated
financial statements.

Revenues and related expenses

     Revenue is 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, bareboat charters, consecutive
voyage charters or affreightment/voyage contracts. Revenue from time charters
and bareboat charters is earned and recognized on a daily basis. Revenue for the
affreightment contracts and consecutive voyage charters is recognized based upon
the percentage of voyage completion. A voyage is deemed to commence upon the
departure of discharged vessel of previous cargo and is deemed to end upon the
completion of discharge of the current cargo. The percentage of voyage
completion is based on the miles transited at the balance sheet date divided by
the total miles expected on the voyage. The position of the barge at the balance
sheet date is determined by locating the position of the boat with the barge in
tow through use of a global positioning system.

     Demurrage income represents payments by the charterer to the vessel owner
when loading or discharging time exceeded the stipulated time in the voyage
charter and is recognized as it is earned.

     Revenue from our passenger vessels business is recognized upon completion
of voyages, together with revenues from on board and other activities.

     From time to time we provide ships salvage services under Lloyd's Standard
Form of Salvage Agreement ("LOF"). The Company recognizes costs as incurred on
these LOF services. Revenue is recognized to the extent of costs incurred in
order to appropriately match revenues with costs, provided that the Company has
earned the revenue. The Company has historically recovered at least its cost in
all of its prior salvage operations. Additional revenues in excess of costs
incurred are recorded at the time the final LOF settlement or arbitration award
occurs.

     Vessels voyage costs, primarily consisting of port, canal and bunker
expenses that are unique to a particular charter, are paid for by the charterer
under time charter arrangements or by us under voyage charter arrangements. The
commissions paid in advance are deferred and amortized over the related voyage
charter period to the extent revenue has been deferred since commissions are
earned as our revenues are earned. Bunker expenses and gift shop for resale are
capitalized when acquired as operating supplies and subsequently charged to
voyage expenses as consumed/resold. All other voyage expenses and other vessel
operating expenses are expensed as incurred.

Vessels and equipment, net

     Vessels and equipment are stated at cost less accumulated depreciation.
This cost includes the purchase price and all directly attributable costs
(initial repairs, improvements and delivery expenses, interest and on-site
supervision costs incurred during the construction periods). Subsequent
expenditures for conversions and major improvements are also capitalized when
they appreciably extend the life, increase the earning capacity or improve the
safety of the vessels.

     Depreciation is computed net from the estimated scrap value, which is equal
to the product of each vessel's lightweight tonnage and estimated scrap value
per lightweight ton, and is recorded using the straight-line method over the
estimated useful lives of the vessels. Acquired secondhand vessels are
depreciated from the date of their acquisition over the remaining estimated
useful life.

     Listed below are the estimated useful lives of vessels and equipment:

                                                                 Useful lives
                                                                  (in years)
                                                              ------------------

     River barges and pushboats                                       35
     PSVs                                                             24
     Ocean-going vessels                                              24
     Passenger vessels                                                45
     Furniture and equipment                                        5 to 10

     However, when regulations place limitations over the ability of a vessel to
trade, its useful life is adjusted to end at the date such regulations become
effective. Currently, these regulations only affect one of our vessels in the
Passenger Business with no significant effects on its useful life.

     At the time vessels are disposed of, the assets and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
recorded in other operating income (expense).

     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.

Drydock Costs

     Our vessels must be periodically drydocked and pass inspections to maintain
their operating classification and/or as mandated by maritime regulations. Costs
incurred to drydock the vessels are deferred and amortized over the period to
the next drydocking, generally 24 to 36 months. Drydocking costs may be
comprised of painting the vessel hull and sides, recoating cargo and fuel tanks,
and performing other engine and equipment maintenance activities to bring the
vessel into compliance with classification standards. Costs include actual costs
incurred at the yard, cost of fuel consumed, and the cost of hiring riding crews
to effect repairs. The unamortized portion of dry dock costs for vessels that
are sold are written off to and included in the calculation of the resulting
gain or loss in the year of the vessel's sale.

     Expenditures for maintenance and minor repairs are expensed as incurred.

Insurance claims receivable

     Insurance claims receivable represent costs incurred in connection with
insurable incidents for which the Company expects to be reimbursed by the
insurance carriers, subject to applicable deductibles. Deductible amounts
related to covered incidents are expensed in the period of occurrence of the
incident. Expenses incurred for insurable incidents in excess of deductibles are
recorded as receivables pending the completion of all repair work and the
administrative claims process. The credit risk associated with insurance claims
receivable is considered low due to the high credit quality and funded status of
the insurance underwriters and P&I clubs in which we are a member. The Company
has historically recovered at least its cost in substantially all of its prior
covered incidents.

Recent accounting pronouncements

     In June 2006, the Financial Accounting Standards Board issued
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
interpretation of SFAS109, Accounting for Income Taxes ("FIN 48"), to create a
single model to address accounting for uncertainty in tax positions. FIN 48
clarifies the accounting for income taxes, by prescribing a minimum recognition
threshold a tax position is required to meet before being recognized in the
financial statements. FIN 48 also provides guidance on derecognition,
measurement, classification, interest and penalties accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006. We do not expect that the adoption of FIN 48
will have a significant impact on our financial position and results of
operations.

Off-balance sheet arrangements.

     We do not have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosures about Market Risks

Inflation and Fuel Price Increases

     We do not believe that inflation has a material impact on our operations,
although certain of our operating expenses (e.g., crewing, insurance and
drydocking costs) are subject to fluctuations as a result of market forces.

     Inflationary pressures on bunker (fuel oil) costs are not expected to have
a material effect on our future operations in the case of our ocean vessels
which are mostly time chartered to third parties since it is the charterers who
pay for fuel. If our ocean vessels are employed under COAs, freight rates for
voyage charters are generally sensitive to the price of a ship's fuel. However,
a sharp rise in bunker prices may have a temporary negative effect on our
results since freight rates generally adjust only after prices settle at a
higher level. In our River Business, we have some of our freight agreements
adjusted by bunker prices adjustment formula, and in other cases we have
periodic renegotiations which adjust for fuel prices, and in other cases we
adjust the fuel component of our cost into the freights on a seasonal or yearly
basis. In our Offshore Supply Business and Passenger Business, the charterers
are generally responsible for the cost of fuel. However in the case of one of
our passenger vessels we will be responsible for the supply of fuel and
consequently we undertake the risk of fluctuations in the price of fuel.

Interest Rate Fluctuation

     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.

     Short term variable rate debt composed $4.7 million of our total debt as of
December 31, 2006. Long term variable rate debt composed $34.3 million of our
total debt as of December 31, 2006. Our variable rate debt had an average
interest rate of 7.69% as of December 31, 2006. A 1% increase in interest rates
on $39.0 million of debt would cause our interest expense to increase on average
$0.4 million per year over the term of the loans, with a corresponding decrease
in income before taxes.

Foreign Currency Fluctuation

     We are an international company and, while our financial statements are
reported in U.S. dollars, some of our operations are conducted in foreign
currencies. We use U.S. dollars as our functional currency, and therefore, our
future operating results may be affected by fluctuations in the exchange rate
between the U.S. dollar and other currencies. A large portion of our revenues
are denominated in U.S. dollars as well as a significant amount of our expenses.
However, changes in currency exchange rates could affect our reported revenues,
and even our margins if costs incurred in multiple currencies are different
than, or in a proportion different to, the currencies in which we receive our
revenues.

     We have not historically hedged our exposure to changes in foreign currency
exchange rates and, as a result, we could incur unanticipated future losses.

Description of Credit Facilities and Other Indebtedness

9% First Preferred Ship Mortgage Notes due 2014

     On November 24, 2004, we completed an offering of $180 million of 9% First
Preferred Ship Mortgage Notes due 2014, or the Notes, through a private
placement to institutional investors eligible for resale under Rule 144A and
Regulation S, or the Note Offering. The net proceeds of the Note Offering were
used to repay our 10.5% First Preferred Ship Mortgage Notes due 2008, or the
Prior Notes, certain other existing credit facilities and to fund an escrow
account.

     Interest on the Notes is payable semi-annually on May 24 and November 24 of
each year. The Notes are senior obligations guaranteed by some of our
subsidiaries directly involved in our Ocean, River and Passenger Businesses. The
Notes are secured by first preferred ship mortgages on 19 vessels, two
oceangoing barges and 202 river barges.

     The Notes are subject to certain covenants, including, among other things,
limiting our and our subsidiaries' ability to incur additional indebtedness or
issue preferred stock, pay dividends to shareholders, incur liens or execute
sale leasebacks of certain principal assets and certain restrictions on our
consolidating with or merging into any other person.

     Upon the occurrence of a change of control event, each holder of the Notes
shall have the right to require us to repurchase such notes at a purchase price
in cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest. A change of control means:

     o    if any person beneficially owns more than 35% of our voting stock and
Solimar, Los Avellanos, SIPSA, S.A. and their affiliates, the Permitted Holders,
together beneficially own a lesser percentage and do not control the election of
the majority of the board of directors of the Company, or

     o    during any period of two consecutive years, individuals who at the
beginning of such period constituted our board of directors (together with any
new directors whose election by such board of directors or whose nomination for
election by our shareholders was approved by a vote of 66 2/3% of our directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the board of directors then in
office; or

     o    our merger or consolidation with or into another Person or the merger
of another Person with or into us, or the sale of all or substantially all of
our assets (determined on a consolidated basis) to another person other than (A)
a transaction in which the survivor or transferee is a person that is controlled
by the Permitted Holders or (B) a transaction following which (1) in the case of
a merger or consolidation transaction, holders of securities that represented
100% of our common stock eligible to vote on matters requiring a shareholder
vote immediately prior to such transaction (or other securities into which such
securities are converted as part of such merger or consolidation transaction)
own directly or indirectly at least a majority of the voting power of the common
stock eligible to vote on matters requiring a shareholder vote of the surviving
Person in such merger or consolidation transaction immediately after such
transaction and (2) in the case of a sale of assets transaction, each transferee
becomes an obligor in respect of the Notes and a subsidiary of the transferor of
such assets.

In the first quarter of 2005, pursuant to a registration rights agreement, we
completed a registered exchange offer in which we exchanged registered Notes for
the Notes that were originally issued in order to allow the Notes to be eligible
for trading in the public markets.

Loan with DVB Bank America NV (DVB NV) of up to $30 million:

     On April 27, 2005 UP Offshore (Panama) S.A. (our subsidiary in the Offshore
Supply Business) entered into a $30.0 million loan agreement with DVB NV for the
purpose of providing post delivery financing of two PSVs named UP Esmeralda and
UP Safira, which were delivered in May and June 2005, and repaying existing
financing and shareholder loans.

     This loan is divided into two tranches:

     o    - Tranche A, amounting to $26.0 million, shall be repaid by (i) 40
consecutive quarterly installments of $0.5 million each beginning in September
2005 and (ii) a balloon repayment of $8.0 million together with the 40
installment and accrues interest at LIBOR rate plus 1.875% per annum if the
Holding Company Guaranty has not been issued, and

     o    - Tranche B, amounting to $4.0 million, shall be repaid by 12
consecutive quarterly installments of $0.3 million each beginning in September
2005 and accrues interest at LIBOR rate plus 2.25% per annum.

     The loan is secured by a mortgage on the UP Safira and UP Esmeralda and is
jointly and severally irrevocable and unconditionally guaranteed by Packet
Maritime Inc. and Padow Shipping Inc. The loan also contains customary covenants
that limit, among other things, the Borrower's and the Guarantors' ability to
incur additional indebtedness, grant liens over their assets, sell assets, pay
dividends, repay indebtedness, merge or consolidate, change lines of business
and amend the terms of subordinated debt. The agreement governing the facility
also contains customary events of default. If an event of default occurs and is
continuing, DVB NV may require the entire amount of the loan be immediately
repaid in full. Further, the loan agreement requires until June 2008 that the
PSVs pledged as security have an aggregate market value of at least 85% of the
value of the loan amount and at all times thereafter an aggregate market value
of at least 75% of the value of the loan.

     The aggregate outstanding principal balance of the loan was $25.3 million
at December 31, 2006.

Loan with DVB Bank AG (DVB AG) of up to $15.0 million:

     On January 17, 2006, UP Offshore Apoio Maritimo Ltda. (a wholly owned
subsidiary of the Offshore Supply Business) as Borrower, Packet Maritime Inc.
and Padow Shipping Inc. as Guarantors and UP Offshore as Holding Company entered
into a $15.0 million loan agreement with DVB AG for the purposes of providing
post delivery financing of one PSV named UP Agua-Marinha delivered in February
2006.

     This loan is divided into two tranches:

     o    - Tranche A, amounting to $13.0 million, shall be repaid by (i) 120
consecutive monthly installments of $75,000 each beginning in March 2006 and
(ii) a balloon repayment of $4.0 million together with the 120 installments
which accrue interest at LIBOR rate plus a margin of 2.25% per annum, and

     o    - Tranche B, amounting to $2.0 million, shall be repaid by 35
consecutive monthly installments of $56,000 each beginning in March 2006 which
accrues interest at LIBOR rate plus a margin of 2.875% per annum.

     On January 24, 2007 UP Offshore Apoio Maritimo Ltda. and DVB AG amended and
restated the margin of both tranches to 1.20% per annum effective since February
1, 2007.

     The loan is secured by a mortgage on the UP Agua Marinha and is jointly and
severally irrevocable and unconditionally guaranteed by Packet Maritime Inc. and
Padow Shipping Inc. The loan also contains customary covenants that limit, among
other things, the Borrower's and the Guarantors' ability to incur additional
indebtedness, grant liens over their assets, sell assets, pay dividends, repay
indebtedness, merge or consolidate, change lines of business and amend the terms
of subordinated debt. The agreement governing the facility also contains
customary events of default. If an event of default occurs and is continuing,
DVB AG may require the entire amount of the loan be immediately repaid in full.
Further, the loan agreement requires until February 2009 that the UP Agua
Marinha pledged as security has an aggregate market value of at least 117.6% of
the value of the loan amount and at all times thereafter an aggregate market
value of at least 133.3% of the value of the loan.

The aggregate outstanding principal balance of the loan was $13.7 million at
December 31, 2006.

Loan with DVB Bank AG (DVB AG) of up to $61.3 million:

     o    On December 28, 2006, UP Offshore (Bahamas) Ltd., as Borrower, entered
into a $61.3 million loan agreement with DVB AG for the purpose of refinancing
three PSVs named UP Esmeralda, UP Safira and UP Topazio. The loan is divided
into two advances, and shall be repaid by 40 consecutive quarterly installments
as set forth in the repayment schedule therein.

The loan is secured by a mortgage on the UP Esmeralda, UP Safira, UP Topazio and
UP Agua Marinha (together, the Mortgaged Vessels) and is jointly and severally
irrevocable and unconditionally guaranteed by Ultrapetrol (Bahamas) Ltd., UP
Offshore Apoio Maritimo Ltda., Packet Maritime Inc. and Padow Shipping Inc. The
loan also contains customary covenants that limit, among other things, the
Borrower's and the Guarantors' ability to incur additional indebtedness, grant
liens over their assets, sell assets, pay dividends, repay indebtedness, merge
or consolidate, change lines of business and amend the terms of subordinated
debt. The agreement governing the facility also contains customary events of
default. If an event of default occurs and is continuing, DVB AG may require the
entire amount of the loan be immediately repaid in full. Further, the loan
agreement requires upon the until the third anniversary of the final advance
under the loan, the Mortgaged Vessels pledged as security have an aggregate
market value of at least 117.6% of the value of the loan amount and at all times
thereafter an aggregate market value of at least 133.3% of the value of the
loan.

At December 31, 2006, there are no drawdowns under the loan agreement.

Senior Secured Term Loan with Natixis of $13.6 million:

     On January 29, 2007, Stanyan Shipping Inc. (a wholly owned subsidiary in
the Ocean Business and the owner of the Alejandrina) as Borrower, and
Ultrapetrol (Bahamas) Limited as Guarantor and Holding Company entered into a
$13.6 million loan agreement with Natixis for the purpose of providing post
delivery financing of one Panamanian flag small product tanker named
Alejandrina.

     The loan must be repaid by (i) 40 consecutive quarterly installments of
$0.2 million each beginning in June 2007 and (ii) a balloon repayment of $4.5
million payable simultaneously with the 40th quarterly installment. The loan
accrues interest at LIBOR plus 1.00% per annum for so long as the Alejandrina
remains chartered under standard conditions.

     The loan is secured by a mortgage on the Alejandrina and is guaranteed by
Ultrapetrol (Bahamas) Limited. The loan also contains customary covenants that
limit, among other things, the Borrower's and the Guarantors' ability to incur
additional indebtedness, grant liens over their assets, sell assets, pay
dividends, repay indebtedness, merge or consolidate, change lines of business
and amend the terms of subordinated debt. The agreement governing the facility
also contains customary events of default.

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

     Not Applicable.

D. TREND INFORMATION

     We believe the following developments and initiatives will have a
significant impact on the operations of our various businesses.

River Business
--------------

     o    New vessels. On March 7, 2007, we acquired ownership of an existing
          competitor in our river system adding to our fleet one 4,500 HP
          shallow drafted pushboat and twelve Jumbo 2,500 dwt barges, all of
          which were built in the United States in 1995.

     o    Expansion and fuel efficiency initiatives - We have begun a three year
          program to expand the size of approximately 130 of our barges. To
          date, we have expanded 12 barges, and we expect to have a total of 62
          expanded by the end of 2007. We are also working on a four year
          program to replace the diesel engines in 16 of our line pushboats with
          new engines that will burn less expensive heavy fuel oil. We have to
          date contracted to purchase six of these new engines from MAN Diesel
          with expected delivery dates in July and November of 2007.

     o    Expansion of our barge construction capability. We plan to expand our
          shipyard in Argentina and adequately equip it to build new barges and
          grow our fleet in order to meet our expected future incremental demand
          in a cost effective manner. We expect that the most significant impact
          from these programs on our operations will occur after 2007.

Offshore Supply Business
------------------------

     o    Acquisition of additional 66.67% interest - On March 21, 2006, we
          acquired an additional 66.67% of UP Offshore, which is the holding
          company for our Offshore Supply Business, raising our ownership to
          94.45%. Prior to this transaction, we used the equity method of
          accounting for our investment in UP Offshore. Since the date of the
          transaction, we consolidate UP Offshore into our financial results.

     o    New vessels - Our 2006 operating results reflect the partial year
          operations of two newly built PSVs, one that we received and placed
          into service in March 2006, and one that we received in August 2006
          and placed into service in September 2006. We expect to take delivery
          of two more sister vessels currently under construction in Brazil in
          the second quarter 2007 and in 2008, respectively. In addition, we
          have recently signed contracts with a shipyard in India for the
          construction of two additional vessels to be delivered commencing in
          2009, with an option to build two more.

Ocean Business
--------------

     o    Vessel acquisitions and dispositions in our Ocean Business - On
          October 23, 2006, we purchased our Amadeo, a 39,530 mt dwt crude and
          product carrier. Upon delivery in December 2006, we sent this vessel
          to a Romanian shipyard where we have contracted for retro-fitting a
          double hull. We expect this vessel to commence service in South
          America in the second quarter 2007. On January 5, 2007 we took
          delivery of our new acquisition, Alejandrina, a 9,200 metric tons dwt
          2006 built double hull product carrier which will commence service in
          South America in late March 2007.

Passenger Business
------------------

     o    Vessel deployment in our Passenger Business. We completed a
          refurbishment of all passenger accommodations on the New Flamenco in
          February 2006 and she has secured employment at increased rates for
          the European summer season of 2007 with an option for the 2008 summer
          season. We have entered into an agreement with Monarch Classic Cruises
          for the Grand Victoria (to be renamed Blue Monarch) to participate in
          their program in the Aegean Sea during the European summer season of
          2007.

E. OFF-BALANCE SHEET ARRANGEMENTS

     We do not have any off-balance sheet arrangements.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

     The following schedule summarizes our contractual obligations and
commercial commitments as of December 31, 2006. The amounts below include both
principal and interest payments.

<TABLE>
     Contractual Obligations
     -----------------------
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                                                  Payments due by period
--------------------------------------------------------------------------------------------------------------

                                                                           Two to       Four to       After
                                                                           three        five          five
                                                  Total      Current(a)    years(b)     years(c)      years(d)
--------------------------------------------------------------------------------------------------------------
                                                                  (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>          <C>          <C>          <C>
1. Long - term debt obligations(e)

   - DVB Bank of America NV
   o   Tranche A (UP Offshore Panama)
                                                  $23,300       $1,800       $3,600       $3,600      $14,300
   o   Tranche B (UP Offshore Panama)
                                                    2,000        1,333          667           --           --
   - DVB Bank AG
   o   Tranche A (UP Offshore Apoio)
                                                   12,250          900        1,800        1,800        7,750
   o   Tranche B (UP Offshore Apoio)
                                                    1,444          667          777           --           --

-9% First Preferred Ship Mortgage
Notes due 2014                                    180,000           --           --           --      180,000
                                                 --------     --------     --------     --------     --------

Total long-term debt obligations                  218,994        4,700        6,844        5,400      202,050

Estimated interest on contractual debt
obligation

   - DVB Bank of America NV
   o   Tranche A (UP Offshore Panama)
                                                    9,774        1,639        2,886        2,365        2,884
   o   Tranche B (UP Offshore Panama)
                                                      133          114           19           --           --
   - DVB Bank AG
   o   Tranche A (UP Offshore Apoio)
                                                    4,979          787        1,397        1,155        1,640
   o   Tranche B (UP Offshore Apoio)
                                                      108           76           32           --           --

- 9% First Preferred Ship Mortgage
Notes due 2014                                    129,600       16,200       32,400       32,400       48,600
                                                 --------     --------     --------     --------     --------

Total estimated interest on contractual debt
obligation                                        144,594       18,816       36,734       35,920       53,124

2. Operating lease obligations                      2,062          568          945          321          228

3. Purchase obligations

   - Fuel supply contract                          12,000       12,000           --           --           --

   - Vessel construction                           14,000       11,600        2,400           --           --
                                                 --------     --------     --------     --------     --------

                                                   26,000       23,600        2,400           --           --
                                                 ========     ========     ========     ========     ========

Total contractual obligations                    $391,650      $47,684      $46,923      $41,641     $255,402
                                                 ========     ========     ========     ========     ========
</TABLE>

(a)  Represents the period from January 1, 2007 through December 31, 2007.

(b)  Represents the period from January 1, 2008 through December 31, 2009.

(c)  Represents the period from January 1, 2010 through December 31, 2011.

(d)  Represents the period after December 31, 2011.

(e)  Represents principal amounts due on outstanding debt obligations, current
     and long-term, as of December 31, 2006. Amounts do not include interest
     payments.

The interest rate and term assumptions used in these calculations are contained
in the following table:

<TABLE>
<CAPTION>
                                                            Obligation                Principal     Interest   Period
                                                                                      at December   rate       From-To
                                                                                      31, 2006
----------------------------------------------------------------------------------------------------------------------------------
                                                                                      (Dollars in thousands)
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                                <C>           <C>        <C>
DVB Bank of America NV
                                                   Tranche A (UP Offshore Panama)     $23,300       7.24%      1/1/2007-5/31/2015

                                                   Tranche B (UP Offshore Panama)       2,000       7.62%      1/1/2007-6/31/2008
DVB Bank AG
                                                   Tranche A (UP Offshore Apoio)       12,250       6.56%      1/1/2007-2/14/2016
                                                   Tranche B (UP Offshore Apoio)        1,444       6.56%      1/1/2007-2/14/2009
9% First Preferred ship Mortgages Notes due 2014                                      180,000       9.00%      1/1/2007-11/24/2014
</TABLE>

(f)  All interest expense calculations begin January 1, 2007 and end on the
     respective maturity dates. The LIBOR rates are the rate in effect as of
     December 31, 2006.

(g)  Our subsidiaries in the River Business, entered into a full supply contract
     with Repsol YPF S.A. The calculations use the market prices in effect as of
     December 31, 2006.

     For additional disclosures regarding these obligations and commitments, see
our notes to our audited consolidated financial statements.

     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.

     Our ability to make scheduled payments of principal, or to pay interest on,
or to refinance, our indebtedness, including the Notes, or to fund planned
capital expenditures will depend on our ability to generate cash from our
operation in the future. Our ability to generate cash is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control.

G. SAFE HARBOR

     Forward-looking information discussed in this Item 5 includes assumptions,
expectations, projections, intentions and beliefs about future events. These
statements are intended as "forward-looking statements". We caution that
assumptions, expectations, projections, intentions and beliefs about future
events may and often do vary from actual results and the differences can be
material. Please see "Cautionary Statement Regarding Forward-Looking Statements"
in this Report.

ITEM 6. - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.   DIRECTORS AND EXECUTIVE OFFICERS

     Set forth below are the names, ages and positions of our directors and
executive officers. Our board of directors is elected annually, and each
director elected holds office until his successor has been duly elected and
qualified, except in the event of his death, resignation, removal or the earlier
termination of his term of office. George Wood has agreed to serve on our audit
committee. Officers are elected from time to time by vote of our board of
directors and hold office until a successor is elected. The business address of
each of our executive officers and directors is H&J Corporate Services Ltd.,
Ocean Centre, Montagu Foreshore, East Bay St., P.O. Box SS-19084, Nassau,
Bahamas.

        Name               Age                     Position
        ----               ---                     --------
Felipe Menendez R.......    52   Chief Executive Officer, President and Director
Ricardo Menendez R......    58   Executive Vice President and Director; Chief
                                 Executive Officer of UP Offshore
Leonard J. Hoskinson....    53   Chief Financial Officer, Secretary and Director
James F. Martin.........    52   Director
Katherine A. Downs......    52   Director
Michael C. Hagan........    60   Director
George Wood.............    61   Director
Alberto G. Deyros.......    51   Chief Accountant

     Biographical information with respect to each of our directors, executives
and key personnel is set forth below.

     Felipe Menendez R. Mr. Menendez has been President, Chief Executive Officer
and a Director of the Company since incorporation in December 1997, and is the
brother of Ricardo Menendez. Mr. Menendez commenced his career in shipping in
1974. He is President, and has been a Director of Ultrapetrol S.A. since its
incorporation in 1992 as well as the President and CEO of UABL. Mr. Menendez is
also a Director of SIPSA S.A., or SIPSA, a Chilean publicly traded company
controlled by the Menendez family. 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.

     Ricardo Menendez R. Mr. Menendez is the Executive Vice President of the
Company and CEO of UP Offshore and has been a Director of the Company 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 Navegacion 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 has been the Executive Vice President and 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
and is currently its Chairman. Mr. Menendez is also a Director of UABL.

     Leonard J. Hoskinson. Mr. Hoskinson is the Chief Financial Officer of the
Company, was appointed Director of the Company in March 2000 and assumed the
position of Secretary six months later. Mr. Hoskinson has been employed by the
Company and its subsidiaries for over 16 years. Prior to that, he had an
international banking career specializing in ship finance spanning over 18 years
and culminating as the Head of Shipping for Marine Midland Bank NA in New York
(part of the HSBC banking group). He is also a Director of UABL.

     James F. Martin. Mr. Martin has been a Director since 2000. He is Managing
Partner at EMP Latin America and a Managing Director at EMP Global, responsible
for the management of the $1.1 billion, Bermuda-based AIG-GE Capital Latin
America Infrastructure Fund L.P. and for development of new funds and financial
advisory activities in the Latin America region. Prior to joining EMP Global in
1997, Mr. Martin was head of a team responsible for investments in water and
environmental infrastructure at International Finance Corporation. Mr. Martin
has a BSFS in International Economics from Georgetown University and a MBA from
Columbia University. He is also a Director of UABL and UP Offshore.

     Katherine A. Downs. Ms. Downs has been a Director since 2000. Ms. Downs is
a Partner at EMP Latin America and a Managing Director at EMP Global. She joined
EMP Global in 1997 where she has worked on investments in transportation, power,
water and sanitation, and natural resources. 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. Ms. Downs holds a BA from Wesleyan
University, a JD from Boston University Law School, a MBA from Yale University
School of Management, and a MIPP in Latin American Studies from Johns Hopkins
SAIS, as well as the CFA designation. She is also a Director of UABL and UP
Offshore.

     Michael C. Hagan. Mr. Hagan has been a Director since October 2006. He has
served as Chief Executive Officer of American Commercial Lines (ACL) from 1991
to 2003, and has served as Executive Vice President from 1989 to 1991. ACL was
at the time one of the largest inland river-oriented businesses engaged in barge
transportation, marine terminal and marine equipment manufacturing businesses
with peak sales of $850.0 million. Mr. Hagan started his career within ACL in
American Commercial Barge Lines (ACBL), a subsidiary of ACL, where he was
responsible for the sales and marketing of their inland barge operation. He then
became Sales VP for CSX Transportation Railroad, with sales volume of $2.5
billion per annum in bulk and manufactured products as well as liquid chemicals.
Mr. Hagan holds a B.S. in Business Administration from Brescia University. Mr.
Hagan is a member of the National Waterways Foundation board of Directors and is
a past Chairman of the American Waterways Operators.

     George Wood. Mr. Wood has been a Director upon since October 2006. He is
managing director of Chancery Export Finance LLC (Chancery), a firm licensed by
the Export Import Bank of the United States of America (ExIm Bank). Chancery
provides ExIm Bank guaranteed financing for purchase of U.S. manufactured
capital goods by overseas buyers. Prior to his designation as managing director
of Chancery, Mr. Wood worked as managing director of Baltimore based Bengur
Bryan & Co. (Bengur Bryan) providing investment-banking services to
transportation related companies in the global maritime, U.S. trucking, motor
coach and rail industries. Before his employment with Bengur Bryan in 2000, Mr.
Wood was employed for 27 years in various managerial positions at the First
National Bank of Maryland which included managing the International Banking
Group as well as the bank's specialized lending divisions in leasing, rail,
maritime and motor coach industries, encompassing a risk asset portfolio of $1.2
billion. Mr. Wood holds a B.S. in Economics and Finance from University of
Pennsylvania and an MBA from University of North Carolina and became a CPA in
1980. Mr. Wood presently serves as member of the Boards of Atlanta-based
Infinity Rails Wawa Inc., and John S. Connor Inc.. Mr. Wood recently served for
two years on the Board of LASCO Shipping Co.

     Alberto G. Deyros: Mr. Deyros is the Chief Accountant of the Company and
was appointed in April 2006. Mr. Deyros has been employed by the Company and its
subsidiaries for more than eight years. Prior to that he specialized in ship
administration management over a period of 20 years. Mr. Deyros is a Certified
Public Accountant and a graduate of Universidad de Buenos Aires.

B.   COMPENSATION

     The aggregate annual net cost to us for the compensation paid to members of
the board of directors and our executive officers was $1.9 million for the
fiscal year ended December 31, 2006.

Management Agreements

     For the day to day management of our operations, we and/or our subsidiaries
have entered into administrative and management agreements to provide specific
services for our operations. We refer you to "Related Party Transactions" in
Item 7.B of this report.

C.   BOARD PRACTICES

     Our audit committee is composed of Mr. Wood, one of our independent
directors. Our audit committee is responsible for reviewing our accounting
controls and recommending to the board of directors the engagement of our
outside auditors. Our corporate governance practices are in compliance with
Bahamian law, and we are exempt from many of the corporate governance provisions
of the Nasdaq Marketplace Rules other than those related to the establishment of
an audit committee.

     We have certified to Nasdaq that our corporate governance practices are in
compliance with, and are not prohibited by, the laws of The Bahamas. Therefore,
we are exempt from many of Nasdaq's corporate governance practices other than
the requirements regarding the disclosure of a going concern audit opinion,
submission of a listing agreement, notification of material non-compliance with
Nasdaq corporate governance practices and the establishment of an audit
committee in accordance with Nasdaq Marketplace Rules 4350(d)(3) and
4350(d)(2)(A)(ii). The practices that we follow in lieu of Nasdaq's corporate
governance rules are as follows:

     o    We do not have a board of directors with a majority of independent
directors, nor are we required to under Bahamian law. However, we have two
independent directors.

     o    In lieu of holding regular meetings at which only independent
directors are present, our entire board of directors, may hold regular meetings,
as is consistent with Bahamian law.

     o    In lieu of an audit committee comprising three independent directors,
our audit committee will have at least one member, which is consistent with
Bahamian law. The member of the audit committee currently meets the Nasdaq
requirement of a financial expert. We cannot guarantee that at least one member
of our audit committee will continue to meet this requirement.

     o    In lieu of a nomination committee comprising independent directors,
our board of directors will be responsible for identifying and recommending
potential candidates to become board members and recommending directors for
appointment to board committees. Shareholders may also identify and recommend
potential candidates to become board members in writing. No formal written
charter has been prepared or adopted because this process is outlined in our
memorandum of association.

     o    In lieu of a compensation committee comprising independent directors,
our board of directors will be responsible for establishing the executive
officers' compensation and benefits. Under Bahamian law, compensation of the
executive officers is not required to be determined by an independent committee.

     o    In lieu of obtaining an independent review of related party
transactions for conflicts of interests, consistent with Bahamian law
requirements, our memorandum of association provides that related party
transactions must be approved by disinterested directors, and in certain
circumstances, supported by a fairness opinion.

     o    Pursuant to our articles of association, we are required to obtain
shareholder approval in order to issue additional securities.

     o    As a foreign private issuer, we are not required to solicit proxies or
provide proxy statements to Nasdaq pursuant to Nasdaq corporate governance rules
or Bahamian law. Consistent with Bahamian law and as provided in our articles of
association, we will notify our shareholders of meetings between 15 and 60 days
before the meeting. This notification will contain, among other things,
information regarding business to be transacted at the meeting. In addition, our
memorandum of association provides that shareholders must give us 90 days
advance notice to properly introduce any business at a meeting of the
shareholders. Our memorandum of association also provides that shareholders may
designate a proxy to act on their behalf (in writing or by telephonic or
electronic means as approved by our board from time to time).

     Other than as noted above, we are in full compliance with all other
applicable Nasdaq corporate governance standards.

D.   EMPLOYEES

     As of December 31, 2006, we employed approximately 855 employees,
consisting of 188 land-based employees and approximately 677 seafarers as crew
on our vessels, of which 183 were in our River Business, 57 were in our Offshore
Supply Business, 126 were in our Ocean Business, and 301 were in our Passenger
Business. Some of these employees were employed through various manning agents
depending on the nationality as listed below:

<TABLE>
     <S>                                   <C>
     o Indian crew:                        Orient Ship Management & Manning Pvt., Ltd., Mumbai, India
     o Argentine crew:                     Tecnical Services S.A., a subsidiary, Montevideo, Uruguay
     o Filipino crew:                      C.F. Sharp Crew Management, Manila, Philippines
     o Ukrainian crew:                     South Star Ltd., Odessa, Ukraine
     o Romanian crew:                      Corona Shipping SRL, Constantza, Romania
     o Indonesian crew:                    Indomarimo Maju PT, Jakarta, Indonesia
     o Chilean crew:                       Maritima SIPSA, a related company, Santiago, Chile
     o Greek and Eastern European crew:    Nova Manning Services, Piaraeus, Greece
     o Paraguayan crew:                    Tecnical Services S.A., a subsidiary, Montevideo, Uruguay
</TABLE>

     Our crew is employed under the standard collective bargaining agreements
with the seafarers' union in their respective countries. 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 and certification to comply with all international
regulations and shipping conventions. Our training requirements for the crew
exceed the applicable statutory requirements. 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. We have in force special
programs such as a performance-related incentive bonus, which is paid to some of
our senior officers upon rejoining our ships. This ensures retention of
qualified and competent staff.

E.   SHARE OWNERSHIP

For information concerning the share ownership in our Company of our officers
and directors, please see Item 7 -- Major Shareholders and Related Party
Transactions.

ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.   MAJOR SHAREHOLDERS

     The following table sets forth information regarding the owners of more
than five percent of our common stock as of March 21, 2007. The address of each
of the shareholders set forth below is Ocean Centre, Montagu Foreshore, East Bay
St., P.O. Box SS-19084, Nassau, Bahamas.

<TABLE>
<CAPTION>
                                                                            Prior to the Stock Offering
                                                                           ----------------------------
                                                               Number       Percent of
                                                             of Shares        Shares
                                                            Beneficially   Beneficially      Voting
Name                                                           Owned           Owned      Percentage(1)
-------------------------------------------------------------------------------------------------------
<S>                                                            <C>             <C>            <C>
Solimar Holdings Ltd.(2)(3)(4)                                 9,819,048       34.5%          56.4%
Inversiones Los Avellanos S.A.  (3)(5)(6)                      5,594,624       19.7%          28.6%
Hazels (Bahamas) Investments Inc. (3)(5)(6)                      702,159        2.5%           4.1%
All directors and executive officers as a group (5)(7)         5,941,576       20.6%          32.9%
</TABLE>

(1)  Solimar, Los Avellanos and Hazels are each entitled to seven votes for each
     share of our common stock that they hold, and all other holders of our
     common stock are entitled to one vote for each share of common stock held.

(2)  Solimar is a wholly-owned subsidiary of the AIG-GE Capital Latin American
     Infrastructure Fund L.P., a Bermuda limited partnership.

(3)  Solimar, Los Avellanos and Hazels have entered into an agreement pursuant
     to which they have agreed to vote their respective shares together in all
     matters where a vote of our shareholders is required. See "Related Party
     Transactions" in Item 7.B of this report

(4)  Includes warrants held by Solimar which entitle it to purchase up to
     146,384 shares at an exercise price of $6.83 per share.

(5)  Los Avellanos and the Hazels are controlled by members of the Menendez
     family, including Felipe Menendez R., our President, Chief Executive
     Officer and a director, and Ricardo Menendez R., our Executive Vice
     President and a director. The sole shareholder of Los Avellanos is SIPSA
     S.A. and Hazels is a wholly-owned subsidiary of Los Avellanos.

(6)  Includes shares owned by Hazels, a wholly-owned subsidiary of Los
     Avellanos.

(7)  Includes 310,000 shares of restricted stock issued to companies controlled
     by our chief executive officer, executive vice president and chief
     financial officer. Does not include 348,750 shares of common stock issuable
     upon exercise of options granted to these companies, as those options have
     not yet vested.

B.   RELATED PARTY TRANSACTIONS

     Our revenues derived from transactions with related parties for each of the
years ended December 31, 2004, 2005 and 2006 amounted to approximately $5.2
million, $2.0 million and $4.1 million, respectively. As of December 31, 2005
and 2006, the balances of the accounts receivable from and payables to all
related parties were approximately $17.9 million and $5.2 million,
respectively.

Maritima SIPSA S.A.

     A significant part of our revenue from related parties is derived from the
chartering activity of Maritima SIPSA S.A. In May 2003, the Princess Marina was
chartered by a Chilean national petroleum company under a time charter that
required her to be flagged in Chile. Pursuant to Chilean Law in order for her to
be flagged in Chile, she needed to be owned by a legal entity controlled by
Chilean citizens. Maritima SIPSA S.A. is controlled by Chilean citizens. We own
49% of Maritima SIPSA S.A., and the other shareholder of Maritima SIPSA S.A.,
SIPSA S.A., is a Chilean public company that is controlled by members of the
Menendez family, which includes Felipe Menendez R., our President, Chief
Executive Officer and Director, and Ricardo Menendez R., our Executive Vice
President and Director. In order to effect the re-flagging of the vessel, we
sold the Princess Marina to Maritima SIPSA S.A. for a purchase price of $15.1
million, and partially financed the sale by lending Maritima SIPSA S.A. $7.4
million. Under the terms of our agreement, Maritima SIPSA S.A. pays us
installments of the purchase price on a monthly basis that we record as charter
revenue. For the year ended December 31, 2006, this charter revenue amounted to
$3.9 million and management fees paid to Ravenscroft amounted to $0.2 million.
For the year ended December 31, 2005, this charter revenue amounted to $2.0
million and for the year ended December 31, 2004, this charter revenue amounted
to $2.5 million. We are obligated to repurchase (and Maritima SIPSA S.A. is
obligated to sell to us) the Princess Marina upon the expiry of the charter
originally contracted for. In July 2006, the Company and Maritima SIPSA S.A.
entered into an amended agreement to modify the repurchase date of the vessel to
February 2007 or at a later date if the charter was further extended, at a
purchase price not exceeding $7.7 million. In March 2007, the Company and
Maritima SIPSA S.A. entered into an agreement to postpone the date of sale of
the Princess Marina (from Maritima SIPSA S.A. to the Company) to September 25,
2007. This new agreement also contemplates a modification to the purchase price
agreed, lowering it to the sum of $3.7 million. Concurrently with the payment of
the agreed purchase price, Maritima SIPSA S.A. will repay to the Company the
remaining $2.3 million outstanding.

Shipping Services Argentina S.A. (Formerly I. Shipping Services S.A.)

     We and our subsidiaries also contract with related parties for various
services. Pursuant to an agency agreement with us, Shipping Services Argentina
S.A. (formerly I. Shipping Services S.A.) has agreed to perform the duties of
port agent for us in Argentina. Shipping Services Argentina S.A. is indirectly
controlled by the Menendez family, which includes Felipe Menendez R. and Ricardo
Menendez R. For these services, we pay Shipping Services Argentina S.A. fees
ranging from $800 to $1,875 per port call. For each of the years ended December
31, 2004, 2005 and 2006 the amounts paid and/or accrued for such services
amounted to $0.02 million, $0.0 million, and $0.08 million, respectively. We
believe that payments made under the above agreements reflect market rates for
the services provided and are similar to what third parties pay for similar
services.

     Certain of our directors and senior management hold similar positions with
our related parties. Felipe Menendez R., who is our President, Chief Executive
Officer and a director, is also a director of Maritima SIPSA S.A., and Shipping
Services Argentina S.A. Ricardo Menendez R., who is our Executive Vice President
and one of our directors, is also the President of Shipping Services Argentina
S.A., and is a director of Maritima SIPSA S.A. 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 Maritima SIPSA S.A. and Shipping
Services Argentina S.A.

Ravenscroft Acquisition

     On March 20, 2006, we purchased all of the issued and outstanding capital
stock of Ravenscroft Shipping (Bahamas) S.A. from two of our related companies,
Crosstrade Maritime Inc., and Crosstrees Maritime Inc., for the purchase price
of $11.5 million. The purchase price included a building in Coral Gables,
Florida, U.S., independently valued at $4.5 million. Ravenscroft Shipping
(Bahamas) Inc. is a holding company that is the ultimate parent of our vessel
managers, Ravenscroft Ship Management Inc., which manages the vessels in our
Ocean Business and Offshore Supply Business, and Elysian Ship Management Inc.,
which manages the vessels in our Passenger Business. In compliance with the
requirements of our indenture related to the 9% First Preferred Ship Mortgage
Notes due 2014, we obtained a fairness opinion from an internationally
recognized accounting firm in connection with this acquisition.

UP Offshore Acquisition

     Separately, we purchased 66.67% of the issued and outstanding capital stock
of UP Offshore, the company through which we operate our Offshore Supply
Business, from an affiliate of Solimar, one of our shareholders, for a purchase
price of $48.0 million on March 21, 2006. Following this acquisition, we hold
94.45% of the issued and outstanding shares of UP Offshore. In compliance with
the requirements of our indenture related to the 9% First Preferred Ship
Mortgage Notes due 2014, we obtained a fairness opinion from an internationally
recognized accounting firm in connection with this acquisition.

Operations in OTS S.A.'s terminal

     UABL Paraguay, our subsidiary in the River Business, operates the terminal
that pertains to Obras Terminales y Servicios S.A. (OTS S.A.), a related party.
In 2006 and 2005, UABL Paraguay paid to OTS S.A. $0.6 million and $0.6 million,
respectively, for this operation.

UP River (Holdings) Ltd.

     On May 3, 2006, we entered into an agreement with International Finance
Corporation, or IFC, to purchase from IFC 7.14% of UP River (Holdings) Ltd., an
entity that owned the 50% of UABL that we did not own, for the price of $6.2
million. As part of this agreement, IFC waived its option to convert its
interest in UP River to shares in our company and its right to participate in
our IPO. Our obligation under this agreement was paid from the proceeds of our
IPO.

Shareholders Arrangements

     On March 20, 2006, Los Avellanos and Avemar, two of our shareholders
cancelled their agreement pursuant to which Avemar had previously granted Los
Avellanos an irrevocable proxy to vote our shares owned by Avemar. The shares
owned by Avemar were distributed immediately prior to closing of our IPO.
Solimar owns 34.5% of our shares and Los Avellanos owns directly or indirectly
22.2% of our shares.

Share Repurchase

     On March 20, 2006, we exercised our option to repurchase from Los Avellanos
25,212 shares of our common stock for a total consideration of $894,999, and the
$894,999 note originally issued by Los Avellanos in connection with the option
was cancelled.

Solimar (Holdings) Ltd. Warrants

     Under the terms of the warrant agreement dated March 16, 2000, and as
amended as of September 21, 2006, our shareholder Solimar owns warrants to
purchase, prior to the 7.36842 for one stock split that occurred on September
25, 2006, up to 146,384 shares of our common stock at an exercise price of $6.83
per share. These warrants may be exercised at any time up to and including March
1, 2010 for restricted and unregistered shares.

Registration Rights Agreement

     We are parties to a registration rights agreement with Los Avellanos,
Hazels and Solimar, our shareholders prior to our IPO, pursuant to which we
granted them and certain of their transferees, the right, under certain
circumstances and subject to certain restrictions, including restrictions
included in the lock-up agreements to which Los Avellanos, Hazels and Solimar
are party, to require us to register under the Securities Act shares of our
common stock held by Los Avellanos, Hazels or Solimar. Under the registration
rights agreement, Los Avellanos, Hazels and Solimar have the right to request
that we register the sale of shares held by them on their behalf and may require
that we make available shelf registration statements permitting sales of shares
into the market from time to time over an extended period. We are required to
pay all registration expenses in connection with the demand registrations under
the registration rights agreement except that the underwriters' expenses
reimbursement will be limited to one counsel. In addition, Los Avellanos, Hazels
and Solimar have the ability to exercise certain piggyback registration rights
in connection with registered offerings initiated by us, for which we must pay
all expenses.

Shareholders Agreement

     Solimar, Los Avellanos and Hazels are party to a second amended and
restated shareholders agreement, dated September 21, 2006, that became effective
on October 18, 2006 that contains, among other things, provisions relating to
director designation rights, restrictions of transfers of stock held by them and
an agreement to vote their shares together on certain matters.

Employment Agreements

     We have entered into employment contracts with our President and Chief
Executive Officer, Felipe Menendez R., our Executive Vice President, Ricardo
Menendez R., our Chief Financial Officer, Leonard J. Hoskinson, and our Chief
Accountant, Mr. Alberto G. Deyros. Each of these employment agreements has an
initial term of three years from October 18, 2006 and is subject to one year
renewals at our written election. In addition, on July 20, 2006, we entered into
separate consulting agreements that became effective October 18, 2006 with
companies controlled by our chief executive officer, executive vice president,
chief financial officer and chief accountant for work they performed for us in
various different jurisdictions. Some of these consulting agreements obligate us
to grant these companies an aggregate of 310,000 shares of restricted stock for
which we expect to incur charges over the three year period of the agreement
equal in the aggregate to the number of shares granted multiplied by $11.00 (the
IPO price) and 348,750 shares issuable upon the exercise of options with an
exercise price of $11.00 (the IPO price) pursuant to the Plan.

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

     Not Applicable.

ITEM 10 - ADDITIONAL INFORMATION

A.   SHARE CAPITAL

     Not Applicable.

B.   MEMORANDUM AND ARTICLES OF ASSOCIATION

MEMORANDUM AND ARTICLES OF ASSOCIATION

     The following summarizes certain provisions of the Company's Second Amended
and Restated Memorandum of Association and Fourth Amended and Restated Articles
of Association (hereinafter referred to as "the 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 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., Ocean Centre, Montagu
Foreshore, East Bay Street, P.O. Box SS-19084 Nassau, Bahamas. The Registered
Agent of the Company is H & J Corporate Services Ltd., Ocean Centre, Montagu
Foreshore, East Bay Street, P.O. Box SS-19084, Nassau, Bahamas.

     Clause 4 of the Company's Memorandum of Association provides that its
purpose is to engage in any lawful act or activity for which companies organized
under the International Business Companies Act, 2000 (the "Act") or any
successor law to the Act that is at any time in force in the Commonwealth of The
Bahamas, may now or hereafter be permitted to engage.

Directors

     The Company shall have a board of directors (the Board of Directors") which
shall meet at least quarterly, and shall direct and oversee the management and
affairs of the Company and which may exercise all the powers of the Company that
are not expressly reserved to the Shareholders under the Articles, the Act or
any other laws of the Commonwealth of The Bahamas. The Board of Directors may
from time to time, in its discretion, fix the amounts which shall be payable to
members of the Board of Directors and to members of any committee, for
attendance at the meetings of the Board of Directors or of such committee and
for services rendered to the Company.

     Subject always to the Act, the Company shall not enter into:

          (i) any merger or consolidation involving the Company on the one hand
          and any Named Shareholder that is a Shareholder of the Company, any
          affiliate of such Named Shareholder or any member of the Company's
          management or Board of Directors or their respective affiliates (each
          an "Interested Party") on the other hand;

          (ii) any sale, lease or other direct or indirect disposition of all or
          substantially all of the Company's and its subsidiaries' assets in a
          transaction or series of related transactions to one or more
          Interested Parties;

          (iii) any merger or consolidation or sale, lease or other direct or
          indirect disposition of all or substantially all of the Company's and
          its subsidiaries' assets in a transaction or series of related
          transactions that would result in the receipt of different types or
          amounts of consideration per share by one or more Interested Parties
          on the one hand, and any other of the Company's Shareholders, on the
          other hand; and

          (iv) any business transaction between the Company or its subsidiaries
          on the one hand and one or more Interested Parties on the other hand,
          involving a value in excess of $2 million;

     without (A) having previously obtained, at the Company's expense, a
     fairness opinion confirming that the proposed transaction is fair from a
     financial standpoint for the Company and, with respect to a transaction
     described in Section 2.12(a)(iii) above, for those Shareholders which are
     not Interested Parties and (B) such proposed transaction being approved by
     a majority of disinterested Directors of the Company. Any fairness opinion
     pursuant to the preceeding sentence shall be rendered by an internationally
     recognized investment banking, auditing or consulting firm (or, if the
     proposed transaction involves the sale or purchase of a vessel or other
     floating assets, by an internationally recognized shipbroker) selected by
     the Company's disinterested Directors and engaged on behalf of the Company
     and/or its Shareholders. To qualify as a disinterested Director for
     purposes of this Section 2.12, a Director must not have a personal interest
     in the transaction at hand and must not otherwise have a relationship that,
     in the opinion of the Company's Board of Directors, would interfere with
     the exercise of independent judgment in carrying out the responsibilities
     of a Director. Further, should any such transaction require Shareholder
     approval, it must be approved by a majority vote of those Shareholders
     entitled to vote that are not Interested Parties.

     In this connection, the International Business Companies Act, 2000,
provides 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

     Dividends may be declared in conformity with applicable law by, and at the
discretion of, the Board of Directors at any regular or special meeting.
Dividends may be declared and paid in cash, stock or other property of the
Company.

     Subject as therein provided, the Articles may be amended, added to, altered
or repealed, or new Articles may be adopted, at any annual or special meeting of
the Shareholders by the vote of holders of a majority of the votes of the shares
issued and outstanding and entitled to vote at such meeting of Shareholders. At
all meetings of Shareholders of the Company, except as otherwise expressly
provided by law, there must be present, either in person or by proxy,
Shareholders of record holding at least a majority of the votes of the shares
issued and outstanding and entitled to vote at such meetings in order to
constitute a quorum, but if less than a quorum is present, a majority of those
shares present either in person or by proxy shall have power to adjourn any
meeting until a quorum shall be present. If after an adjournment an adjourned
meeting is held, for the purpose of such adjourned meeting in order to establish
a quorum there must be present, either in person or by proxy, Shareholders of
record holding at least a one-third of the votes of the shares issued and
outstanding and entitled to vote at such adjourned meeting.

     If a quorum is present, and except as otherwise expressly provided by law,
the affirmative vote of a majority of the votes represented at the meeting shall
be the act of the Shareholders of the Company. At any meeting of Shareholders of
the Company, with respect to a matter for which a Shareholder is entitled to
vote, each such Shareholder shall be entitled to one (1) vote for each share of
Common Stock it holds; provided that the Named Shareholders, as such term is
defined in the Memorandum of Association, shall be entitled to seven (7) votes
for each share of Common Stock held by it that was initially acquired by a Named
Shareholder prior to the completion of the Company's initial public offering
(which right shall be personal and non-transferable, unless to another Named
Shareholder or Permitted Transferee, as such term is defined in the Memorandum
of Association), subject to the limitations set forth in the Memorandum of
Association. Each Shareholder may exercise such voting right either in person or
by proxy provided, however, that no proxy shall be valid after the expiration of
eleven months from the date such proxy was authorized unless otherwise provided
in the proxy. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient to support an irrevocable power. A Shareholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the Company.

     Notice of every annual and special meeting of Shareholders of the Company,
other than any meeting the giving of notice of which is otherwise prescribed by
law, stating the date, time, place and purpose thereof, and in the case of
special meetings, the name of the person or persons at whose direction the
notice is being issued, shall be given personally or sent by mail, telegraph,
cablegram, telex, teleprinter or such other method (including electronic mail)
as permitted by the United States Securities and Exchange Commission and the
NASDAQ Marketplace Rules on the date thereof, at least fifteen (15) but not more
than sixty (60) days before such meeting, to each Shareholder of record entitled
to vote thereat and to each Shareholder of record who, by reason of any action
proposed at such meeting would be entitled to have his shares appraised if such
action were taken, and the notice shall include a statement of that purpose and
to that effect. If mailed, notice shall be deemed to have been given when
deposited in the mail, directed to the Shareholder at his address as the same
appears on the record of Shareholders of the Company or at such address as to
which the Shareholder has given notice to the Secretary. Notice of a meeting
need not be given to any Shareholder who submits a signed waiver of notice,
whether before or after the meeting, or who attends the meeting without
protesting prior to the conclusion thereof the lack of notice to him.

     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

     On March 20, 2006, we entered into a Stock Purchase Agreement with
Crosstrade Maritime Inc. and Crosstrees Maritime Inc., two of our related
companies, in connection with our acquisition of all of the issued and
outstanding capital stock of Ravenscroft. For a description of the material
terms of this agreement, see "Related Party Transactions -- Ravenscroft
Acquisition" in Item 7.B of this report.

     On March 21, 2006, we entered into Stock Purchase Agreement with LAIF XI
LTD. in connection with our acquisition of 66.67% of the issued and outstanding
capital stock of UP Offshore that we did not already own. For a description of
the material terms of this agreement, see "Related Party Transactions -- UP
Offshore Acquisition" in Item 7.B of this report.

     On May 3, 2006, we signed an agreement with International Finance
Corporation, or IFC, to purchase from IFC the 7.14% of UP River (Holdings) Ltd.,
or UP River, an entity that owned the 50% of UABL Limited that we did not own,
for the price of $6.2 million. As part of this agreement, IFC agreed to waive
its option to convert its interest in UP River to shares in our company and its
right to participate in our IPO. Our obligation under this agreement was paid
from proceeds of our IPO.

D.   EXCHANGE CONTROLS

     Under Bahamian law, there are currently no restrictions on the export or
import of capital, including foreign exchange controls or restrictions that
affect the remittance of dividends, interest or other payments to non-resident
holders of our common stock.

E.   TAX CONSIDERATIONS

     The following is a discussion of the material Bahamian and United States
federal income tax considerations relevant to an investment decision by a U.S.
Holder and a Non-U.S. Holder, each as defined below, with respect to the common
stock. This discussion does not purport to deal with the tax consequences of
owning common stock to all categories of investors, some of which, such as
dealers in securities, investors whose functional currency is not the United
States dollar and investors that own, actually or under applicable constructive
ownership rules, 10% or more of our common stock, may be subject to special
rules. You are encouraged to consult your own tax advisors concerning the
overall tax consequences arising in your own particular situation under United
States federal, state, local or foreign law of the ownership of common stock.

Bahamian Tax Considerations

     In the opinion of Higgs & Johnson, the following are the material Bahamian
tax consequences of our activities to us and shareholders of our common stock.
We are incorporated in the Commonwealth of The Bahamas. Under current Bahamian
law, we are not subject to tax on income or capital gains, and no Bahamian
withholding tax will be imposed upon payments of dividends by us to our
shareholders for a period of twenty years from our date of incorporation.

United States Federal Income Tax Considerations

     In the opinion of Seward & Kissel LLP, our United States counsel, the
following are the material United States federal income tax consequences to us
of our activities and to U.S. Holders and Non-U.S. Holders, each as defined
below, of our common stock. The following discussion of United States federal
income tax matters is based on the United States Internal Revenue Code of 1986,
as amended, or the Code, judicial decisions, administrative pronouncements, and
existing and proposed regulations issued by the United States Department of the
Treasury, all of which are subject to change, possibly with retroactive effect.
This discussion is based in part upon Treasury Regulations promulgated under
Section 883 of the Code in August of 2003, which became effective on January 1,
2005, for calendar year taxpayers such as ourselves and our subsidiaries. The
discussion below is based, in part, on the description of our business as
described in "Business" above and assumes that we conduct our business as
described in that section. References in the following discussion to "we" and
"us" are to Ultrapetrol (Bahamas) Limited and its subsidiaries on a combined
basis.

United States Federal Income Taxation of Our Company

Taxation of Operating Income: in General

     We anticipate that the Company will earn substantially all its income from
the hiring or leasing of vessels for use on a time, voyage or bareboat charter
basis or from the performance of services directly related to those uses, which
we refer to as "shipping income."

     Unless exempt from United States federal income taxation under the rules of
Section 883 of the Code, or Section 883, as discussed below, we will be subject
to United States federal income tax on our shipping income that is treated as
derived from sources within the United States, to which we refer as "United
States source shipping income." For these purposes, United States source
shipping income includes 50% of our shipping income that is attributable to
transportation that begins or ends, but that does not both begin and end, in the
United States.

     Shipping income attributable to transportation that both begins and ends in
the United States is considered to be 100% from sources within the United
States. We are not permitted by law and therefore do not expect to engage in
transportation that produces income which is considered to be 100% from sources
within the United States.

     Shipping income attributable to transportation exclusively between non-U.S.
ports will be considered to be 100% derived from sources outside the United
States. Shipping income derived from sources outside the United States will not
be subject to any United States federal income tax.

     In the absence of exemption from tax under Section 883, our gross
U.S.-source shipping income would be subject to a 4% tax imposed without
allowance for deductions as described below. Our non-U.S. subsidiaries did not
derive any U.S.-source shipping income for the calendar year 2006, but may
derive U.S.-source shipping income in future years.

Exemption of Operating Income from United States Federal Income Taxation

     Under Section 883 of the Code and the final Treasury Regulations
promulgated thereunder, or the final regulations, which became effective on
January 1, 2005 for calendar taxpayers such as ourselves, a foreign corporation
will be exempt from United States federal income taxation on its U.S.-source
shipping income if:

     (1) it is organized in a qualified foreign country which, as defined, is
one that grants an "equivalent exemption" to corporations organized in the
United States in respect of each category of shipping income for which exemption
is being claimed under Section 883 and to which we refer to as the "Country of
Organization Test"; and

     (2) either

          (A) more than 50% of the value of its stock is beneficially owned,
     directly or indirectly, by qualified shareholders which as defined includes
     individuals who are "residents" of a qualified foreign country which we
     refer to as the "50% Ownership Test," or

          (B) its stock, or that of its 100% parent, is "primarily and regularly
     traded on an established securities market" in a qualified foreign country
     or in the United States, which we refer to as the "Publicly-Traded Test."

     The Commonwealth of The Bahamas and Panama, the jurisdictions where we and
our vessel-owning subsidiaries are incorporated, each have been officially
recognized by the United States Internal Revenue Service, or IRS, as a qualified
foreign country that grants the requisite equivalent exemption from tax in
respect of each category of shipping income we and our subsidiaries earn and
currently expect to earn in the future. Therefore, we and each of our
subsidiaries will be exempt from United States federal income taxation with
respect to our U.S.-source shipping income if we satisfy either the 50%
Ownership Test or the Publicly-Traded Test. We do not believe that we are able
to satisfy the 50% Ownership Test due to the widely-held ownership of our stock.
Our ability and that of our subsidiaries to qualify for exemption under Section
883 is solely dependent upon satisfaction of the Publicly-Traded Test as
discussed below.

     The final regulations provide, in pertinent part, that stock of a foreign
corporation will be considered to be "primarily traded" on an established
securities market if the number of shares of each class of stock that are traded
during any taxable year on all established securities markets in that country
exceeds the number of shares in each such class that are traded during that year
on established securities markets in any other single country. Our common stock,
which is the sole class of our issued and outstanding stock, is "primarily
traded" on The Nasdaq Global Market.

     Under the final regulations, our common stock will be considered to be
"regularly traded" on an established securities market if one or more classes of
our stock representing more than 50% of our outstanding shares, by total
combined voting power of all classes of stock entitled to vote and total value,
will be listed on the market, which we refer to as the listing threshold. Since
our common stock is listed on The Nasdaq Global Market, we will satisfy the
listing requirement.

     It is further required that with respect to each class of stock relied upon
to meet the listing threshold (i) such class of stock is traded on the market,
other than in minimal quantities, on at least 60 days during the taxable year or
1/6 of the days in a short taxable year; and (ii) the aggregate number of shares
of such class of stock traded on such market during the taxable year is at least
10% of the average number of shares of such class of stock outstanding during
such year or as appropriately adjusted in the case of a short taxable year. We
believe we will satisfy the trading frequency and trading volume tests. Even if
this were not the case, the final regulations provide that the trading frequency
and trading volume lists will be deemed satisfied if, as we expect to be the
case with our common stock, such class of stock is traded on an established
market in the United States and such stock is regularly quoted by dealers making
a market in such stock.

     Notwithstanding the foregoing, the final regulations provide, in pertinent
part, that a class of stock will not be considered to be "regularly traded" on
an established securities market for any taxable year in which 50% or more of
the issued and outstanding shares of such class of stock are owned, actually or
constructively under specified stock attribution rules, on more than half the
days during the taxable year by persons who each own 5% or more of the vote and
value of such class of stock, which we refer to as the "5 Percent Override
Rule."

     For purposes of being able to determine the persons who own 5% or more of
our stock, or the 5% Shareholders, the final regulations permit us to rely on
those persons that are identified on Schedule 13G and Schedule 13D filings with
the United States Securities and Exchange Commission, or the "SEC," as having a
5% or more beneficial interest in our common stock. The final regulations
further provide that an investment company identified on a SEC Schedule 13G or
Schedule 13D filing which is registered under the Investment Company Act of
1940, as amended, will not be treated as a 5% Shareholder for such purposes.

     We anticipate that our 5% Shareholders may own a majority of our common
stock. If our 5% Shareholders own a majority of our common stock, then we will
be subject to the 5% Override Rule unless we can establish that among the
closely-held group of 5% Shareholders, there are sufficient 5% Shareholders that
are qualified 5% shareholders for purposes of Section 883 to preclude
non-qualified 5% Shareholders in the closely-held group from owning 50% or more
of our common stock for more than half the number of days during the taxable
year. In order to establish this, sufficient 5% Shareholders that are qualified
5% shareholders would have to comply with certain documentation and
certification requirements designed to substantiate their identity as qualified
shareholders.

     We believe that we will be able to establish that there are sufficient
qualified 5% shareholders among our 5% Shareholders in order to qualify for the
benefits of Section 883. However, there can be no assurance that we will be able
to continue to satisfy the substantiation requirements in the future.

Taxation In the Absence of Exemption

     To the extent the benefits of Section 883 are unavailable, our U.S. source
shipping income, to the extent not considered to be "effectively connected" with
the conduct of a U.S. trade or business, as described below, would be subject to
a 4% tax imposed by Section 887 of the Code on a gross basis, without the
benefit of deductions. Since under the sourcing rules described above, no more
than 50% of our shipping income would be treated as being derived from U.S.
sources, the maximum effective rate of U.S. federal income tax on our shipping
income would never exceed 2% under the 4% gross basis tax regime.

     To the extent the benefits of the Section 883 exemption are unavailable and
our U.S. source shipping income is considered to be "effectively connected" with
the conduct of a U.S. trade or business, as described below, any such
"effectively connected" U.S. source shipping income, net of applicable
deductions, would be subject to the U.S. federal corporate income tax currently
imposed at rates of up to 35%. In addition, we may be subject to the 30% "branch
profits" taxes on earnings effectively connected with the conduct of such trade
or business, as determined after allowance for certain adjustments, and on
certain interest paid or deemed paid attributable to the conduct of its U.S.
trade or business.

     Our U.S. source shipping income would be considered "effectively connected"
with the conduct of a U.S. trade or business only if:

     o    we have, or are considered to have, a fixed place of business in the
          United States involved in the earning of shipping income; and

     o    substantially all of our U.S. source shipping income is attributable
          to regularly scheduled transportation, such as the operation of a
          vessel that follows a published schedule with repeated sailings at
          regular intervals between the same points for voyages that begin or
          end in the United States.

     We do not intend to have, or permit circumstances that would result in
having any vessel operating to the United States on a regularly scheduled basis.
Based on the foregoing and on the expected mode of our shipping operations and
other activities, we believe that none of our U.S. source shipping income will
be "effectively connected" with the conduct of a U.S. trade or business.

United States Taxation of Gain on Sale of Vessels

     If we and our subsidiaries qualify for exemption under Section 883 in
respect of the shipping income derived from the international operation of our
vessels, then gain from the sale of any such vessel should likewise be exempt
from tax under Section 883. In the absence of the benefits of exemption under
Section 883, we and our subsidiaries will not be subject to United States
federal income taxation with respect to gain realized on a sale of a vessel,
provided the sale is considered to occur outside of the United States under
United States federal income tax principles. In general, a sale of a vessel will
be considered to occur outside of the United States for this purpose if title to
the vessel, and risk of loss with respect to the vessel, pass to the buyer
outside of the United States. It is anticipated that any sale of a vessel by us
will be considered to occur outside of the United States.

UNITED STATES FEDERAL INCOME TAXATION OF U.S. HOLDERS

     As used herein, the term "U.S. Holder" means a beneficial owner of common
stock that is a United States citizen or resident, United States corporation or
other United States entity taxable as a corporation, an estate the income of
which is subject to United States federal income taxation regardless of its
source, or a trust if a court within the United States is able to exercise
primary jurisdiction over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the
trust.

     If a partnership holds our common stock, the tax treatment of a partner
will generally depend upon the status of the partner and upon the activities of
the partnership. If you are a partner in a partnership holding our common stock,
you should consult your tax advisor.

Distributions

     Subject to the discussion of passive foreign investment companies below,
any distributions made by us with respect to our common stock to a U.S. Holder
will generally constitute dividends, which may be taxable as ordinary income or
"qualified dividend income" as described in more detail below, to the extent of
our current or accumulated earnings and profits, as determined under United
States federal income tax principles. Distributions in excess of our earnings
and profits will be treated first as a nontaxable return of capital to the
extent of the U.S. Holder's tax basis in his common stock on a dollar-for-dollar
basis and thereafter as capital gain. Because we are not a United States
corporation, U.S. Holders that are corporations will not be entitled to claim a
dividends received deduction with respect to any distributions they receive from
us. Dividends paid with respect to our common stock will generally be treated as
`"passive category income" or, in the case of certain types of U.S. Holders, as
"general category income" for purposes of computing allowable foreign tax
credits for United States foreign tax credit purposes.

     Dividends paid on our common stock to a U.S. Holder who is an individual,
trust or estate (a "U.S. Individual Holder") should be treated as "qualified
dividend income" that is taxable to such U.S. Individual Holders at preferential
tax rates (through 2010) provided that: (1) our common stock is readily tradable
on an established securities market in the United States (such as The Nasdaq
Global Market on which our common stock will be traded); (2) we are not a
passive foreign investment company for the taxable year during which the
dividend is paid or the immediately preceding taxable year (which we do not
believe we are, have been or will be); and (3) the U.S. Individual Holder has
owned the common stock for more than 60 days in the 121-day period beginning 60
days before the date on which the common stock becomes ex-dividend. Any
dividends paid by the Company which are not eligible for these preferential
rates will be taxed as ordinary income to a U.S. Individual Holder.

     Special rules may apply to any "extraordinary dividend" -- generally, a
dividend equal to or in excess of ten percent of a shareholder's adjusted basis
(or fair market value in certain circumstances) in a share of common stock --
paid by us. If we pay an "extraordinary dividend" on our common stock that is
treated as "qualified dividend income," then any loss derived by a U.S.
Individual Holder from the sale or exchange of such common stock will be treated
as long-term capital loss to the extent of such dividend. Depending upon the
amount of a dividend paid by us, such dividend may be treated as an
"extraordinary dividend."

Sale, Exchange or other Disposition of Common Stock

     Assuming we do not constitute a passive foreign investment company for any
taxable year, a U.S. Holder generally will recognize taxable gain or loss upon a
sale, exchange or other disposition of our common stock in an amount equal to
the difference between the amount realized by the U.S. Holder from such sale,
exchange or other disposition and the U.S. Holder's tax basis in such stock.
Subject to the discussion of extraordinary dividends above, such gain or loss
will be treated as long-term capital gain or loss if the U.S. Holder's holding
period is greater than one year at the time of the sale, exchange or other
disposition. Such capital gain or loss will generally be treated as U.S.-source
income or loss, as applicable, for U.S. foreign tax credit purposes. A U.S.
Holder's ability to deduct capital losses is subject to certain limitations.

Passive Foreign Investment Company Status and Significant Tax Consequences

     Special United States federal income tax rules apply to a U.S. Holder that
holds stock in a foreign corporation classified as a passive foreign investment
company for United States federal income tax purposes. In general, we will be
treated as a passive foreign investment company with respect to a U.S. Holder
if, for any taxable year in which such holder held our common stock, either:

     o    at least 75% of our gross income for such taxable year consists of
          passive income (e.g., dividends, interest, capital gains and rents
          derived other than in the active conduct of a rental business); or

     o    at least 50% of the average value of the assets held by the
          corporation during such taxable year produce, or are held for the
          production of, passive income.

     For purposes of determining whether we are a passive foreign investment
company, we will be treated as earning and owning our proportionate share of the
income and assets, respectively, of any of our subsidiary corporations in which
we own at least 25 percent of the value of the subsidiary's stock. Income
earned, or deemed earned, by us in connection with the performance of services
would not constitute passive income. By contrast, rental income would generally
constitute "passive income" unless we were treated under specific rules as
deriving our rental income in the active conduct of a trade or business.

     Based on our current operations and future projections, we do not believe
that we are, have been nor do we expect to become, a passive foreign investment
company with respect to any taxable year. Although there is no legal authority
directly on point, our belief is based principally on the position that, for
purposes of determining whether we are a passive foreign investment company, the
gross income we derive or are deemed to derive from the period chartering and
voyage chartering activities of our wholly-owned subsidiaries should constitute
services income, rather than rental income. Correspondingly, such income should
not constitute passive income, and the assets that we and our wholly-owned
subsidiaries own and operate in connection with the production of such income,
in particular, the vessels, should not constitute passive assets for purposes of
determining whether we are a passive foreign investment company. We believe
there is substantial legal authority supporting our position consisting of case
law and IRS pronouncements concerning the characterization of income derived
from period charters and voyage charters as services income for other tax
purposes. However, in the absence of any legal authority specifically relating
to the statutory provisions governing passive foreign investment companies, the
IRS or a court could disagree with our position. In addition, although we intend
to conduct our affairs in a manner to avoid being classified as a passive
foreign investment company with respect to any taxable year, we cannot assure
you that the nature of our operations will not change in the future.

     As discussed more fully below, if we were to be treated as a passive
foreign investment company for any taxable year, a U.S. Holder would be subject
to different taxation rules depending on whether the U.S. Holder makes an
election to treat us as a "Qualified Electing Fund," which election we refer to
as a "QEF election." As an alternative to making a QEF election, a U.S. Holder
should be able to make a "mark-to-market" election with respect to our common
stock, as discussed below.

Taxation of U.S. Holders Making a Timely QEF Election

     If a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to
as an "Electing Holder," the Electing Holder must report each year for United
States federal income tax purposes his pro rata share of our ordinary earnings
and our net capital gain, if any, for our taxable year that ends with or within
the taxable year of the Electing Holder, regardless of whether or not
distributions were received from us by the Electing Holder. The Electing
Holder's adjusted tax basis in the common stock will be increased to reflect
taxed but undistributed earnings and profits. Distributions of earnings and
profits that had been previously taxed will result in a corresponding reduction
in the adjusted tax basis in the common stock and will not be taxed again once
distributed. An Electing Holder would generally recognize capital gain or loss
on the sale, exchange or other disposition of our common stock. A U.S. Holder
would make a QEF election with respect to any year that our company is a passive
foreign investment company by filing one copy of IRS Form 8621 with his United
States federal income tax return and a second copy in accordance with the
instructions to such form. If we were aware that we were to be treated as a
passive foreign investment company for any taxable year, we would provide each
U.S. Holder with all necessary information in order to make the QEF election
described above.

Taxation of U.S. Holders Making a  "Mark-to-Market"  Election

     Alternatively, if we were to be treated as a passive foreign investment
company for any taxable year and, as we anticipate, our stock is treated as
"marketable stock," a U.S. Holder would be allowed to make a "mark-to-market"
election with respect to our common stock, provided the U.S. Holder completes
and files IRS Form 8621 in accordance with the relevant instructions and related
Treasury Regulations. If that election is made, the U.S. Holder generally would
include as ordinary income in each taxable year the excess, if any, of the fair
market value of the common stock at the end of the taxable year over such
holder's adjusted tax basis in the common stock. The U.S. Holder would also be
permitted an ordinary loss in respect of the excess, if any, of the U.S.
Holder's adjusted tax basis in the common stock over its fair market value at
the end of the taxable year, but only to the extent of the net amount previously
included in income as a result of the mark-to-market election. A U.S. Holder's
tax basis in his common stock would be adjusted to reflect any such income or
loss amount. Gain realized on the sale, exchange or other disposition of our
common stock would be treated as ordinary income, and any loss realized on the
sale, exchange or other disposition of the common stock would be treated as
ordinary loss to the extent that such loss does not exceed the net
mark-to-market gains previously included in income by the U.S. Holder.

Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election

     Finally, if we were to be treated as a passive foreign investment company
for any taxable year, a U.S. Holder who does not make either a QEF election or a
"mark-to-market" election for that year, whom we refer to as a "Non-Electing
Holder," would be subject to special rules with respect to (1) any excess
distribution (i.e., the portion of any distributions received by the
Non-Electing Holder on our common stock in a taxable year in excess of 125
percent of the average annual distributions received by the Non-Electing Holder
in the three preceding taxable years, or, if shorter, the Non-Electing Holder's
holding period for the common stock), and (2) any gain realized on the sale,
exchange or other disposition of our common stock. Under these special rules:

     o    the excess distribution or gain would be allocated ratably over the
          Non-Electing Holders' aggregate holding period for the common stock;

     o    the amount allocated to the current taxable year would be taxed as
          ordinary income; and

     o    the amount allocated to each of the other taxable years would be
          subject to tax at the highest rate of tax in effect for the applicable
          class of taxpayer for that year, and an interest charge for the deemed
          deferral benefit would be imposed with respect to the resulting tax
          attributable to each such other taxable year.

     These penalties would not apply to a pension or profit sharing trust or
other tax-exempt organization that did not borrow funds or otherwise utilize
leverage in connection with its acquisition of our common stock. If a
Non-Electing Holder who is an individual dies while owning our common stock,
such holder's successor generally would not receive a step-up in tax basis with
respect to such stock.

UNITED STATES FEDERAL INCOME TAXATION OF "NON-U.S. HOLDERS"

     A beneficial owner of common stock that is not a U.S. Holder is referred to
herein as a "Non-U.S. Holder."

Dividends on Common Stock

     Non-U.S. Holders generally will not be subject to United States federal
income tax or withholding tax on dividends received from us with respect to our
common stock, unless that income is effectively connected with the Non-U.S.
Holder's conduct of a trade or business in the United States. If the Non-U.S.
Holder is entitled to the benefits of a United States income tax treaty with
respect to those dividends, that income is generally taxable only if it is
attributable to a permanent establishment maintained by the Non-U.S. Holder in
the United States.

Sale, Exchange or Other Disposition of Common Stock

     Non-U.S. Holders generally will not be subject to United States federal
income tax or withholding tax on any gain realized upon the sale, exchange or
other disposition of our common stock, unless:

     o    the gain is effectively connected with the Non-U.S. Holder's conduct
          of a trade or business in the United States. If the Non-U.S. Holder is
          entitled to the benefits of an income tax treaty with respect to that
          gain, that gain is generally taxable only if it is attributable to a
          permanent establishment maintained by the Non-U.S. Holder in the
          United States; or

     o    the Non-U.S. Holder is an individual who is present in the United
          States for 183 days or more during the taxable year of disposition and
          other conditions are met.

     If the Non-U.S. Holder is engaged in a United States trade or business for
United States federal income tax purposes, the income from the common stock,
including dividends and the gain from the sale, exchange or other disposition of
the stock that is effectively connected with the conduct of that trade or
business will generally be subject to regular United States federal income tax
in the same manner as discussed in the previous section relating to the taxation
of U.S. Holders. In addition, in the case of a corporate Non-U.S. Holder, its
earnings and profits that are attributable to the effectively connected income,
which are subject to certain adjustments, may be subject to an additional branch
profits tax at a rate of 30%, or at a lower rate as may be specified by an
applicable income tax treaty.

Backup Withholding and Information Reporting

     In general, dividend payments, or other taxable distributions, made within
the United States to a non-corporate U.S. Holder will be subject to information
reporting requirements. Such payments will also be subject to backup withholding
tax if a non-corporate U.S. Holder:

     o    fails to provide an accurate taxpayer identification number;

     o    is notified by the IRS that it has failed to report all interest or
          dividends required to be shown on its federal income tax returns; or

     o    in certain circumstances, fails to comply with applicable
          certification requirements.

     Non-U.S. Holders may be required to establish their exemption from
information reporting and backup withholding by certifying their status on IRS
Form W-8BEN, W-8ECI or W-8IMY, as applicable.

     If a Non-U.S. Holder sells its common stock to or through a United States
office or broker, the payment of the proceeds is subject to both United States
backup withholding and information reporting unless such holder certifies that
it is a non-U.S. person, under penalties of perjury, or otherwise establishes an
exemption. If a Non-U.S. Holder sells its common stock through a non-United
States office of a non-United States broker and the sales proceeds are paid to
such holder outside the United States then information reporting and backup
withholding generally will not apply to that payment. However, United States
information reporting requirements, but not backup withholding, will apply to a
payment of sales proceeds, even if that payment is made to a Non-U.S. Holder
outside the United States, if such holder sells its common stock through a
non-United States office of a broker that is a United States person or has some
other contacts with the United States.

     Backup withholding tax is not an additional tax. Rather, a holder generally
may obtain a refund of any amounts withheld under backup withholding rules that
exceed its income tax liability by filing a refund claim with the IRS.

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 100 F Street, N.E., Room 1580, Washington, D.C. 20549. 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 Ocean
Centre, Montague Foreshore East Bay Street, Nassau, Bahamas.

I.   SUBSIDIARY INFORMATION

     Not Applicable.

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See "Item 5 -- Operating and Financial Review and Prospects -- Quantitative
and Qualitative Disclosures About Market Risk."

ITEM 12 - DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not Applicable.
<PAGE>

                                     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

     We carried out an evaluation under the supervision and with the
participation of our management, including our chief executive officer and chief
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures, as of December 31, 2006. There are inherent
limitations to the effectiveness of any system of disclosure controls and
procedures, including the possibility of human error and the circumvention or
overriding of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable assurance of
achieving their control objectives. Based upon our evaluation, our chief
executive officer and chief financial officer concluded that the disclosure
controls and procedures as of December 31, 2006 were effective to provide
reasonable assurance that information required to be disclosed in the reports we
file and submit under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported as and when required.

     There has been no change in our internal control over financial reporting
during 2006 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT

     We have established an audit committee composed of one board member that is
responsible for reviewing our accounting controls and recommending to the board
of directors the engagement of our outside auditors. The sole member of the
audit committee, Mr. George Wood, is an independent director. Mr. Wood currently
meets the Nasdaq requirement of a financial expert.

ITEM 16B CODE OF ETHICS

     The board of directors has elected to adopt a code of ethics applicable to
the Company's principal executive officer and principal financial officer,
principal accounting officer or controller, which complies with the definition
of a "code of ethics" set out in Section 406(c) of the Sarbanes-Oxley Act of
2002.

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

     Aggregate fee for professional services rendered for the Company by
Pistrelli, Henry Martin y Asociados S.R.L. and other member firms of Ernst &
Young Global in 2006 and 2005 in each of the following categories were:

                       Year ended December 31,
                       -----------------------

                       2006             2005
                       ---              ---
                     (in thousands of US dollars)

Audit fees             907              301
Audit-related fees      50              120
Tax fees                30               25
                       ---              ---
Total fees             987              446
                       ===              ===

     Audit fees include fees associated with the annual audit of the Company and
subsidiaries, statutory audits of subsidiaries required internationally, comfort
letters and SEC filings in connection with our initial public offering of our
common stock.

     Audit related fees include fees associated with the documentation
assistance in connection with the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002.

     Tax fees relate to tax compliance and tax advice.

     Prior to our initial public offering, all audit, audit-related, and non
audit services provided by our independent auditor were pre-approved by the
board of directors. Since our initial public offering, all such services are
pre-approved by our audit committee, which was formed at the time of our initial
public offering.

ITEM 16D. EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES.

Not Applicable.

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

     Not Applicable.

PART III

ITEM 17 - FINANCIAL STATEMENTS

     Not Applicable.

ITEM 18 - FINANCIAL STATEMENTS

     The following financial statements listed below and set forth on pages F-1
through F-34, together with the report of independent registered public
accounting firm are filed as part of this annual report:
<PAGE>

                 ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES

             TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS

                                    CONTENTS                                PAGE
----------------------------------------------------------------------   -------

o    Financial statements

     -    Consolidated balance sheets as of December 31, 2006 and 2005       -1-

     -    Consolidated statements of income for the years ended
          December 31, 2006, 2005 and 2004                                   -2-

     -    Consolidated statements of changes in shareholders' equity
          for the years ended December 31, 2006, 2005 and 2004               -3-

     -    Consolidated statements of cash flows for the years ended
          December 31, 2006, 2005 and 2004                                   -4-

     -    Notes to consolidated financial statements                         -5-
<PAGE>

             ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES

<TABLE>
       CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2006 AND 2005
 (Stated in thousands of U.S. dollars, except par value and share amounts)
<CAPTION>
                                                                 At December 31,
                                                           ---------------------------
                                                               2006           2005
                                                           ------------   ------------
<S>                                                        <C>            <C>
ASSETS

   CURRENT ASSETS

      Cash and cash equivalents                            $     20,648   $      7,914
      Restricted cash                                                --          3,638
      Accounts receivable, net of allowance for
          doubtful accounts of $709 and $324
          in 2006 and 2005, respectively                         17,333          9,017
      Receivables from related parties                            3,322         17,944
      Marine and river operating supplies                         3,020          3,547
      Prepaid expenses                                            2,530          3,239
      Other receivables                                           7,917          4,807
                                                           ------------   ------------
        Total current assets                                     54,770         50,106
                                                           ------------   ------------
   NONCURRENT ASSETS

      Other receivables                                           6,368          6,431
      Receivables from related parties                            2,280          1,995
      Restricted cash                                             1,088             68
      Vessels and equipment, net                                333,191        182,069
      Dry dock                                                    9,673         12,743
      Investment in affiliates                                    2,285         15,698
      Intangible assets                                           3,748             --
      Goodwill                                                    5,015             --
      Other assets                                                6,014          7,548
      Deferred tax assets                                         1,947          1,624
                                                           ------------   ------------
        Total noncurrent assets                                 371,609        228,176
                                                           ------------   ------------
        Total assets                                       $    426,379   $    278,282
                                                           ============   ============

LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY

   CURRENT LIABILITIES

      Accounts payable                                     $     13,491   $     12,138
      Payable to related parties                                    420          2,008
      Accrued interest                                            1,691          1,723
      Current portion of long-term financial debt                 4,700          6,599
      Other payables                                              2,469            915
                                                           ------------   ------------
        Total current liabilities                                22,771         23,383
                                                           ------------   ------------
   NONCURRENT LIABILITIES

      Long-term debt                                            180,000        180,000
      Financial debt, net of current portion                     34,294         22,953
      Deferred tax liability                                      6,544          1,095
      Other payables                                                250             --
                                                           ------------   ------------
        Total noncurrent liabilities                            221,088        204,048
                                                           ------------   ------------
        Total liabilities                                       243,859        227,431
                                                           ------------   ------------

   MINORITY INTEREST                                              3,091          2,479
                                                           ------------   ------------
   MINORITY INTEREST SUBJECT TO PUT RIGHTS                           --          4,898
                                                           ------------   ------------

   SHAREHOLDERS' EQUITY
     Common stock, $.01 par value: 100,000,000
          authorized shares; 28,346,952 and
          15,500,000 shares issued and outstanding
          in 2006 and 2005, respectively                            283            155
      Additional paid-in capital                                173,826         48,418
      Accumulated earnings (deficit)                              5,231         (5,295)
      Accumulated other comprehensive income                         89            196
                                                           ------------   ------------
      Total shareholders' equity                                179,429         43,474
                                                           ------------   ------------
      Total liabilities, minority interests and
          shareholders' equity                             $    426,379   $    278,282
                                                           ============   ============
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.
<PAGE>

                 ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES

<TABLE>
                        CONSOLIDATED STATEMENTS OF INCOME

              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

     (Stated in thousands of U.S. dollars, except share and per share data)
<CAPTION>
                                                            For the year ended December 31,
                                                      --------------------------------------------
                                                          2006            2005            2004
                                                      ------------    ------------    ------------
<S>                                                   <C>             <C>             <C>
REVENUES

      Revenues from third parties                     $    169,387    $    123,385    $     89,956
      Revenues from related parties                          4,079           1,976           5,204
                                                      ------------    ------------    ------------
      Total revenues                                       173,466         125,361          95,160
                                                      ------------    ------------    ------------

OPERATING EXPENSES (1)

      Voyage expenses                                      (43,445)        (33,827)        (15,923)
      Running costs                                        (54,165)        (39,234)        (24,892)
      Amortization of dry docking                           (7,830)         (6,839)         (5,195)
      Depreciation of vessels and equipment                (19,920)        (14,494)        (13,493)
      Management fees to related parties                      (511)         (2,118)         (1,513)
      Amortization of intangible assets                       (590)             --              --
      Administrative and commercial expenses               (13,905)         (7,617)         (7,494)
      Other operating (expense) income                        (198)         22,021             784
                                                      ------------    ------------    ------------
                                                          (140,564)        (82,108)        (67,726)
                                                      ------------    ------------    ------------
   Operating profit                                         32,902          43,253          27,434
                                                      ------------    ------------    ------------

OTHER INCOME (EXPENSES)

      Financial expense                                    (19,025)        (19,141)        (16,134)
      Financial gain on extinguishment of debt                  --              --           1,344
      Financial loss on extinguishment of debt              (1,411)             --          (6,422)
      Financial income                                         733           1,152             119
      Investment in affiliates                                 588            (497)            406
      Other, net                                               859             384             174
                                                      ------------    ------------    ------------
      Total other expenses                                 (18,256)        (18,102)        (20,513)
                                                      ------------    ------------    ------------

   Income before income taxes and minority interest         14,646          25,151           6,921

      Income taxes                                          (2,201)           (786)           (642)
      Minority interest                                     (1,919)         (9,797)         (1,140)
                                                      ------------    ------------    ------------
   Net income                                         $     10,526    $     14,568    $      5,139
                                                      ============    ============    ============

      Basic net income per share                      $       0.59    $       0.94    $       0.33
      Diluted net income per share                    $       0.58    $       0.94    $       0.33

      Basic weighted average number of shares           17,965,753      15,500,000      15,500,000
      Diluted weighted average number of shares         18,079,091      15,500,000      15,500,000
</TABLE>

(1)  In addition to management fees to related parties, operating expenses
     included $3,163, $5,089 and $2,451 in 2006, 2005 and 2004, respectively,
     from related parties.

                 The accompanying notes are an integral part of
                     these consolidated financial statements

<PAGE>
<TABLE>

                                     ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES


                               CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                  FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

                                (Stated in thousands of U.S. dollars, except share data)
<CAPTION>
                                                           Additional                  Accumulated
                                                Common      paid-in      Accumulated      other
                                   Shares       stock       capital        earnings    comprehensive
      Balance                      amount     (Note 12)    (Note 12)      (deficit)     income            Total
                                 ----------   ----------   ----------    ----------    -------------    ----------
<S>                              <C>          <C>          <C>           <C>           <C>              <C>
December 31, 2003                15,500,000   $      155   $   48,418    $  (25,002)   $         222    $   23,793

Comprehensive income:
-  Net income                            --           --           --         5,139               --         5,139
-  Net loss on EURO hedge
    agreement designated
    as cash flow hedge                   --           --           --            --              (22)          (22)
                                                                                                        ----------
Total comprehensive income                                                                                   5,117
                                 ----------   ----------   ----------    ----------    -------------    ----------
December 31, 2004                15,500,000          155       48,418       (19,863)             200        28,910

Comprehensive income:
-  Net income                            --           --           --        14,568               --        14,568
-  Net loss on EURO hedge
    agreement designated
    as cash flow hedge                   --           --           --            --               (4)           (4)
                                                                                                        ----------
Total comprehensive income                                                                                  14,564
                                 ----------   ----------   ----------    ----------    -------------    ----------
December 31, 2005                15,500,000          155       48,418        (5,295)             196        43,474

Issuance of common stock         12,500,000          125      137,375            --               --       137,500

Underwriting fees and
      issuance expenses                  --           --      (12,314)           --               --       (12,314)

Issuance of restricted stock
      and recognition of stock
      options                       346,952            3          347            --               --           350

Comprehensive income:
-  Net income                            --           --           --        10,526               --        10,526
-  Net loss on forward fuel
    purchase agreement
    designated as cash
    flow hedge                           --           --           --            --              (98)          (98)
-  Net loss on EURO hedge
    agreement designated as
    cash flow hedge                      --           --           --            --               (9)           (9)
                                                                                                        ----------
Total comprehensive income                                                                                  10,419
                                 ----------   ----------   ----------    ----------    -------------    ----------
December 31, 2006                28,346,952   $      283   $  173,826    $    5,231    $          89    $  179,429
                                 ==========   ==========   ==========    ==========    =============    ==========
</TABLE>

                 The accompanying notes are an integral part of
                     these consolidated financial statements
<PAGE>

                 ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES

<TABLE>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

                      (Stated in thousands of U.S. dollars)
<CAPTION>
                                                                                         For the year ended December 31,
                                                                                       -----------------------------------
                                                                                         2006         2005         2004
                                                                                       ---------    ---------    ---------
<S>                                                                                    <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net income                                                                          $  10,526    $  14,568    $   5,139

   Adjustments to reconcile net income to net cash provided by operating
   activities:

      Depreciation of vessels and equipment                                               19,920       14,494       13,493
      Amortization of dry docking                                                          7,830        6,839        5,195
      Expenditure for dry docking                                                         (4,836)      (8,427)     (11,139)
      Note issuance expenses amortization                                                    750        1,037          568
      Minority interest in equity of subsidiaries                                          1,919        9,797        1,140
      Amortization of intangible assets                                                      590           --           --
      Financial gain on extinguishment of debt                                                --           --       (1,344)
      Financial loss on extinguishment of debt                                             1,411           --        6,422
      (Gain) on disposal of assets                                                          (630)     (21,867)         (41)
      Net (gain) loss from investment in affiliates                                         (588)         497         (406)
      Allowance for doubtful accounts                                                      1,065         (246)         355
      Share - based compensation                                                             350           --           --

   Changes in assets and liabilities net of effects from purchase of Ravenscroft
   and UP Offshore (Bahamas) companies in 2006 and UABL Limited and UABL
   Terminals companies in 2004:
         (Increase) Decrease in assets:
              Accounts receivable                                                         (8,636)      (2,217)       5,365
              Receivable from related parties                                              3,276         (905)       3,783
              Marine and river operating supplies                                             17       (1,353)         405
              Prepaid expenses                                                             1,350          862         (994)
              Other receivables                                                           (1,405)       2,114         (318)
              Other                                                                         (135)          --           --
         Increase (Decrease) in liabilities:
              Accounts payable                                                              (436)       1,209        1,801
              Payable to related parties                                                  (4,510)       1,240       (3,498)
              Other payables                                                               1,620         (583)        (251)
              Other                                                                         (647)        (388)      (2,546)
                                                                                       ---------    ---------    ---------
              Net cash provided by operating activities                                   28,801       16,671       23,129
                                                                                       ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES

   Purchase of vessels and equipment                                                     (52,699)     (51,461)     (59,934)
   Purchase of Ravenscroft and UP Offshore (Bahamas) companies, net of cash acquired     (59,014)          --           --
   (Decrease) Increase in loan to affiliate                                               11,391      (13,141)          --
   Purchase of minority interest in UABL Limited                                          (6,225)          --           --
   Proceeds from disposals of assets                                                       2,630       37,888        6,430
   Investment in affiliates                                                                   --           --       (1,713)
   Purchase of UABL and UABL Terminals companies, net of cash acquired                        --           --       (1,542)
   Other                                                                                    (112)         (11)        (797)
                                                                                       ---------    ---------    ---------
              Net cash (used in) investing activities                                   (104,029)     (26,725)     (57,556)
                                                                                       ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES

   Payments of long-term debt                                                            (33,077)     (19,354)     (39,149)
   Decrease (Increase) in restricted cash                                                  3,273       29,279      (13,333)
   Proceeds from initial public offering, net of issuance costs                          125,186           --           --
   (Payment) Issuance of redeemable preference shares of subsidiary                       (4,303)          --        3,000
   Proceeds from long-term financial debt                                                     --       10,500       27,700
   Redemption of minority interest                                                        (2,600)     (13,400)          --
   Proceeds from 2014 Senior notes, net of issuance costs                                     --           --      173,345
   Minority interest in equity of subsidiaries                                                --           --       17,959
   Payments of 2008 Senior Notes                                                              --           --     (131,502)
   Other                                                                                    (517)        (659)        (239)
                                                                                       ---------    ---------    ---------
              Net cash provided by financing activities                                   87,962        6,366       37,781
                                                                                       ---------    ---------    ---------
              Net increase (decrease) in cash and cash equivalents                        12,734       (3,688)       3,354

              Cash and cash equivalents at the beginning of year                       $   7,914    $  11,602    $   8,248
                                                                                       ---------    ---------    ---------
              Cash and cash equivalents at the end of year                             $  20,648    $   7,914    $  11,602
                                                                                       ---------    ---------    ---------
</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements
<PAGE>

                 ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           (Stated in thousands of U.S. dollars, except per share data
                            and otherwise indicated)

1.   NATURE OF OPERATIONS AND CORPORATE ORGANIZATION

     Nature of operations

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

     We are a shipping transportation company serving the marine transportation
     needs of our clients in the markets on which we focus. We serve the
     shipping markets for grain, forest products, minerals, crude oil,
     petroleum, and refined petroleum products, as well as the offshore oil
     platform supply market, and the leisure passenger cruise market through our
     operations in the following four segments of the marine transportation
     industry. In our Ocean Business, we are an owner and operator of oceangoing
     vessels that transport petroleum products and dry cargo. In our Passenger
     Business, we are an owner of cruise vessels that transport passengers
     primarily cruising the Mediterranean and Black Sea. In our River Business
     we are an owner and operator of river barges and push boats in the Hidrovia
     region of South America, a region of navigable waters on the Parana,
     Paraguay and Uruguay Rivers and part of the River Plate, which flow through
     Brazil, Bolivia, Uruguay, Paraguay and Argentina. In our Offshore Supply
     Business we own and operate vessels that provide logistical and
     transportation services for offshore petroleum exploration and production
     companies, primarily in the North Sea and the coastal waters of Brazil.

     Initial Public Offering (IPO)

     On October 18, 2006 the Company closed on the sale of 12,500,000 shares of
     its common stock at $11.00 per share through an IPO. The proceeds of
     $137,500 were used:

     -    to repay the note we issued to LAIF XI Ltd., a related company, in
          connection with our purchase of its 66.67% interest in UP Offshore
          (Bahamas) Ltd. for $48,000,

     -    to repay the notes we issued to Crosstrade Maritime Inc. and
          Crosstrees Maritime Inc., related companies, in connection with our
          purchase of 100% of Ravenscroft Shipping (Bahamas) for $11,500,

     -    to redeem UP Offshore (Bahamas) Ltd. 's redeemable preferred shares
          issued to IFC for $4,303,

     -    to discharge the obligations to the International Finance Corporation
          resulting from our purchase of its interest in our River Business for
          $6,225,

     -    to repay some of our variable interest rate indebtedness owed to the
          International Finance Corporation and other lenders for $26,763
          (included accrued interest at the cancellation date) and,

     -    to cancel underwriters fees and additional fees and incremental
          issuance expenses amounted to $12,314, with the remaining $28,395 set
          aside $20,000 for funding a portion of the balance of the construction
          costs of the two PSVs being built in Brazil and the balance for
          general corporate purpose.

     Ultrapetrol common share is now traded on the NASDAQ Global Market under
     the symbol "ULTR".

     Subsequent to the IPO, an aggregate of 232,712 shares were sold by our
     Original Shareholders in connection with the underwriters' exercise of
     their over-allotment option. The Company did not receive any proceeds from
     the sale of the over-allotment shares.
<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 of
          America ("US GAAP").

          The consolidated financial statements include the accounts of the
          Company and its subsidiaries, both majority and wholly owned.
          Significant intercompany accounts and transactions have been
          eliminated in this consolidation. Investments in 50% or less owned
          affiliates, in which the Company exercises significant influence, are
          accounted for by the equity method.

     b)   Estimates

          The preparation of financial statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions that affect the reported
          amounts of assets and liabilities at the date of the financial
          statements, and the reported amounts of revenue and expenses during
          the years. Significant estimates have been made by management,
          including the allowance for doubtful accounts, insurance claims
          receivables, useful lives and valuation of vessels, realizability of
          deferred tax assets and certain accrued liabilities. Actual results
          may differ from those estimates.

     c)   Revenues and related expenses

          Revenue is recorded when services are rendered, the Company has 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, bareboat charters,
          consecutive voyage charters or affreightment/voyage contracts. Revenue
          from time charters and bareboat charters is earned and recognized on a
          daily basis. Revenue from affreightment/voyage contracts and
          consecutive voyage charters is recognized based upon the percentage of
          voyage completion. A voyage is deemed to commence upon the departure
          of discharged vessel of previous cargo and is deemed to end upon the
          completion of discharge of the current cargo. The percentage of voyage
          completion is based on the miles transited at the balance sheet date
          divided by the total miles expected on the voyage. The position of the
          barge at the balance sheet date is determined by locating the position
          of the boat with the barge in tow through use of a global positioning
          system.

          Demurrage income represents payments by the charterer to the vessel
          owner when loading or discharging time exceeded the stipulated time in
          the voyage charter and is recognized as it is earned.

          Revenue from our Passenger Business is recognized upon completion of
          voyages, together with revenues from on board and other activities.

          From time to time we provide ships salvage services under Lloyd's
          Standard Form of Salvage Agreement ("LOF"). The Company recognizes
          costs as incurred on these LOF services. Revenue is recognized to the
          extent of costs incurred in order to appropriately match revenues with
          costs, provided that the Company has earned the revenue. The Company
          has historically recovered at least its cost in all of its prior
          salvage operations. Additional revenues in excess of costs incurred
          are recorded at the time the final LOF settlement or arbitration award
          occurs.

          Vessel voyage costs, primarily consisting of port, canal and bunker
          expenses that are unique to a particular charter, are paid for by the
          charterer under time charter arrangements or by the Company under
          voyage charter arrangements. The commissions paid in advance are
          deferred and amortized over the related voyage charter period to the
          extent revenue has been deferred since commissions are earned as the
          Company's revenues are earned. Bunker expenses and gift shop for
          resale are capitalized when acquired as operating supplies and
          subsequently charged to voyage expenses as consumed/resold. All other
          voyage expenses and other vessel operating expenses are expensed as
          incurred.

     d)   Foreign currency translation

          The Company uses the US dollar as its functional currency. Operations
          denominated in other currencies are remeasured into US dollars in
          accordance with Statement of Financial Accounting Standard No. 52,
          Foreign Currency Translation ("SFAS 52"). Receivables and payables
          denominated in foreign currencies are translated into US dollars at
          the rate of exchange at the balance sheet date, while revenues and
          expenses are translated using the average exchange rate for each
          month. Certain subsidiaries enter into transactions denominated in
          currencies other than their functional currency. Changes in currency
          exchange rates between the functional currency and the currency in
          which a transaction is denominated is included in the consolidated
          statements of income in the period in which the currency exchange rate
          changes.

     e)   Cash and cash equivalents

          The Company considers all highly liquid investments with an original
          maturity of three months or less to be cash equivalents. Cash
          equivalents consist of money market instruments and overnight
          investments. The credit risk associated with cash and cash equivalents
          is considered low due to the high credit quality of the financial
          institutions.

     f)   Restricted cash

          Certain of the Company's loan agreements require the Company to fund:
          (a) a loan retention account equivalent to either one sixth or one
          third of the loan installment (depending on the frequency of the
          repayment elected by the Company, i.e. quarterly or semi annually)
          plus interest which is used to fund the loan installments coming due,
          (b) a minimum cash deposit, and (c) a drydocking account which is
          restricted for use and can only be used for the purpose of paying for
          drydocking or special survey expenses.

     g)   Accounts receivable

          Substantially all of the Company's accounts receivable are due from
          international oil companies and traders. The Company performs ongoing
          credit evaluations of its trade customers and generally does not
          require collateral. Expected credit losses are provided for in the
          consolidated financial statements for all expected uncollectible
          accounts.

          Changes in the allowance for doubtful accounts for the three years
          ended December 31, 2006, were as follow:

                                        For the year ended December 31,
                                        -------------------------------
                                          2006       2005       2004
                                        -------    -------    -------

          Balance at January 1          $   324    $   739    $ 1,142
          Provision                       1,065        290        679
          Recovery                           --        (44)      (324)
          Amounts written off (1)          (680)      (661)      (758)
                                        -------    -------    -------
          Balance at December 31        $   709    $   324    $   739
                                        =======    =======    =======

          (1)  Accounts charged to the allowance when collection efforts cease.

     h)   Insurance claims receivable

          Insurance claims receivable represent costs incurred in connection
          with insurable incidents for which the Company expects to be
          reimbursed by the insurance carriers, subject to applicable
          deductibles. Deductible amounts related to covered incidents are
          expensed in the period of occurrence of the incident. Expenses
          incurred for insurable incidents in excess of deductibles are recorded
          as receivables pending the completion of all repair work and the
          administrative claims process. The credit risk associated with
          insurance claims receivable is considered low due to the high credit
          quality and funded status of the insurance underwriters and Protection
          & Indemnity ("P&I") clubs in which the Company is a member. The
          Company has historically recovered at least its cost in substantially
          all of its prior covered incidents. Insurance claims receivable,
          included in other receivables in the accompanying balance sheets,
          amounts $2,435 and $6,152 at December 31, 2006 and 2005, respectively.

     i)   Marine and river operating supplies

          Such amounts consist principally of fuel and supplies that are
          recorded for at the lower of cost or market and are charged to
          operating expenses as consumed determined on a first-in, first-out
          basis.

     j)   Vessels and equipment, net

          Vessels and equipment are stated at cost less accumulated
          depreciation. This cost includes the purchase price and all directly
          attributable costs (initial repairs, improvements and delivery
          expenses, interest and on-site supervision costs incurred during the
          construction periods). Subsequent expenditures for conversions and
          major improvements are also capitalized when they appreciably extend
          the life, increase the earning capacity or improve the safety of the
          vessels.

          Depreciation is computed net from the estimated scrap value which is
          equal to the product of each vessel's lightweight tonnage and
          estimated scrap value per lightweight ton and is recorded using the
          straight-line method over the estimated useful lives of the vessels.
          Acquired secondhand vessels are depreciated from the date of their
          acquisition over the remaining estimated useful life.

          Listed below are the estimated useful lives of vessels and equipment:

                                               Useful lives
                                                (in years)
                                               ------------

          Ocean-going vessels                      24
          PSVs                                     24
          Passenger vessels                        45
          River barges and push boats              35
          Furniture and equipment                5 to 10

          However, when regulations place limitations over the ability of a
          vessel to trade, its useful life is adjusted to end at the date such
          regulations become effective. Currently, these regulations only affect
          one of our vessels in the Passenger Business with no significant
          effects on its useful life.

          At the time vessels are disposed of, the assets and related
          accumulated depreciation are removed from the accounts, and any
          resulting gain or loss is recorded in other operating income
          (expense).

          Long-lived assets are reviewed for impairment in accordance with
          Statement of Financial Accounting Standard No. 144, Accounting for the
          Impairment or Disposal of Long-lived Assets ("SFAS 144"), 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.

     k)   Dry dock costs

          The Company's vessels must be periodically drydocked and pass
          inspections to maintain their operating classification, as mandated by
          maritime regulations. Costs incurred to drydock the vessel are
          deferred and amortized using the straight - line method over the
          period to the next drydocking, generally 24 to 36 months. Drydocking
          costs are comprised of painting the vessel hull and sides, recoating
          cargo and fuel tanks, and performing other engine and equipment
          maintenance activities to bring the vessel into compliance with
          classification standards. Costs include actual costs incurred at the
          yard, cost of fuel consumed, and the cost of hiring riding crews to
          effect repairs. The unamortized portion of dry dock costs for vessels
          that are sold are written off and included in the calculation of the
          resulting gain or loss in the year of the vessels' sale.

          Expenditures for maintenance and minor repairs are expensed as
          incurred.

     l)   Investments in affiliates

          These investments are accounted for by the equity method. At December
          31, 2006 and 2005 this includes our interest in 50% of Puertos del Sur
          S.A. and OTS S.A. and 49% of Maritima Sipsa S.A. At December 31, 2005
          it also included a 27.78% interest in UP Offshore (Bahamas) Ltd.

     m)   Business combinations

          The Company accounts for business combinations under the provisions of
          Statement of Financial Accounting Standard No. 141, Business
          Combination ("SFAS 141"), which requires the use of the purchase
          method of accounting for all business combinations. The purchase
          method of accounting requires the Company to adjust the carrying value
          of the assets acquired and liabilities assumed to their fair value at
          the date of the purchase with any excess of purchase price over the
          fair value of assets acquired and liabilities assumed to be recorded
          as goodwill. Under the provisions of SFAS 141, the Company has one
          year from the purchase date to finalize the fair value of the assets
          acquired and liabilities assumed. The operating results of entities
          acquired are included in the accompanying consolidated statements of
          operations from the date of acquisition.

     n)   Identifiable intangible assets

          The Company accounts for its intangible assets in accordance with
          Statement of Financial Accounting Standard No. 142, Goodwill and Other
          Intangible Assets ("SFAS 142"). The Company's intangible assets arose
          as a result of the Ravenscroft acquisition (see Note 3), and consist
          of principally a safety management system, software and customer
          existing contracts, which are being amortized over useful lives
          ranging from three to eight years using the straight - line method.

          Accumulated amortization at December 31, 2006 and amortization for
          2006 amounted to $590. Amortization of intangible assets for the five
          years subsequent to December 31, 2006 is expected to approximate $786
          in each 2007 and 2008, $720 in 2009, $306 in 2010 and $175 in 2011.

     o)   Goodwill

          Goodwill is accounted for under the provisions of SFAS 142. Goodwill
          is recorded when the purchase price paid for an acquisition exceeds
          the estimated fair value of net identified tangible and intangible
          assets acquired. In accordance with SFAS 142, the Company performs an
          annual impairment test of goodwill and further periodic tests to the
          extent indicators of impairment develop between annual impairment
          tests. The Company's impairment review process compares the fair value
          of the reporting unit to its carrying value, including the goodwill
          related to the reporting unit. To determine the fair value of the
          reporting unit, the Company uses a discounted future cash flow
          approach that uses estimates for revenue, estimated costs and
          appropriate discount rates, among others. These various estimates are
          reviewed each time the Company tests goodwill for impairment and many
          are developed as part of the Company's routine business planning and
          forecasting process. The Company believes its estimates and
          assumptions are reasonable; however, variations from those estimates
          could produce materially different results.

     p)   Other assets

          This account includes costs incurred to issue debt net of amortization
          costs, which are being amortized over the debts' term using the
          effective interest rate method.

     q)   Accounts payable

          Accounts payable at December 31, 2006 and 2005 consists of insurance
          payables, operating expenses, customers advances collected, among
          others.

     r)   Comprehensive Income (Loss)

          Statement of Financial Accounting Standard No. 130 Reporting
          Comprehensive Income ("SFAS 130"), establishes standards for the
          reporting and display of comprehensive income (loss), which is defined
          as the change in equity arising from non-owner sources. Comprehensive
          income (loss) is reflected in the consolidated statement of
          shareholders' equity.

     s)   Derivative financial instruments

          The Company from time to time uses forward fuel purchases to provide
          partial short-term protection against a sharp increase in diesel fuel
          prices. These instruments generally cover some portion of the
          Company's forecasted diesel fuel needs for push boat operations. The
          Company accounts for these instruments as cash flow hedges. In
          accordance with Statement of Financial Accounting Standard Accounting
          for Derivative Instruments and Hedging Activities No.133 ("SFAS 133"),
          such financial instruments are market-to-market and, as they qualify
          for hedge accounting, the offset is recorded to other comprehensive
          income and then subsequently recognized as a component of fuel expense
          when the underlying fuel being hedged is used.

     t)   Earnings per share

          In accordance with Statement of Financial Accounting Standards No.
          128, Earnings per share ("SFAS 128") basic net income per share is
          computed by dividing the net income by the weighted average number of
          common shares outstanding during the relevant periods. Diluted net
          income per share reflects the potential dilution that could occur if
          securities or other contracts to issue common shares result in the
          issuance of such shares. In determining dilutive shares for this
          purpose the Company assumes, through the application of the treasury
          stock method, all restricted stock grants have vested, all common
          shares have been issued pursuant to the exercise of all outstanding
          stock options and all common shares have been issued pursuant to the
          issuance of all outstanding warrants.

<TABLE>
<CAPTION>
                                                          For the year ended December 31,
                                                      ---------------------------------------
                                                         2006          2005          2004
                                                      -----------   -----------   -----------
          <S>                                         <C>           <C>           <C>
          Net income                                  $    10,526   $    14,568   $     5,139
          Basic weighted average number of shares      17,965,753    15,500,000    15,500,000
          Effect on dilutive shares:
             Options and restricted stock                  56,837            --            --
             Warrants issued                               56,501            --            --
                                                      -----------   -----------   -----------
          Diluted weighted average number of shares    18,079,091    15,500,000    15,500,000
                                                      ===========   ===========   ===========
          Basic net income per share                  $      0.59   $      0.94   $      0.33
          Diluted net income per share                $      0.58   $      0.94   $      0.33
</TABLE>

     u)   Stock compensation

          Statement of Financial Accounting Standard No. 123 (revised 2004)
          Share-Based Payments ("SFAS 123 (R)") requires all share based
          payments to employees, including grants of employee stock options, to
          be recognized in the statements of income based on their fair values.
          The Company uses the Black-Scholes valuation model and straight-line
          amortization of compensation expense over the requisite service
          periods of the grants. The Company will reconsider its use of this
          model if additional information becomes available in the future that
          indicates another model would be more appropriate, or if grants issued
          in future periods have characteristics that cannot be reasonably
          estimated using this model.

     v)   Other operating (expense) income

          For the three years ended December 31, 2006, this account includes:

                                               For the year ended December 31,
                                               -------------------------------
                                                 2006        2005       2004
                                               --------    --------   --------

          Gain on vessels disposal             $     --    $ 21,867   $     41
          Claims against insurance companies         --          --        743
          Other                                    (198)        154         --
                                               --------    --------   --------
                                               $   (198)   $ 22,021   $    784
                                               ========    ========   ========

     w)   Income taxes

          The Company accounts for Income Taxes under the liability method in
          accordance with Statement of Financial Accounting Standard No. 109
          Accounting for Income Taxes ("SFAS 109").

          Under this method, deferred taxes 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 period end corresponding to those jurisdictions subject to income
          taxes. Deferred tax assets are recognized for all temporary items and
          an offsetting valuation allowance is recorded to extent that it is not
          more likely than not that the asset will be realized. Deferred tax is
          measured based on tax rates and laws enacted or substantively enacted
          at the balance sheet date in any jurisdiction.

     x)   New accounting pronouncements:

          In June 2006, the Financial Accounting Standards Board issued
          Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
          interpretation of SFAS109, Accounting for Income Taxes ("FIN 48"), to
          create a single model to address accounting for uncertainty in tax
          positions. FIN 48 clarifies the accounting for income taxes, by
          prescribing a minimum recognition threshold a tax position is required
          to meet before being recognized in the financial statements. FIN 48
          also provides guidance on derecognition, measurement, classification,
          interest and penalties, accounting in interim periods, disclosure and
          transition. FIN 48 is effective for fiscal years beginning after
          December 15, 2006. The Company does not expect that the adoption of
          FIN 48 will have a significant impact on the Company's financial
          position and results of operations.

3.   BUSINESS ACQUISITIONS

     a)   Acquisition of 100% of Ravenscroft

          On March 20, 2006, we purchased, for $11,500 all of the issued and
          outstanding capital stock of Ravenscroft Shipping (Bahamas) S.A.
          (Ravenscroft) from two of our related companies Crosstrade Maritime
          Inc. and Crosstrees Maritime Inc. Ravenscroft and its affiliated
          entities manage the vessels in our Ocean Business, Offshore Supply
          Business and Passenger Business.

          The results of the Ravenscroft acquisition are included in the
          consolidated financial statements since the date of acquisition.

          The Company expects with this acquisition to open new business
          opportunities on ship management services and to eliminate the
          management fees paid to related parties, while bringing the costs of
          ship management in-house.

          The purchase price of this acquisition was paid with the proceeds of
          our initial public offering described in note 1.

          The following table summarizes the estimated fair values of the assets
          acquired and liabilities assumed and the allocation of purchase price
          at the date of acquisition.

          Current assets                                       $   106
          Buildings and equipment                                4,614
          Other noncurrent assets                                   52
          Identifiable intangible assets                         4,338
          Goodwill                                               5,015
                                                               -------
             Total assets acquired                              14,125
                                                               -------

          Noncurrent liabilities                                 2,634
                                                               -------
             Total liabilities assumed                           2,634
                                                               -------

             Total purchase price                              $11,491(1)
                                                               =======

          (1)  Net of $9 of cash acquired.

          Due to immateriality, the Company has not prepared pro forma
          information related to this business combination.

     b)   Acquisition of an additional 66.67% of UP Offshore (Bahamas) Ltd.

          On March 21, 2006, we purchased for $48,000, an additional 66.67% of
          the issued and outstanding capital stock of UP Offshore (Bahamas)
          Ltd., from LAIF XI Ltd. (LAIF), an affiliate of Solimar Holdings Ltd,
          one of our shareholders. Following the acquisition of the shares of UP
          Offshore (Bahamas) Ltd. from LAIF, we hold 94.45% of the issued and
          outstanding shares of UP Offshore (Bahamas) Ltd.

          The results of UP Offshore (Bahamas) Ltd. acquisition are included in
          the consolidated financial statements since the date of acquisition.

          The purchase price was paid with the proceeds of our initial public
          offering described in note 1.

          The following table summarizes the estimated fair values of the assets
          acquired and liabilities assumed and the allocation of purchase price
          at the date of acquisition.

          Current assets                                       $ 1,073
          Vessels and equipment                                 79,580
          Other noncurrent assets                                1,516
                                                               -------
          Total assets acquired                                 82,169
                                                               -------

          Current liabilities                                    6,070
          Noncurrent liabilities                                26,310
                                                               -------
          Total liabilities assumed                             32,380
                                                               -------
          Redeemable preferred shares issued                     2,266
                                                               -------
          Total purchase price                                 $47,523(1)
                                                               =======

          (1)  Net of $477 of cash acquired.

          If the transaction had been consummated on January 1, 2005, the
          unaudited Company's pro forma revenues and net income for the years
          ended December 31, 2006 and 2005, would have been as shown below.
          However, such pro forma information is not necessarily indicative of
          what actually would have occurred had the transaction occurred on such
          date.

                                                 For the year ended
                                                    December 31,
                                                    (unaudited)
                                             -------------------------
                                                 2006          2005
                                             -----------   -----------

          Revenues                           $   173,793   $   125,361
          Net income                         $    11,328   $    13,934
          Basic net income per share         $      0.63   $      0.90
          Diluted net income per share       $      0.63   $      0.90

     c)   UP River (Holdings) Ltd.

          In June 2003, the Company sold to International Finance Corporation
          (IFC) a 7.14% interest in UP River (Holdings) Ltd., which holds the
          50% in UABL, our subsidiary in the River Business.

          Also the Company agreed to pay to IFC 7.14% of the amount of the
          respective Charter Party Payments pursuant to the Charter Party
          Agreements between Ultrapetrol and UABL.

          In full consideration for (a) the sale of the shares, and (b) the
          right to receive a portion of the Charter Party Payments IFC paid to
          the Company $5,000.

          Upon the occurrence of an Ultrapetrol IPO the IFC had the right to
          receive in exchange for all but not less than all of the shares owned
          by it in UP River (Holdings) Ltd., at the option of Ultrapetrol (a) a
          number of registered Ultrapetrol shares that, when multiplied by the
          Ultrapetrol IPO price, gave the IFC a realized internal return rate of
          12% per annum on its investment in the UP River (Holdings) Ltd's
          shares or (b) a number of Ultrapetrol shares (valued at the
          Ultrapetrol IPO price) and an amount of cash that, in the aggregate,
          gave the IFC a realized internal return rate of 12% per annum on its
          investment in the UP River (Holdings) Ltd's shares.

          On May 3, 2006, we signed an agreement with the IFC, to purchase from
          the IFC the 7.14% of our subsidiary UP River (Holdings) Ltd., which we
          did not own. As part of this agreement the IFC waived its option to
          convert its interest in UP River (Holdings) Ltd. to our shares and its
          right to participate in our IPO.

          The Company paid the purchase price of $6,225 with the proceeds of its
          initial public offering described in note 1.

          At December 31, 2005, the Company presents $4,898, as a "Minority
          interest subject to put rights", which represents the initial proceeds
          received by the IFC plus accrued interest less Charter Party Payments
          made to the IFC.

     d)   Ultracape Delaware LLC

          In October 2004 the Company through a subsidiary, Ultracape Delaware
          LLC, purchased 99.99% of Parque Ecologico Industrial Altamira S.A.
          (PEISA) for $2,000 from a related party of its shareholder, Solimar
          Holdings Ltd.

          On September 22, 2006, Ultracape (a 60% subsidiary) exercised its
          option to sell 100% of its interest in Ultracape Delaware LLC to
          MexPlus Puertos S.A. de C.V., a related party of our shareholder
          Solimar Holdings Ltd., for a total price of $2,630. Ultrapetrol
          recorded a gain of $630 from this disposition in "Other income
          (expense) -- Other, net".

     e)   Acquisition of UABL and river fleet

          On April 23, 2004, the Company acquired in a series of related
          transactions, through two wholly owned subsidiaries from ACBL
          Hidrovias Ltd. ("ACBL"), the remaining 50% equity interest in UABL
          Limited and UABL Terminals that it did not own (together "UABL"), as
          well as a fleet of 50 river barges and 7 push boats, which UABL
          Limited and its subsidiaries previously leased from ACBL, certain
          receivables and liabilities all for an aggregate purchase price of
          $26,100.

     f)   Other

          In March 2006 we hired the administrative personnel and purchased the
          administrative related assets of Oceanmarine for $321 (See Note 10 -
          Management fee).

          On September 8, 2006 we entered into a Memorandum of Agreement with
          the Argos Group to form a joint venture to establish a river
          transportation company on the Magdalena River in Colombia.

4.   DRY DOCK

     The capitalized amounts in dry dock at December 31, 2006 and 2005 were as
     follows:

                                                      At December 31 ,
                                                  ------------------------
                                                    2006            2005
                                                  --------        --------

     Original book value                          $ 26,769        $ 23,549
     Accumulated amortization                      (17,096)        (10,806)
                                                  --------        --------
     Net book value                               $  9,673        $ 12,743
                                                  ========        ========

5.   VESSELS AND EQUIPMENT, NET

     The capitalized cost of the vessels and equipment, and the related
     accumulated depreciation at December 31, 2006 and 2005 were as follows:

                                                      At December 31,
                                                  ------------------------
                                                     2006           2005
                                                  ---------      ---------

     Ocean-going vessels                          $ 152,122      $ 126,776
     River barges and pushboats                     125,172        116,054
     PSVs                                            87,599             --
     Construction of PSVs in progress                34,943             --
     Passenger vessels                               38,321         28,105
     Furniture and equipment                          7,571          6,173
     Building, land and operating base                8,782          6,525
                                                  ---------      ---------
     Total original book value                      454,510        283,633
     Accumulated depreciation                      (121,319)      (101,564)
                                                  ---------      ---------
     Net book value                               $ 333,191      $ 182,069
                                                  =========      =========

     In 2006 we capitalized interest totaled $2,299 in our PSVs under
     construction. In 2005 and 2004 we capitalized interest totaled $557 and
     $685, respectively in our equity investment in UP Offshore (Bahamas) Ltd.

     Acquisition and disposition of vessels

     In October 2006, the Company purchased the product tanker, named M/T Rea,
     renamed Amadeo with a carrying capacity of 39,530 dwt, for a total purchase
     price of $19,100.

     Also, in November 2006, the Company purchased the product tanker, named
     Cadenza, renamed Alejandrina with a carrying capacity of 9,219 dwt for a
     purchase price of $17,000 of which 10% was paid as advance payment in 2006.
     The vessel was delivered in January 2007.

     In June 2003, UP Offshore Apoio Maritimo Ltda. (our wholly owned subsidiary
     in the Offshore Supply Business) signed shipbuilding contracts for
     construction of four PSVs with EISA Estaleiro Ilha S/A (EISA), a Brazilian
     corporation. During November 2005 UP Offshore Apoio Maritimo Ltda. and EISA
     amended some conditions of the shipbuilding contracts, including the
     purchase price and the delivery dates.

     The four PSVs are to be built by EISA at a combined cost of $69,750. In
     March 2006, the first of the four PSVs, named UP Agua Marinha was delivered
     and in August 2006, the second of the four PSVs, named UP Topazio was
     delivered. The total remaining commitment at December 31, 2006 for the two
     PSVs cost is approximately $14,000, which includes the minimum contractual
     obligation with the shipyard and the remaining necessary expenditure to
     commission the two PSVs in service.

     In January 2005 the Company purchased, for $7,614, 35 dry barges for our
     River Business. $7,500 was funded by a draw down of the loan granted to our
     river subsidiaries by the IFC and KFW in 2002 and the balance with
     available cash.

     In March 2005, the Company entered into an agreement to sell its vessel,
     Cape Pampas for a total price of $37,880, net of the related expenses. The
     vessel was delivered to the new owners on May 6, 2005, at which time a gain
     on sale of $21,875 was recognized. The Company used part of the proceeds
     from the sale mentioned above to settle financial obligations related to
     the purchase of this vessel.

     In March 2005, the Company entered into a contract with Cruise Elysia Inc.
     to purchase a passenger vessel, named New Flamenco for a total purchase
     price of $13,500. 90% of the purchase price, $12,150, was funded by funds
     deposited in the Escrow Account and the balance with available cash.

     In April 2005 the Company agreed to purchase the product tanker Mt Sun
     Chemist, renamed Miranda I, for a total price of $10,275. The vessel was
     delivered and fully paid for on July 7, 2005. 90% of the purchase price,
     $9,247, was funded by funds deposited in the Escrow Account and the balance
     with available cash.

     In April 2005, the Company purchased at auction for a price of $3,493 the
     cruise vessel World Renaissance, renamed Grand Victoria, which was
     delivered and fully paid for on April 19, 2005. 90% of the purchase price,
     $3,143 was funded by funds deposited in the Escrow Account and the balance
     with available cash.

     In October 2005 the Company purchased 11 dry barges from our river
     subsidiary UABL International S.A. $2,900 was funded by funds deposited in
     the Escrow Account. Since the transaction was between the parent and a
     subsidiary, the transaction was accounted for at historical cost and no
     gain or loss was recognized.

     During 2004 the Company sold certain older single hull tankers serving the
     regional trade of Argentina and Brazil. A gain of $41 in 2004 relating to
     disposal of such vessels are presented in other operating income (expense).

6.   LONG-TERM DEBT AND OTHER FINANCIAL DEBT

     9% First Preferred Ship Mortgage Notes due 2014

     On November 24, 2004 the Company completed a debt offering of $180 million
     of 9% First Preferred Ship Mortgage Notes due 2014 (the "2014 Senior
     Notes"), through a private placement to institutional investors eligible
     for resale under Rule 144A and Regulation S (the "Offering"). The net
     proceeds of the Offering were used to repay the 2008 Senior Notes, certain
     other existing credit facilities and to fund the Escrow Account.

     Interest on the 2014 Senior Notes is payable semi-annually on May 24 and
     November 24 of each year. The 2014 Senior Notes are senior obligations
     guaranteed by the majority of the Company's subsidiaries directly involved
     in our Ocean and Passenger Business. The Notes are secured by first
     preferred ship mortgages on 18 vessels, 2 oceangoing barges and 193 river
     barges.

     The 2014 Senior Notes are subject to certain covenants, including, among
     other things, limiting the parent's and guarantor subsidiaries' ability to
     incur additional indebtedness or issue preferred stock, pay dividends to
     stockholders, incur liens or execute sale leasebacks of certain principal
     assets and certain restrictions on the Company consolidating with or
     merging into any other person.

     Upon the occurrence of a change of control event, each holder of the 2014
     Senior Notes shall have the right to require the Company to repurchase such
     notes at a purchase price in cash equal to 101% of the principal amount
     thereof plus accrued and unpaid interest. Our indenture governing our 2014
     Senior Notes describes the circumstances that are considered a change of
     control event.

     In the first quarter of 2005 the SEC declared effective an exchange offer
     filed by the Company to register substantially identical senior notes to be
     exchanged for the 2014 Senior Notes pursuant to a registration rights
     agreement, to allow the 2014 Senior Notes be eligible for trading in the
     public markets.

     Although Ultrapetrol (Bahamas) Limited, the parent company, subscribed the
     issued Notes, principal and related expenses will be paid through funds
     obtained from the operations of the Company's subsidiaries.

     At December 31, 2006 the net book value of the assets pledged as a
     guarantee of the 2014 Senior Notes was $132,067.

     Loan with the DVB Bank America NV (DVB NV) of up to $30,000:

     On April 27, 2005 UP Offshore (Panama) S.A. (our subsidiary in the Offshore
     Supply Business), which was first consolidated in 2006) as Holding Company
     entered into a $30,000 loan agreement with DVB NV for the purpose of
     providing post delivery financing of two PSVs named UP Esmeralda and UP
     Safira, which were delivered in May and June 2005, and repaying existing
     financing and shareholder loans.

     This loan is divided into two tranches:

     Tranche A, amounting to $26,000, accrues interest at LIBOR rate plus 1.875%
     per annum, and shall be repaid by (i) 40 consecutive quarterly installments
     of $450 each beginning in September 2005 and (ii) a balloon repayment of
     $8,000 together with the 40th installment.

     Tranche B, amounting to $4,000, accrues interest at LIBOR rate plus 2.25%
     per annum, and shall be repaid by 12 consecutive quarterly installments of
     $333 each beginning in September 2005.

     The loan is secured by a mortgage on the UP Safira and UP Esmeralda and is
     jointly and severally irrevocable and unconditionally guaranteed by Packet
     Maritime Inc. and Padow Shipping Inc. The loan also contains customary
     covenants that limit, among other things, the Borrower's and the
     Guarantors' ability to incur additional indebtedness, grant liens over
     their assets, sell assets, pay dividends, repay indebtedness, merge or
     consolidate, change lines of business and amend the terms of subordinated
     debt. The agreement governing the facility also contains customary events
     of default. If an event of default occurs and is continuing, DVB NV may
     require the entire amount of the loan be immediately repaid in full.
     Further, the loan agreement requires until June 2008 that the PSVs pledged
     as security have an aggregate market value of at least 85% of the value of
     the loan amount and at all times thereafter an aggregate market value of at
     least 75% of the value of the loan.

     At December 31, 2006, the outstanding principal balance under the loan
     agreement was $25,300 and the aggregate net book value of the assets
     pledged was $41,800. In January 2007, the Company fully prepaid the
     outstanding principal balance of the loan with the proceeds of the loan
     with DVB Bank AG of up to $61,306.

     Loan with DVB Bank AG (DVB AG) of up to $15,000

     On January 17, 2006 UP Offshore Apoio Maritimo Ltda. (our subsidiary in the
     Offshore Supply Business) as Borrower, Packet Maritime Inc. and Padow
     Shipping Inc. as Guarantors and UP Offshore (Bahamas) Ltd. as Holding
     Company entered into a $15,000 loan agreement with DVB AG for the purposes
     of providing post delivery financing of one PSV named UP Agua Marinha
     delivered in February 2006.

     This loan is divided into two tranches:

     -    Tranche A, amounting to $13,000, accrues interest at LIBOR rate plus a
          margin of 2.25% per annum and shall be repaid by (i) 120 consecutive
          monthly installments of $75 each beginning in March 2006 and (ii) a
          balloon repayment of $4,000 together with the 120 installments.

     -    Tranche B, amounting to $2,000, shall be repaid by 35 consecutive
          monthly installments of $56 each beginning in March 2006 and accrues
          interest at LIBOR rate plus a margin of 2.875% per annum.

     On January 24, 2007 UP Offshore Apoio Maritimo Ltda. and DVB AG amended and
     restated the margin of both tranches to 1.20% per annum effective since
     February 1, 2007.

     The loan is secured by a mortgage on the UP Agua Marinha and is jointly and
     severally irrevocable and unconditionally guaranteed by Packet Maritime
     Inc. and Padow Shipping Inc. The loan also contains customary covenants
     that limit, among other things, the Borrower's and the Guarantors' ability
     to incur additional indebtedness, grant liens over their assets, sell
     assets, pay dividends, repay indebtedness, merge or consolidate, change
     lines of business and amend the terms of subordinated debt. The agreement
     governing the facility also contains customary events of default. If an
     event of default occurs and is continuing, DVB AG may require the entire
     amount of the loan be immediately repaid in full. Further, the loan
     agreement requires until February 2009 that the PSV pledged as security has
     an aggregate market value of at least 117.6% of the value of the loan
     amount and at all times thereafter an aggregate market value of at least
     133.3% of the value of the loan.

     At December 31, 2006 the outstanding principal balance under the loan
     agreement was $13,694 and the aggregate net book value of the asset pledged
     was $21,892.

     Loan with DVB Bank AG (DVB AG) of up to $61,306

     On December 28, 2006 UP Offshore (Bahamas) Ltd. (our subsidiary in the
     Offshore Supply Business) as Borrower, Packet Maritime Inc, Padow Shipping
     Inc. and UP Offshore Apoio Maritimo Ltda. (collectively the owners of our
     PSVs UP Safira, UP Esmeralda, UP Agua Marinha and UP Topazio) and
     Ultrapetrol (Bahamas) Limited as Guarantors entered into a $61,306 loan
     agreement with DVB AG for the purposes of providing post delivery
     re-financing of our Panamanian registered PSVs named UP Safira and UP
     Esmeralda and the Brazilian registered PSV UP Topazio.

     The loan bears interest at LIBOR rate plus 1.20% per annum with quarterly
     principal and interest payments and maturing through December 2016.
     Beginning in March 2007, the principal payments equal to the regularly
     scheduled quarterly principal payments ranging from $1,075 to $1,325 with a
     balloon installment of $16,000 in December 2016. If a PSV is sold or
     becomes a total loss, the Borrower shall prepay the loan in an amount equal
     to the stipulated value of such PSV, which is initially stipulated in
     $18,750 and shall be reduced in the amount of $387.5 on each repayment
     date.

     The loan is secured by a first priority mortgage on the UP Safira, UP
     Esmeralda and UP Topazio and by a second priority mortgage on the UP Agua -
     Marinha and is jointly and severally irrevocable and unconditionally
     guaranteed by Packet Maritime Inc., Padow Shipping Inc., UP Offshore Apoio
     Maritimo Ltd. and Utrapetrol (Bahamas) Limited. The loan also contains
     customary covenants that limit, among other things, the Borrower's ability
     to incur additional indebtedness, grant liens over their assets, sell
     assets, pay dividends, repay indebtedness, merge or consolidate, change
     lines of business and amend the terms of subordinated debt. The agreement
     governing the facility also contains customary events of default. If an
     event of default occurs and is continuing, DVB AG may require the entire
     amount of the loan be immediately repaid in full. Further, the loan
     agreement requires until December 2009 that the PSVs pledged as security
     have an aggregate market value of at least 117.6% of the value of the loan
     amount and at all times thereafter an aggregate market value of at least
     133.3% of the value of the loan.

     At December 31, 2006 there are no drawdowns under the loan agreement.

     Loans with IFC and KfW entered into by UABL Barges and UABL Paraguay

     On December 17, 2002, UABL Barges, a subsidiary in our River Business,
     entered into a loan agreement with the International Finance Corporation
     (IFC) in an aggregate principal amount of $20,000.

     In addition, on February 27, 2003, UABL Barges entered into a loan
     agreement with Kreditanstalt fur Wiederaufbau (KfW) in an aggregate
     principal amount of $10,000.

     The Company fully prepaid the outstanding principal balance of the loans of
     $22,286 with the proceeds of its initial public offering described in note
     1.

     On March 27, 2003, UABL Paraguay, a subsidiary in our River Business,
     entered into a loan agreement with the IFC in an aggregate principal amount
     of $10,000. In 2005, UABL Paraguay received a disbursement for an amount
     totaled $3,000. The outstanding principal amount of $2,625 was fully repaid
     with the proceeds of our initial public offering described in note 1.

     As a result of the early prepayment of these debts in 2006 the Company
     recorded a loss on extinguishment of debt of $1,411.

     10.5% First Preferred Ship Mortgage Notes due 2008

     At December 31, 2003 the aggregate outstanding amount related with its
     10.5% First Preferred Ship Mortgage Notes due 2008 (the "2008 Senior
     Notes") was $128,341, due in full in 2008.

     In connection with the issue of its 9% First Preferred Ship Mortgage Notes
     due 2014, on November 24, 2004 the Company repaid all its 2008 Senior
     Notes.

     Early Extinguishment of Debt

     In connection with the 2014 Senior Notes offering, the Company paid
     $122,641 to redeem principal of its 2008 Senior Notes. In addition, an
     early extinguishment premium of $4,600 was paid. Such premium and a $1,822
     balance of unamortized deferred financial cost were charged to expenses for
     a total of $6,422 in 2004.

     Previously the Company recognized a gain of extinguishment of debt of
     $1,344 in 2004 related to the repurchases of nominal value $5,700 of its
     2008 Senior Notes.

     Loan with Deutsche Schiffbank Aktiengesellschaft ("DSA")

     On October 27, 2004, Braddock Shipping Inc, a 60% owned subsidiary in our
     Ocean Business ("Braddock"), entered into a $10,000 loan agreement with DSA
     for the purpose of refinancing debt previously incurred in connection with
     the purchase of the vessel Cape Pampas. The loan accrued interest at LIBOR
     rate plus 1.625% per annum. The loan was secured by a mortgage on the Cape
     Pampas and a pledge of 100% of the stock of Braddock and was guaranteed by
     both the direct and indirect parents of Braddock.

     In March 2005, the Company entered into an agreement to sell its vessel
     Cape Pampas (see Note 5). After that the Company used part of the proceeds
     from the sale mentioned to cancel its financial obligation with a principal
     amount of $9,250.

     Balances of long-term debt and other financial debt at December 31, 2006
     and 2005:

<TABLE>
<CAPTION>
                            Financial institution /                      Nominal value
                                                                     --------------------

                                                                     --------------------
                                  Other                 Due-year     Current   Noncurrent   Total      Average rate
                            ------------------------------------------------------------------------ ---------------
<S>                         <C>                        <C>           <C>       <C>        <C>         <C>
Ultrapetrol (Bahamas) Ltd   Private Investors (Notes)     2014       $    --   $ 180,000  $ 180,000         9.000%
UP Offshore Panama          DVB  Tranche A             Through 2015    1,800      21,500     23,300   Libor + 1.875%
UP Offshore Panama          DVB  Tranche B             Through 2008    1,333         667      2,000   Libor + 2.250%
UP Offshore Apoio           DVB  Tranche A             Through 2016      900      11,350     12,250   Libor + 2.250%
UP Offshore Apoio           DVB  Tranche B             Through 2009      667         777      1,444   Libor + 2.875%
                                                                     --------  ---------  ----------
     December 31, 2006                                               $ 4,700   $ 214,294  $ 218,994
                                                                     ========  =========  ==========
     December 31, 2005                                               $ 6,599   $ 202,953  $ 209,552
                                                                     ========  =========  ==========
</TABLE>

     Aggregate annual future payments due to the long-term debt:

                            Year ending December 31
                            ------------------------
                            2007            $  4,700
                            2008               4,034
                            2009               2,810
                            2010               2,700
                            2011               2,700
                            Thereafter       202,050
                                            --------
                                    Total   $218,994
                                            ========

7.   FINANCIAL INSTRUMENTS

     Fair values

     The carrying amounts of the following financial instruments approximate
     their fair values; cash and cash equivalents and restricted cash accounts,
     accounts and other accounts receivable, receivables from related parties,
     accounts and other payables and payable to related parties. The fair values
     of long-term loans approximate the recorded values, generally, due to their
     variable interest rates. In the case of fixed rate borrowings, fair value
     approximates the estimated quoted market prices.

     The fair value of forward fuel purchases agreement is the amount at which
     they could be settled, based on quoted market prices.

     The following table presents the carrying value and fair value of the
     financial instruments:

                                               At December 31
                                  -----------------------------------------
                                         2006                   2005
                                  -------------------   -------------------
                                  Carrying     Fair     Carrying     Fair
                                   value       value      value      value
                                  --------   --------   --------   --------
     Assets

     Cash and cash equivalents    $ 20,648   $ 20,648   $  7,914   $  7,914
     Restricted cash                 1,088      1,088      3,706      3,706

     Liabilities

     Forward fuel purchases             98         98         --         --
     Financial debt (Note 6)        38,994     38,994     29,552     29,552
     Long-term notes (Note 6)      180,000    176,400    180,000    175,500

     Credit Risk

     The Company believes that no significant credit risk exists with respect to
     the Company's cash due to the spread of this risk among various different
     banks and the high credit status of these counterparties. The Company is
     also exposed to credit risk in the event of non-performance by
     counterparties to derivative instruments. However, the Company limits this
     exposure by entering into transactions with counterparties that have high
     credit ratings. Credit risk with respect to accounts receivable is reduced
     by the Company by chartering its vessels to established international
     charterers.

     Forward fuel purchases

     UABL Limited, our subsidiary in the River Business, has entered into
     forward fuel purchase agreements, which are guaranteed by Ultrapetrol
     (Bahamas) Limited.

     Outstanding forward fuel purchase agreements involve both the risk of a
     counterparty not performing under the terms of the contract and the risk
     associated with changes in market value. The Company monitors its
     positions, the credit ratings of counterparties and the level of contracts
     it enters into with any one party. The counterparties to these contracts
     are major financial institutions. Given the high level of credit quality of
     its derivative counterparties, the Company does not believe it is necessary
     to obtain collateral arrangement.

     At December 31, 2006, UABL Limited had forward fuel purchases agreements
     outstanding for 1.18 million gallons with an aggregate notional value of
     $2,112 and a fair value of $(98), which has been recorded in other current
     liabilities on the consolidated balance sheet. Under these agreements,
     starting February and ending August 2007, UABL Limited pays a fixed price
     of $1.79 per gallon.

8.   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 the contingency is 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.

     a)   Paraguayan Customs Dispute

          On September 21, 2005 the local Customs Authority of Ciudad del Este,
          Paraguay issued a finding that certain UABL entities owe taxes to that
          authority in the amount of $2,200, together with a fine for
          non-payment of the taxes in the same amount, in respect of certain
          operations of our River Business for the prior three-year period. This
          matter was referred to the Central Customs Authority of Paraguay. We
          believe that this finding is erroneous and UABL has formally replied
          to the Paraguayan Customs Authority contesting all of the allegations
          upon which the finding was based.

          After review of the entire case the Paraguayan Central Tax Authorities
          who have jurisdiction over the matter have confirmed the Company has
          no liability in respect of two of the three matters at issue, while
          they held a dissenting view on the third issue. Through a Resolution
          which was notified to UABL on October 13, 2006 the Paraguayan
          Undersecretary for Taxation has confirmed that, in his opinion, the
          Company is liable for a total of approximately $0.5 million and has
          applied a fine of 100% of this amount. On November 24, 2006, the court
          confirmed that UABL is not liable for the first two issues. The
          Company has entered a plea with the respective court contending the
          interpretation on the third issue where the Company claims to be
          equally non-liable.

          We have been advised by UABL's counsel in the case that they believe
          that there is only a remote possibility that a court would find UABL
          liable for any of these taxes or fines.

     b)   Brazilian Customs Dispute

          Ultrapetrol S.A. was involved in a customs dispute with the Brazilian
          Customs Tax Authorities over the alleged infringement of customs
          regulations by the Alianza G-3 and Alianza Campana (collectively, the
          "Alianza Campana") in Brazil during 2004. As a result, the Brazilian
          Customs Tax Authorities commenced an administrative proceeding and
          applied the penalty of apprehension against the Alianza Campana which
          required the Alianza Campana to remain in port or within a maximum of
          five nautical miles from the Brazilian maritime coast. The maximum
          customs penalty that could be imposed would be confiscation of the
          Alianza Campana, which is estimated by the Brazilian Customs Tax
          Authorities to be valued at $4,560. The Secretary of Brazilian Federal
          Revenue decided to cancel the penalty of confiscation of the Alianza
          Campana by means of a decision issued on August 14, 2006. However, the
          conditioned his decision on the compliance with the following
          requirements: (1) the classification of the Alianza Campana under the
          Regime Advaneiro Especial Para a Industria do Petroleo, or REPETRO
          regime and, if such classification is confirmed; (2) the payment by
          Ultrapetrol S.A. of $46 as a penalty in the amount of one percent of
          the customs value of the Alianza Campana.

          On February 2, 2007, our customer Petroleo Brasileiro S.A.
          ("Petrobras") obtained from Brazilian Customs Tax Authorities the
          recognition of the classification of the Alianza Campana under the
          REPETRO regime and we paid the penalty mentioned above. Finally, on
          March 5, 2007 the Federal Internal Revenue Service confirmed such
          decision and, therefore, the confiscation penalty was automatically
          canceled and the administrative proceeding was finalized with no
          further consequences to us.

     c)   Tax claim in Bolivia

          On November 3, 2006 the Bolivian Tax Authority (Departamento de
          Inteligencia Fiscal de la Gerencia Nacional de Fiscalizacion) issued a
          notice in the Bolivian press advising that UABL International S.A. (a
          Panamanian subsidiary of the Company in the River Business) would owe
          taxes to that authority in the amount of approximately $2,500
          (including interest) together with certain fines that have not been
          determined yet. No claims have been noticed to this company.

          We believe that this finding is incorrect and UABL International S.A.
          will formally reply to the Bolivian Tax Authority contesting the
          allegations of the finding, when we would be notified by the Bolivian
          Tax Authority. We have been advised by our local counsel in the case
          that there is only a remote possibility that UABL International S.A.
          would be found liable for any of these taxes or fines.

     d)   Fuel supply contract of UABL Paraguay

          In January 2007, UABL Paraguay, a river subsidiary of the Company,
          entered into a fuel supply contract. Under this contract UABL Paraguay
          has contracted to purchase a minimum amount of fuel per month through
          the year 2007 and to make a minimum annual payment of $12,000. The
          price of the cubic meter is equivalent to the price in the
          international market plus a margin.

     e)   Lease obligations

          The Company and its subsidiaries lease buildings and operating
          equipment under various leases, which expire from 2007 to 2,016 and
          which generally have renewal options at similar terms. Rental expense
          under continuing obligations for the three years ended December 31,
          2006 was $475, $322 and $235, respectively. At December 31, 2006,
          obligations under the companies' operating leases with initial or
          remaining noncancellable lease terms longer than one year were as
          follows:

                             Year ending December 31
                             -----------------------
                             2007            $  568
                             2008               537
                             2009               408
                             2010               275
                             2011                46
                             Thereafter         228
                                             ------
                                     Total   $2,062
                                             ======

     f)   Other

          At December 31, 2006, we employed many employees and seafarers as crew
          of our vessels. These seafarers are covered by industry-wide
          collective bargaining agreements that set basic standards applicable
          to all companies who hire such individuals as crew. Because most of
          our employees are covered by these industry-wide collective bargaining
          agreements, failure of industry groups to renew these agreements may
          disrupt our operations and adversely affect our earnings. In addition,
          we cannot assure that these agreements will prevent labor
          interruptions. While we have had no labor interruption in the past we
          do not believe any labor interruptions will disrupt our operations and
          harm our financial performance.

9.   INCOME TAXES

     The Company operates through its subsidiaries, which are subject to several
     tax jurisdictions, as follows:

     a)   Bahamas

          The earnings from shipping operations were derived form sources
          outside the Bahamas and such earnings were not subject to Bahamanian
          taxes.

     b)   Panama

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

     c)   Paraguay

          Two of our Ocean Business subsidiaries, Parfina S.A. and Oceanpar S.A.
          and four or our River Business subsidiaries, UABL Paraguay, Parabal
          S.A., Yataity and Riverpar are subject to Paraguayan corporate income
          taxes.

     d)   Argentina

          Ultrapetrol S.A., one of our Ocean Business subsidiaries and three of
          our River Business subsidiaries, UABL S.A., Argenpar S.A. and Sernova
          S.A., 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 TOMPI 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.

     e)   Brazil

          Our subsidiaries in the Offshore Supply Business, UP Offshore Apoio
          Maritimo Ltda. and Agriex Importadora e Exportadora de Generos
          Alimenticios Ltda. are subject to Brazilian corporate income taxes.

          UP Offshore Apoio Maritimo Ltda., has foreign currency exchange gains
          recognized for tax purposes only in the period the debt (including
          intercompany transactions) is extinguished. A deferred tax liability
          is recognized in the period the foreign currency exchange rate changes
          equal to the future taxable income at the applicable tax rate.

     f)   Chile

          Our subsidiary in the Ocean Business, Corporacion de Navegacion
          Mundial S.A. (Cor.Na.Mu.S.A.) is subject to Chilean corporate income
          taxes.

     g)   US federal income tax

          Under the United Stated Internal Revenue Code of 1986, as amended, or
          the Code, 50% of the gross shipping income of our vessel owning or
          chartering subsidiaries attributable to transportation that begins or
          ends, but that does not both begin and end, in the U.S. are
          characterized as U.S. source shipping income. Such income is subject
          to 4% U.S. federal income tax without allowance for deduction, unless
          our subsidiaries qualify for exemption from tax under Section 883 of
          the Code and the Treasury Regulations promulgated thereunder, which
          became effective for our calendar year subsidiaries on January 1,
          2005.

          For the years 2006, 2005 and 2004, our subsidiaries did not derive any
          U.S. source shipping income. Therefore our subsidiaries are not
          subject to any U.S. federal income taxes, except our ship management
          services provided by Ravenscroft.

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

                                      For the year ended December 31,
                                      --------------------------------
                                       2006         2005         2004
                                      ------       ------       ------

          Current                     $1,305       $  178       $  570
          Deferred                       896          608           72
                                      ------       ------       ------
                                      $2,201       $  786       $  642
                                      ======       ======       ======

          Ultrapetrol's pre-tax income for the three years ended December 31,
          2006 was taxed in foreign jurisdictions (principally Chile, Brazil,
          Argentina and Paraguay).

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

<TABLE>
<CAPTION>
                                                              For the year ended December 31,
                                                             ----------------------------------
                                                               2006         2005         2004
                                                             --------     --------     --------
<S>                                                          <C>          <C>          <C>
     Pre-tax income                                          $ 14,646     $ 25,151     $  6,921
         Sources not subject to income tax
         (tax exempt income)                                   (8,784)     (23,480)      (7,468)
                                                             --------     --------     --------
                                                                5,862        1,671         (547)
     Statutory tax rate                                            35%          35%          35%
                                                             --------     --------     --------
     Tax expense (benefit) at statutory tax rate                2,052          585         (192)
     Decrease in valuation allowance                               --           --
         Rate differential                                     (1,027)        (360)
         Effects of foreign exchange changes
         related to Argentinian and Brazilian subsidiaries        716           --          527
     Others                                                       460          561          307
                                                             --------     --------     --------
     Income tax provision                                    $  2,201     $    786     $    642
                                                             ========     ========     ========
</TABLE>

     At December 31, 2006, Argentine subsidiaries had a consolidated credit
     related to TOMPI of $1,319 which expires $155 in 2010, $186 in 2011, $318
     in 2012, $171 in 2013, $241 in 2014 and $248 in 2015.

     At December 31, 2006, Argentine subsidiaries had accumulated tax loss
     carryforwards ("NOLs") for a consolidated total of $223 that expire $187 in
     2010 and $36 in 2011. The use of the NOLs and TOMPI will depend upon future
     taxable income in Argentina.

     The components of deferred taxes included on the balance sheets were as
     follows:

                                                          At December 31,
                                                        -------------------
                                                          2006        2005
                                                        -------     -------
     Deferred tax assets

         Other, deferred current assets                 $   143     $   100
                                                        -------     -------

         NOLs                                                78         110
         TOMPI credit                                     1,319       1,514
         Other                                              550          --
                                                        -------     -------

         Total deferred noncurrent assets                 1,947       1,624
                                                        -------     -------

         Total deferred tax assets                        2,090       1,724
                                                        -------     -------

     Deferred tax liabilities

         Vessels and equipment, net                       2,493         826
         Intangible assets                                1,274          --
         Unrealized exchange diferences                   2,650          --
         Other                                              127         269
                                                        -------     -------

         Total deferred noncurrent liabilities            6,544       1,095
                                                        -------     -------

         Net deferred tax (liabilities) assets          $(4,454)    $   629
                                                        =======     =======

10.  RELATED PARTY TRANSACTIONS

     At December 31, 2006 and 2005, the balances of receivables from related
     parties, were as follows:

                                                            At December 31,
                                                           -------   -------
                                                             2006      2005
                                                           -------   -------
     Current:

     Receivable from related parties

     - Ravenscroft Shipping Inc.                           $   421   $ 2,574
     - UP Offshore Bahamas Ltd. and its subsidiaries (1)        --    13,726
     - Maritima Sipsa S.A                                      278        16
     - Puertos del Sur S.A. and O.T.S                        2,584     1,612
     - Other                                                    39        16
                                                           -------   -------
                                                           $ 3,322   $17,944
                                                           =======   =======

                                                           At December 31,
                                                         ------------------
                                                          2006        2005
                                                         ------      ------

     Noncurrent  Receivable from related
        parties - Puertos del
           Sur S.A. (2)a                                 $2,280      $1,995
                                                         ======      ======

     (1)  This loan accrued interest at a nominal interest rate of 9.50% per
          year. The principal and the interest accrued have been repaid in full
          in February 2006.

     (2)  This loan accrues interest at a nominal interest rate of 7% per year,
          payable semi-annually. The principal will be repaid in 8 equal annual
          installments, beginning on June 30, 2008.

     At December 31, 2006 and 2005 the balance of payable to related parties,
     were as follows:

                                                         At December 31,
                                                       --------------------
                                                        2006          2005
                                                       ------        ------
          Payable to related parties:

           - Ravenscroft Shipping Inc.                 $   --        $2,008
           - Maritima Sipsa S.A                           420            --
                                                       ------        ------

                                                       $  420        $2,008
                                                       ======        ======

     For the three years ended December 31, 2006, the revenues derived from
     related parties, were as follows:

                                               For the year ended December 31,
                                               -------------------------------
                                                2006         2005        2004
                                               ------       ------      ------

     Maritima Sipsa S.A. (1)                   $3,885       $1,976      $2,467
     Maritima Sipsa S.A. (2)                      194           --          --
     UABL and its subsidiaries (3)                 --           --       2,737
                                               ------       ------      ------
                                               $4,079       $1,976      $5,204
                                               ======       ======      ======

     (1)  Sale and repurchase of vessel Princess Marina

          In 2003, the Company entered into certain transactions to sell, and
          repurchase in 2006, to and from Maritima Sipsa S.A., a 49% owned
          company, the vessel Princess Marina. The combined effect of the sale
          at $15,100, repurchase at $7,700 and a loan granted to Maritima Sipsa
          S.A. for $7,400 resulted in no cash flow on a consolidated basis at
          the time of execution. The loan is repaid to the Company on a
          quarterly basis over a three-year period ended June 2006. In June
          2006, the Company and Maritima Sipsa S.A. entered into an amended
          agreement to modify the delivery date of the vessel to February 2007
          or at a later date if the charter is further extended, at a purchase
          price not exceeding $7,700. In March 2007, the delivered date was
          postponed to September 2007 and the purchase price was reduced to
          $3,645. The transaction was recognized in the Company's statements of
          income as a lease, reflecting quarterly payments as charter revenues
          for $ 3,885, $1,976 and $2,467 in 2006, 2005 and 2004, respectively,
          while the vessel remains presented in the accompanying balance sheets
          as an asset.

     (2)  Management fee billed by Ravenscroft

          Since the date of acquisition of Ravenscroft we included the
          management fee billed by Ravenscroft to Maritima Sipsa S.A., a 49%
          owned company, for the ship management services for the vessel
          Princess Marina. The stipulated fee is $21 per month.

     (3)  River barges and push boat leases

          Through its subsidiaries, the Company entered into a lease agreement
          with UABL Limited and its subsidiaries for the rental by UABL Limited
          of certain river barges and push boats for a daily lease amount for
          each river barge or push boat. Since April 23, 2004 the date of UABL
          Limited acquisition our financial statements included the operations
          of UABL Limited on consolidated bases. Therefore, these transactions
          have been eliminated in the consolidated financial statements. Prior
          to acquisition, the equity method was used.

     Management fee paid

     For the three years ended December 31, 2006 management fees were expensed
     with the following related parties:

                                               For the year ended December 31,
                                               -------------------------------
                                                2006         2005        2004
                                               ------       ------      ------

     Oceanmarine (1)                           $  150       $  620      $  680
     Ravenscroft Shipping Inc. (2)                361        1,498         833
                                               ------       ------      ------
     Total                                     $  511       $2,118      $1,513
                                               ======       ======      ======

     (1)  The Company through certain of its subsidiaries has contracted with
          Oceanmarine, a company under the same control group as Inversiones Los
          Avellanos S.A., a shareholder, for certain administrative services.
          This agreement stipulated a fee of $10 per month and per ocean going
          cargo vessel.

     (2)  Pursuant to the individual ship management agreement between
          Ravenscroft Ship Management Ltd., a Bahamas Corporation ("Ravenscroft
          Bahamas") a company of the same control group as Inversiones Los
          Avellanos S.A., a shareholder, and the Company's relevant
          vessel-owning subsidiaries, Ravenscroft Bahamas had agreed to provide
          certain ship management services for all of the Company's vessels.
          Ravenscroft Bahamas had subcontracted the provision of these services
          to Ravenscroft Shipping Inc., a Miami-based related party of the
          Company. This agreement stipulated a fee of $12.5 per month per ocean
          going cargo vessel.

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

          In addition, the Company paid Ravenscroft a monthly technical ship
          management fee of (euro)20,000 per passenger vessel for services
          including technical management, crewing, provisioning, superintendence
          and related accounting functions. The Company paid Ravenscroft for
          each passenger vessel (euro)25,000 administrative and operational fee
          per month for all operational functions as well as administering the
          subcontractors, concessions and credit card/collection system onboard.

     We purchased Ravenscroft (see Note 3) and hired the administrative
     personnel and purchased the administration related assets of Oceanmarine in
     March 2006 (see Note 3); accordingly, after those acquisitions, we did not
     pay fees to these related parties, but directly incurred in-house all costs
     of ship management and administration.

     Voyage expenses paid to related parties

     For the three years ended December 31, 2006, the voyage expenses paid to
     related parties were as follows:

                                             For the year ended December 31,
                                             -------------------------------
                                              2006        2005         2004
                                             ------      ------       ------

     Bareboat charter paid (1)               $2,640      $3,977       $   --
     Brokerage commissions (2)                  319         707          694
     Commercial commissions (3)                 125          --           --
     Agency fees (4)                             79           6           21
     Ship management fees (5)                    --          --        1,736
                                             ------      ------       ------
     Total                                   $3,163      $4,690       $2,451
                                             ======      ======       ======

     (1)  Bareboat charter paid to related parties

          Since the second quarter of 2005, through our subsidiary, Corporacion
          de Navegacion Mundial S.A., the Company entered into a bareboat
          charter with UP Offshore (Panama) S.A., a wholly owned subsidiary of
          UP Offshore, for the rental of the two PSVs named UP Safira and UP
          Esmeralda for a daily lease amount for each one. Since March 21, 2006,
          the date of our acquisition of control of UP Offshore, our
          consolidated financial statements included the operations of UP
          Offshore (Panama) S.A., a wholly owned subsidiary of UP Offshore, on a
          consolidated basis. Therefore, these transactions have been eliminated
          in the consolidated financial statements since that date. Prior to the
          acquisition of control, the equity method was used.

     (2)  Brokerage commissions

          Ravenscroft from time to time acted as a broker in arranging charters
          for the Company's oceangoing vessels for which Ravenscroft charged
          brokerage commissions of 1.25% on the freight, hire and demurrage of
          each such charter.

          In addition, in 2005, the Company paid to Ravenscroft $399 for its
          participation in the sale of one of our vessels.

          Since March 20, 2006, the date of Ravenscroft acquisition, our
          consolidated financial statements included the operations of
          Ravenscroft, on a consolidated basis. Therefore, these transactions
          have been eliminated in the consolidated financial statements since
          that date.

     (3)  Commercial commissions

          In 2003, UP Offshore (Bahamas) Ltd. signed a commercial agreement with
          Comintra, one of its shareholders.

          Under this agreement Comintra agreed to assist UP Offshore (Bahamas)
          Ltd. regarding the commercial activities of UP Offshore (Bahamas)
          Ltd.'s fleet of six PSVs with the Brazilian offshore oil industry.
          Comintra's responsibilities, among others, include marketing the PSVs
          in the Brazilian market and negotiating the time charters or other
          revenues contracts with prospective charterers of the PSVs.

          The parties agreed that Comintra's professional fees under this
          agreement shall be 2% of the gross time charters revenues from
          Brazilian charters collected by UP Offshore (Bahamas) Ltd. on a
          monthly basis.

          Comintra's services in connection with this agreement began on June
          25, 2003, and, unless earlier terminated end on June 25, 2013.

          UP Offshore (Bahamas) Ltd. may terminate this agreement (a) at any
          time upon 30 days notice if (i) PSVs representing more than 50% of the
          gross time charter revenues of UP Offshore (Bahamas) Ltd. arising from
          contracts in Brazil are sold or (ii) Ultrapetrol and LAIF cease
          owning, jointly or separately, more than 50% of UP Offshore (Bahamas)
          Ltd.'s outstanding voting stock; (b) Comintra breaches any material
          term of this agreement; (c) in the event of gross negligence or
          material failure to perform the services by Comintra, or (d) upon
          mutual agreement.

          In the event of termination under subsections (a) or (d) above, such
          termination shall not be effective unless and until UP Offshore
          (Bahamas) Ltd. shall have also paid to Comintra $2,500 (less any fees
          already paid to Comintra through the termination date). Other than the
          figures mentioned above no further indemnification will be due by UP
          Offshore (Bahamas) Ltd. to Comintra.

          During 2005 UP Offshore (Bahamas) Ltd. paid in advance to Comintra
          fees under this agreement in the amount of $1,500.

          Since March 21, 2006 the date of UP Offshore (Bahamas) Ltd.
          acquisition, our financial statements included the operations of UP
          Offshore (Bahamas) Ltd. on a consolidated basis. Therefore, these
          transactions have been included in the consolidated financial
          statements since that date.

     (4)  Agency fees

          Pursuant to an agency agreement with Ultrapetrol S.A., UABL S.A. and
          Ravenscroft, Shipping Services Argentina S.A. (formerly I. Shipping
          Service S.A.) a company of the same control group as Inversiones Los
          Avellanos S.A., has agreed to perform the duties of port agent for the
          Company in Argentina.

     (5)  Ship management fees

          Certain of our subsidiaries have had a ship management agreement with
          Lonehort S.A., a wholly owned subsidiary of UABL Limited, to provide
          operating and technical ship management services for the river barges
          and push boat rented by us to UABL Limited and its subsidiaries. Since
          April 23, 2004, the date of UABL Limited acquisition, our financial
          statements included the operations of Lonehort S.A., a wholly owned
          subsidiary of UABL Limited, on a consolidated basis. Therefore, these
          transactions have been eliminated in the consolidated financial
          statements. Prior to acquisition, the equity method was used.

          Operations in OTS S.A.'s terminal

          UABL Paraguay, our subsidiary in the River Business, operates the
          terminal that pertains to Obras Terminales y Servicios S.A. (OTS
          S.A.), a related party.

          In 2006 and 2005, UABL Paraguay paid to OTS S.A. $646 and $610,
          respectively, for this operation.

          Financial advisory services

          Prior to the commencement of the offering of its 2014 Senior Notes, an
          affiliate of one of Ultrapetrol's shareholders provided advice to the
          initial purchaser on the terms and structure of the proposed offering
          for which it was paid a fee of $500 in 2004.

11.  SHARE CAPITAL

     Common shares and shareholders

     On July 20, 2006, the Company adopted a resolution authorizing the
     amendment and restatement of its Memorandum and Articles of Association
     which provides among other things for the authorized capital stock of the
     Company to increase to 100,000,000 shares of common stock, par value $.01
     per share.

     The shares held directly by Inversiones Los Avellanos S.A., Hazels
     (Bahamas) Investment Inc. and Solimar Holdings Ltd (collectively the
     "Original Shareholders") are entitled to seven votes per share and all
     other holders of our common stock are entitled to one vote per share. The
     special voting rights of the Original Shareholders are transferable to each
     other but are not transferable to our other shareholders and apply only to
     shares held by the Original Shareholders on the date of the IPO and not to
     any shares they subsequently purchase or repurchase.

     At December 31, 2006 UPB had 100,000,000 authorized shares and 28,346,952
     shares issued and outstanding.

     At December 31, 2006 our shareholders Solimar Holdings Ltd., Inversiones
     Los Avellanos S.A. and Hazels (Bahamas) Investments Inc. (a wholly owned
     subsidiary of Inversiones Los Avellanos S.A.) hold 9,672,664, 4,892,465 and
     702,159 shares which represent 34.12%, 17.26% and 2.48%, respectively of
     our common stock. The voting power for these shares which represent 89.10%
     of the total voting power is combined pursuant to an agreement between the
     Original Shareholders who have agreed to vote their respective shares
     together in all matters where a vote of UPB's shareholders is required.

     Solimar Holdings Ltd. warrants

     Under the terms of the warrant agreement dated March 16, 2000, our
     shareholder Solimar owns warrants to purchase, up to 146,384 shares of our
     common stock at an exercise price of $6.83 per share. These warrants may be
     exercised at any time up to and including March 1, 2010 for restricted and
     unregistered shares.

     Registration rights agreement

     On September 21, 2006, prior to its IPO the Company entered into a
     registration rights agreement with Inversiones Los Avellanos S.A., Hazels
     (Bahamas) Investments Inc. and Solimar Holdings Ltd., its shareholders of
     record immediately prior to the IPO, pursuant to which the Company has
     granted them and certain of their transferees, the right, under certain
     circumstances and subject to certain restrictions, including any applicable
     lock-up agreements then in place, to require the Company to register under
     the Securities Act shares of its common stock held by them. Under the
     registration rights agreement, these persons will have the right to request
     the Company to register the sale of shares held by them on their behalf and
     may also require to make available shelf registration statements permitting
     sales of shares into the market from time to time over an extended period.
     In addition, these persons will have the ability to exercise certain
     piggyback registration rights in connection with registered offerings
     requested by shareholders or initiated by the Company.

12.  STOCK SPLIT AND TREASURY STOCK

     Stock split

     For purpose of effecting a reduction in the unit price of the common shares
     in order to improve their marketability, the shareholders of the Company
     declared a stock split to shareholders of record as of September 25, 2006
     whereby 7.34862 common shares were issued for each common share held at
     that date.

     A capitalization of $134 from "Additional paid-in capital" to the "Common
     stock" account has been reflected retroactively for all of the periods
     presented.

     Therefore, the Company distributed 13,390,760 additional common shares on a
     proportionate basis. After this stock split, the issued and outstanding
     shares have been increased from 2,109,240 to 15,500,000.

     Treasury stock

     On October 12, 2000 the Company through a wholly owned subsidiary, Avemar
     Holdings (Bahamas) Limited ("Avemar"), purchased 537,144 shares (3,947,266
     shares after the stock split of 7.34862 per share) of the Company.
     Therefore, the Company recorded $20,332 in the "Treasury stock" account in
     the shareholders' equity, $20,000 of which relates to the amount paid to
     Societe Internationale D'Invertissement S.A. (Bahamas) ("SII") and $332
     relates to direct cost of acquisition.

     On March 20, 2006 and September 21, 2006 two of our shareholders,
     Inversiones Los Avellanos S.A. and Avemar (our wholly owned subsidiary),
     cancelled their agreement pursuant to which Avemar had previously granted
     Inversiones Los Avellanos S.A. an irrevocable proxy to vote our shares
     owned by Avemar and agreed to transfer the shares owned by Avemar to the
     remaining shareholders of the Company, in proportion to their existing
     ownership in the Company before our IPO of shares.

     On October 16, 2006 the 3,947,266 shares held in treasury were transferred
     in proportion to their existing ownership, to Solimar Holdings Ltd.,
     Inversiones Los Avellanos S.A. and Hazels Investment Inc., our shareholders
     of record immediately prior to the IPO in the amount of 2,500,809 shares,
     1,245,927 shares and 200,530 shares, respectively.

     This transaction partakes of the nature of a stock split, therefore a
     reclassification of $20,332 from "Treasury stock" to "Additional paid-in
     capital" account has been reflected retroactively for all of the periods
     presented.

13.  PREFERRED SHARES OF UP OFFSHORE (BAHAMAS) LTD.

     In January 2004, UP Offshore (Bahamas) Ltd. issued 3,000,000 of its Series
     A 6% non-voting redeemable preferred shares for a subscription price of
     $3,000.

     The preferred shares accrued cumulative preferred dividends (whether or not
     declared, whether or not UP Offshore (Bahamas) Ltd. had earnings or
     profits, and whether or not there were funds legally available for the
     payment of such dividends) at the annual rate of 6% of the purchase price
     of such shares.

     UP Offshore (Bahamas) Ltd. could, at any time prior to December 15, 2010,
     redeem all, but not less than all, of the Series A preferred shares. The
     redemption price was an amount equal to the amount necessary to cause the
     holder to realize an internal rate of return of 14% per annum on the
     subscription amount of such shares.

     On October 20, 2006 UP Offshore (Bahamas) Ltd. redeemed at its option all
     of the outstanding Series A preferred shares for an amount of $ 4,303 with
     the proceeds of our initial public offering described in note 1.

     The Company incurred a loss of $914, that was recorded in 2006 in "Minority
     interest".

14.  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     Interest and income taxes paid for three years ended December 31, 2006,
     were as follows:

                                           For the year ended December 31,
                                          ---------------------------------
                                            2006         2005         2004
                                          -------      -------      -------

     Interest paid                        $18,574      $17,932      $18,346
     Income taxes paid                    $   604      $   209      $   784

15.  BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION

     The Company organizes its business and evaluates performance by its
     operating segments, Ocean, River, and beginning in 2005 the Offshore Supply
     and Passenger Business. The accounting policies of the reportable segments
     are the same as those for the consolidated financial statements (Note 2).
     The Company does not have significant intersegment transactions. These
     segments and their respective operations are as follows:

     Ocean Business: In our Ocean Business, we own and operate five oceangoing
     vessels and semi-integrated oceangoing tug barge units under the trade name
     Ultrapetrol. Our Suezmax and Aframax vessels transport dry and liquid bulk
     goods on major trade routes around the globe. Major products carried
     include liquid cargo such as petroleum and petroleum derivatives, as well
     as dry cargo such as iron ore, coal and other bulk cargoes.

     River Business: In our River Business, we own and operate several dry and
     tanker barges, and push boats. In addition, we use one barge from our ocean
     fleet, the Alianza G2, as a transfer station. The dry barges transport
     basically agricultural and forestry products, iron ore and other cargoes,
     while the tanker barges carry petroleum products, vegetable oils and other
     liquids.

     We operate our push boats and barges on the navigable waters of Parana,
     Paraguay and Uruguay Rivers and part of the River Plate in South America,
     also known as the Hidrovia region.

     Offshore Supply Business: We operate our Offshore Supply Business, using
     PSVs owned by UP Offshore (Bahamas), two are employed in the spot market in
     the North Sea and two in the Brazilian market. PSVs are designed to
     transport supplies such as containerized equipment, drill casing, pipes and
     heavy loads on deck, along with fuel, water, drilling fluids and bulk
     cement in under deck tanks and a variety of other supplies to drilling rigs
     and platforms.

     Passenger Business: We own and operate two vessels purchased in 2005. The
     business is concentrated in the Mediterranean and Black Sea.

     Ultrapetrol's vessels 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.

                                          For the year ended December 31,
                                       ------------------------------------
                                         2006          2005          2004
                                       --------      --------      --------
     Revenues (1)
     - South America                   $ 87,573      $ 55,455      $ 39,871
     - Europe                            70,548        59,245        30,356
     - Asia                              13,568         9,989        21,647
     - Other                              1,777           672         3,286
                                       --------      --------      --------
                                       $173,466      $125,361      $ 95,160
                                       ========      ========      ========

     (1)  Classified by country of domicile of charterers.

     Revenue by segment consists only of services provided to external
     customers, as reported in the consolidated statement of operations.
     Resources are allocated based on segment profit or loss from operation,
     before interest and taxes.

     Identifiable assets represent those assets used in the operations of each
     segment.

     The following schedule presents segment information about the Company's
     operations for the year ended December 31, 2006:

<TABLE>
<CAPTION>
                                                                                        Offshore
                                                     Ocean       River      Passenger    Supply
                                                   Business    Business     Business    Business      Total
                                                   ---------   ---------    ---------   ---------   ---------
<S>                                                <C>         <C>          <C>         <C>         <C>
     Revenues                                      $  39,202   $  79,124    $  28,851   $  26,289   $ 173,466
     Running and voyage expenses                      14,390      54,131       19,374       9,715      97,610
     Depreciation and amortization                    14,238       8,136        3,626       2,340      28,340
     Segment operating profit                          5,566      10,755        5,101      11,480      32,902
     Segment assets                                  130,960     125,490       38,839     131,090     426,379
     Investments in affiliates                           349       1,936           --          --       2,285
     Income (Loss) from investment in affiliates         384        (124)          --         328         588
     Additions to long-lived assets                $  24,953   $   9,090    $  10,217   $   8,439   $  52,699
</TABLE>

     The following schedule presents segment information about the Company's
     operations for the year ended December 31, 2005:

<TABLE>
<CAPTION>
                                                                           Offshore
                                            Ocean      River    Passenger   Supply
                                          Business   Business   Business   Business     Total
                                          --------   --------   --------   --------   --------
<S>                                       <C>        <C>        <C>        <C>        <C>
     Revenues                             $ 49,874   $ 54,546   $ 14,409   $  6,532   $125,361
     Running and voyage expenses            14,007     43,530      9,326      6,198     73,061
     Depreciation and amortization          13,063      7,166      1,104         --     21,333
     Gain on disposal of vessels            21,867         --         --         --     21,867
     Segment operating profit               39,289        366      3,415        183     43,253
     Segment assets                         98,252    122,594     27,625     29,811    278,282
     Investments in affiliates                  --      2,060         --     13,638     15,698
     Loss from investment in affiliates        179        306         --         12        497
     Additions to long-lived assets       $ 10,678   $ 12,678   $ 28,105   $     --   $ 51,461
</TABLE>

     In 2006 revenues from one customer of Ultrapetrol River Business represent
     approximately $23,700, or 14% of the Company's consolidated revenues,
     revenues from one customer of Ultrapetrol Ocean Business represent
     approximately $19,200, or 11% of the Company's consolidated revenues and
     the revenues from one customer of the Passenger Business represent
     approximately $17,600, or 10% of the Company's consolidated revenues.

     In 2005 revenues from one customer of Ultrapetrol Ocean and River Business
     represent approximately $31,000, or 25% of the Company's consolidated
     revenues, revenues from one customer of Ultrapetrol Ocean Business
     represent approximately $21,000, or 17% of the Company's consolidated
     revenues and revenues for the only customer of the Passenger Business
     represent approximately $14,400, or 11% of the Company's consolidated
     revenues.

     In 2004 revenues from one customer of Ultrapetrol Ocean and River Business
     represent approximately $31,000, or 33% of the Company's consolidated
     revenues and revenues from one customer of Ultrapetrol Ocean Business
     represent approximately $17,000, or 18% of the Company's consolidated
     revenues.

16.  STOCK COMPENSATION

     We have adopted the 2006 Stock Incentive Plan, or the 2006 Plan, dated July
     20, 2006, which entitles our officers, key employees and directors to
     receive restricted stock, stock appreciation rights, stock options dividend
     equivalent rights, unrestricted stock, restricted stock units or
     performance shares. Under the 2006 Plan, a total of 1,400,000 shares of
     common stock have been reserved for issuance. The 2006 Plan is administered
     by our Board of Directors. Under the terms of the 2006 Plan, our Board of
     Directors is able to grant new options exercisable at a price per share to
     be determined by our Board of Directors. Under the terms of the 2006 Plan,
     no options would be able to be exercised until at least one year after the
     closing of our initial public offering (October 18, 2006). Any shares
     received on exercise of the options would not be able to be sold until one
     year after the date of the stock option grant. All options will expire ten
     years from the date of grant. The 2006 Plan expires ten years from the
     closing of our IPO.

     In addition, on July 20, 2006 we entered into separate consulting
     agreements that became effective upon completion of our initial public
     offering (October 18, 2006) with companies controlled by our chief
     executive officer, executive vice president, chief financial officer and
     chief accountant for work they perform for us in various different
     jurisdictions.

     In connection with these agreements, the Company awarded a total of 310,000
     shares of restricted common stock at no cost to two companies, one of which
     is controlled by our chief executive officer and the other by our executive
     vice president. These shares are non-transferable until they vest, which
     occurs ratably over a three year period. During the vesting period, the
     shares have voting rights and cash dividends will be paid if declared. The
     fair market value of the Company's share on the grant date was $11.00.
     Accordingly, $3.450 is being amortized as compensation expenses over the
     vesting period of three years, using the straight-line method.

     On December 5, 2006, the Company granted a total of 36,952 shares of
     restricted common stock at no cost to its non-employee directors. These
     shares are non-transferable until they vest, which occurs ratably over a
     three year period. During the vesting period, the shares have voting rights
     and cash dividends will be paid if declared. The fair market value of the
     Company's share on the grant date was $12.99. Accordingly, $480 is being
     amortized as compensation expenses over the vesting period of three years,
     using the straight-line method.

     Activity with respect to restricted common stock is summarized as follows:

     Nonvested shares outstanding at December 31, 2005                   --
     Granted                                                        346,952
     Vested                                                              --
     Forfeited                                                           --
                                                                    -------
     Nonvested shares outstanding at December 31, 2006              346,952
                                                                    =======

     Total stock based compensation expense was $242 for the period from October
     18, 2006 to December 31, 2006 and is recorded in the same line items used
     for cash compensation. The unrecognized compensation cost at December 31,
     2006 was $3,688 and the weighted average remaining life for unrecognized
     compensation was 2.75 years.

     In addition, the Company awarded to three companies, one of which is
     controlled by our chief executive officer, one by our executive vice
     president and the other by our chief financial officer, stock options to
     purchase a total of 348,750 shares of common stock at an exercise price of
     $ 11.00 per share. These stock options vest ratably over a three-year
     period and expire ten years from the date of grant. The fair value of the
     options granted were estimated on the date of grant using the Black-Scholes
     option pricing model with the following assumptions: risk free interest
     rate of 4.77% which is based on the U.S. Treasury yield curve in effect at
     the time of the grant, expected dividend yield of 0%, expected stock price
     volatility of 10.32% and expected life of 6 years, which has been computed
     based on the short-cut method per the Securities and Exchange Commission
     Staff Accounting Bulletin N(degree) 107. The aggregate fair market value of
     the stock options on the grant date, $1,444, is being amortized as
     compensation expenses over the vesting period of three years, using the
     straight-line method.

     Activity and related information with respect to the Company's stock
     options is summarized as follows:

                                                                     Exercise
                                                           Shares     price
                                                           -------   --------

     Under option at December 31, 2005a                         --        --
     Options granted                                       348,750    $11.00
     Options exercised                                          --        --
     Options forfeited or expired                               --        --
                                                           -------    ------
     Under option at December 31, 2006a                    348,750    $11.00
     Options exercisable at December 31, 2006a                  --        --

     Options outstanding at December 31, 2006 had a remaining contractual life
     of 9.75 years and had an exercise price of $11.00.

     Total stock based compensation expenses was $108 for the period from
     October 18, 2006 to December 31, 2006 and is recorded in the same line
     items used for cash compensation. The unrecognized compensation cost at
     December 31, 2006 was $1,336 and the weighted average remaining life for
     unrecognized compensation was 2.75 years.

17.  SUPPLEMENTAL GUARANTOR INFORMATION

     On November 24, 2004, the Company issued $180 million 9% First Preferred
     Ship Mortgage Notes due 2014.

     The 2014 Senior Notes are fully and unconditionally guaranteed on a joint
     and several basis by the majority of the Company's subsidiaries directly
     involved in our Ocean and Passenger Business.

     The Indenture provides that the 2014 Senior Notes and each of the
     guarantees granted by Subsidiaries, other than the Mortgage, are governed
     by, and construed in accordance with, the laws of the state of New York.
     Each of the mortgaged vessels is registered under either the Panamanian
     flag, or another jurisdiction with similar procedures. All of the
     Subsidiary Guarantors are outside of the United States.

     Supplemental condensed combining financial information for the Guarantor
     Subsidiaries for the 2014 Senior Notes is presented below. This information
     is prepared in accordance with the Company's accounting policies. This
     supplemental financial disclosure should be read in conjunction with the
     consolidated financial statements.
<PAGE>
<TABLE>

                                               ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES


                                               SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEET

                                                         AS OF DECEMBER 31, 2006

                                                 (stated in thousands of U.S. dollars)
<CAPTION>
                                                                         Combined
                                                          Combined      subsidiary                          Total
                                                          subsidiary        non       Consolidating      consolidated
                                                Parent    guarantors    guarantors     adjustments          amounts
                                               --------   -----------   -----------   --------------    --------------
<S>                                             <C>           <C>           <C>             <C>                <C>
Current assets
Receivables from related parties                198,033        26,615        13,158         (234,484)            3,322
Other current assets                             16,191        13,351        21,906               --            51,448
                                               --------   -----------   -----------   --------------    --------------
Total current assets                            214,224        39,966        35,064         (234,484)           54,770
                                               --------   -----------   -----------   --------------    --------------

Noncurrent assets
Vessels and equipment, net                           --       130,666       205,990           (3,465)          333,191
Investment in affiliates                        142,759            --         2,285         (142,759)            2,285
Other noncurrent assets                           6,233        10,732        19,168               --            36,133
                                               --------   -----------   -----------   --------------    --------------
Total noncurrent assets                         148,992       141,398       227,443         (146,224)          371,609
                                               --------   -----------   -----------   --------------    --------------
Total assets                                    363,216       181,364       262,507         (380,708)          426,379
                                               ========   ===========   ===========   ==============    ==============

Current liabilities
Payables to related parties                       1,097       144,779        89,028         (234,484)              420
Other financial debt                                 --            --         4,700               --             4,700
Other current liabilities                         2,690         4,289        10,672               --            17,651
                                               --------   -----------   -----------   --------------    --------------
Total current liabilities                         3,787       149,068       104,400         (234,484)           22,771
                                               --------   -----------   -----------   --------------    --------------

Noncurrent liabilities
Long-term debt                                  180,000            --            --               --           180,000
Other financial debt, net of current portion         --            --        34,294               --            34,294
Other noncurrent liabilities                         --           346         6,448               --             6,794
                                               --------   -----------   -----------   --------------    --------------
Total noncurrent liabilities                    180,000           346        40,742               --           221,088
                                               --------   -----------   -----------   --------------    --------------
Total liabilities                               183,787       149,414       145,142         (234,484)          243,859

Minority interests                                   --            --            --            3,091             3,091

Shareholders' equity                            179,429        31,950       117,365         (149,315)          179,429
                                               --------   -----------   -----------   --------------    --------------

Total liabilities, minority interests
  and shareholders' equity                      363,216       181,364       262,507         (380,708)          426,379
                                               ========   ===========   ===========   ==============    ==============
</TABLE>

<PAGE>
<TABLE>

                                             ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES


                                              SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEET

                                                          AS OF DECEMBER 31, 2005

                                                   (stated in thousands of U.S. dollars)
<CAPTION>
                                                                          Combined
                                                           Combined      subsidiary                          Total
                                                           subsidiary        non       Consolidating      consolidated
                                                Parent     guarantors    guarantors     adjustments          amounts
                                               --------    -----------   -----------   --------------    --------------
<S>                                            <C>         <C>           <C>           <C>               <C>
Current assets
Receivables from related parties               $ 150,558   $     4,147   $     5,580   $     (142,341)   $       17,944
Other current assets                               3,207        11,222        17,733               --            32,162
                                               ---------   -----------   -----------   --------------    --------------
Total current assets                             153,765        15,369        23,313         (142,341)           50,106
                                               ---------   -----------   -----------   --------------    --------------

Noncurrent assets
Vessels and equipment, net                            --       128,589        54,696           (1,216)          182,069
Investment in affiliates                          68,150            --        15,698          (68,150)           15,698
Other noncurrent assets                            6,260        14,641         9,508               --            30,409
                                               ---------   -----------   -----------   --------------    --------------
Total noncurrent assets                           74,410       143,230        79,902          (69,366)          228,176
                                               ---------   -----------   -----------   --------------    --------------
Total assets                                   $ 228,175   $   158,599   $   103,215   $     (211,707)   $      278,282
                                               =========   ===========   ===========   ==============    ==============

Current liabilities
Payables to related parties                    $   3,056   $   119,972   $    21,321   $     (142,341)   $        2,008
Other financial debt                                  --            --         6,599               --             6,599
Other current liabilities                          1,645         6,431         6,700               --            14,776
                                               ---------   -----------   -----------   --------------    --------------
Total current liabilities                          4,701       126,403        34,620         (142,341)           23,383
                                               ---------   -----------   -----------   --------------    --------------

Noncurrent liabilities
Long-term debt                                   180,000            --            --               --           180,000
Other financial debt, net of current portion          --            --        22,953               --            22,953
Other noncurrent liabilities                          --           537           558               --             1,095
                                               ---------   -----------   -----------   --------------    --------------
Total noncurrent liabilities                     180,000           537        23,511               --           204,048
                                               ---------   -----------   -----------   --------------    --------------
Total liabilities                                184,701       126,940        58,131         (142,341)          227,431

Minority interests                                    --            --            --            2,479             2,479

Minority interests subject to put right               --            --            --            4,898             4,898

Shareholders' equity                              43,474        31,659        45,084          (76,743)           43,474
                                               ---------   -----------   -----------   --------------    --------------

Total liabilities, minority interests
  and shareholders' equity                     $ 228,175   $   158,599   $   103,215   $     (211,707)   $      278,282
                                               =========   ===========   ===========   ==============    ==============
</TABLE>

<PAGE>

<TABLE>
                                    ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES


                                 SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME

                                         FOR THE YEAR ENDED DECEMBER 31, 2006

                                         (stated in thousands of U.S. dollars)
<CAPTION>
                                                 Combined
                                            Combined       subsidiary                           Total
                                            subsidiary         non        Consolidating      consolidated
                                Parent      guarantors     guarantors      adjustments          amounts
                               --------     -----------    -----------    --------------    --------------
<S>                            <C>          <C>            <C>            <C>               <C>
Revenues                       $      --    $    94,823    $    97,599    $      (18,956)   $      173,466

Operating expenses                (2,974)       (78,174)       (78,314)           18,898          (140,564)
                               ---------    -----------    -----------    --------------    --------------
Operating profit (loss)           (2,974)        16,649         19,285               (58)           32,902

Investment in affiliates          11,857             --            588           (11,857)              588
Other income (expenses)            1,643        (15,545)        (4,942)               --           (18,844)
                               ---------    -----------    -----------    --------------    --------------
Income before income tax and
minority interest                 10,526          1,104         14,931           (11,915)           14,646

Income taxes                          --           (813)        (1,388)               --            (2,201)
Minority interest                     --             --             --            (1,919)           (1,919)
                               ---------    -----------    -----------    --------------    --------------
Net income                     $  10,526    $       291    $    13,543    $      (13,834)   $       10,526
                               =========    ===========    ===========    ==============    ==============
</TABLE>

<TABLE>
                           SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME

                                   FOR THE YEAR ENDED DECEMBER 31, 2005

                                   (stated in thousands of U.S. dollars)
<CAPTION>
                                                        Combined
                                        Combined       subsidiary                           Total
                                        subsidiary         non        Consolidating      consolidated
                            Parent      guarantors     guarantors      adjustments          amounts
                           --------     -----------    -----------    --------------    --------------
<S>                        <C>          <C>            <C>            <C>               <C>
Revenues                   $      --    $    73,243    $    58,869    $       (6,751)   $      125,361

Operating expenses            (1,606)       (49,725)       (37,509)            6,732           (82,108)
                           ---------    -----------    -----------    --------------    --------------
Operating profit (loss)       (1,606)        23,518         21,360               (19)           43,253

Investment in affiliates      15,768             --           (497)          (15,768)             (497)
Other income (expenses)          406        (14,842)        (3,169)               --           (17,605)
                           ---------    -----------    -----------    --------------    --------------
Income before income tax
and minority interest         14,568          8,676         17,694           (15,787)           25,151

Income taxes                      --           (409)          (377)               --              (786)
Minority interest                 --             --             --            (9,797)           (9,797)
                           ---------    -----------    -----------    --------------    --------------
Net income                 $  14,568    $     8,267    $    17,317    $      (25,584)   $       14,568
                           =========    ===========    ===========    ==============    ==============
</TABLE>

<PAGE>

<TABLE>
                              ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES


                           SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME

                                   FOR THE YEAR ENDED DECEMBER 31, 2004

                                   (stated in thousands of U.S. dollars)
<CAPTION>
                                                        Combined
                                        Combined       subsidiary                           Total
                                        subsidiary         non        Consolidating      consolidated
                            Parent      guarantors     guarantors      adjustments          amounts
                           --------     -----------    -----------    --------------    --------------
<S>                        <C>          <C>            <C>            <C>               <C>
Revenues                   $     --     $    61,856    $    54,121    $      (20,817)   $       95,160

Operating expenses           (1,222)        (39,667)       (47,654)           20,817           (67,726)
                           --------     -----------    -----------    --------------    --------------
Operating profit (loss)      (1,222)         22,189          6,467                --            27,434

Investment in affiliates     14,317              --            356           (14,267)              406
Other income (expenses)      (7,956)         (9,236)        (1,752)           (1,975)          (20,919)
                           --------     -----------    -----------    --------------    --------------
Income before income tax
and minority interest         5,139          12,953          5,071           (16,242)            6,921

Income taxes                     --             265           (907)               --              (642)
Minority interest                --              --             --            (1,140)           (1,140)
                           --------     -----------    -----------    --------------    --------------
Net income                 $  5,139     $    13,218    $     4,164    $      (17,382)   $        5,139
                           ========     ===========    ===========    ==============    ==============
</TABLE>

<TABLE>
                         SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW

                                   FOR THE YEAR ENDED DECEMBER 31, 2006

                                   (stated in thousands of U.S. dollars)
<CAPTION>
                                                            Combined
                                            Combined       subsidiary                           Total
                                            subsidiary         non        Consolidating      consolidated
                                Parent      guarantors     guarantors      adjustments          amounts
                               --------     -----------    -----------    --------------    --------------
<S>                            <C>          <C>            <C>            <C>               <C>
Net income                     $  10,526    $       291    $    13,543    $      (13,834)   $       10,526
Adjustments to reconcile net
  income to net cash (used
  in) provided by operating
  activities                      (8,733)        19,521         (6,347)           13,834            18,275
                               ---------    -----------    -----------    --------------    --------------
Net cash (used in) provided
  by operating activities          1,793         19,812          7,196                --            28,801
                               ---------    -----------    -----------    --------------    --------------

Intercompany sources             (58,516)       (22,035)         2,000            78,551                --
Non-subsidiary sources           (53,848)       (17,511)       (32,670)               --          (104,029)
                               ---------    -----------    -----------    --------------    --------------
Net cash (used in) provided
  by investing activities       (112,364)       (39,546)       (30,670)           78,551          (104,029)
                               ---------    -----------    -----------    --------------    --------------

Intercompany sources              (2,000)        17,900         62,651           (78,551)               --
Non-subsidiary sources           125,129             --        (37,167)               --            87,962
                               ---------    -----------    -----------    --------------    --------------
Net cash (used in) provided
by financing activities          123,129         17,900         25,484           (78,551)           87,962
                               ---------    -----------    -----------    --------------    --------------
Net increase (decrease) in
  cash and cash equivalents    $  12,558    $    (1,834)   $     2,010    $           --    $       12,734
                               =========    ===========    ===========    ==============    ==============
</TABLE>

<PAGE>
<TABLE>

                              ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES

                         SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW

                                   FOR THE YEAR ENDED DECEMBER 31, 2005

                                   (stated in thousands of U.S. dollars)

<CAPTION>
                                                            Combined
                                            Combined       subsidiary                           Total
                                            subsidiary         non        Consolidating      consolidated
                                Parent      guarantors     guarantors      adjustments          amounts
                               --------     -----------    -----------    --------------    --------------
<S>                            <C>          <C>            <C>            <C>               <C>
Net income                     $ 14,568    $     8,267    $    17,317    $      (25,584)   $       14,568
Adjustments to reconcile net
  income to net cash (used
  in) provided by operating
  activities                    (15,057)         7,919        (16,343)           25,584             2,103
                               --------    -----------    -----------    --------------    --------------
Net cash (used in) provided
  by operating activities          (489)        16,186            974                --            16,671
                               --------    -----------    -----------    --------------    --------------

Intercompany sources            (15,745)        (3,835)          (457)           20,037                --
Non-subsidiary sources          (13,401)       (41,214)        27,890                --           (26,725)
                               --------    -----------    -----------    --------------    --------------
Net cash provided by (used
  in) investing activities      (29,146)       (45,049)        27,433            20,037           (26,725)
                               --------    -----------    -----------    --------------    --------------

Intercompany sources              3,056         25,994         (9,013)          (20,037)               --
Non-subsidiary sources           29,386             --        (23,020)               --             6,366
                               --------    -----------    -----------    --------------    --------------
Net cash provided by (used
  in) financing activities       32,442         25,994        (32,033)          (20,037)            6,366
                               --------    -----------    -----------    --------------    --------------
Net increase (decrease) in
  cash and cash equivalents    $  2,807    $    (2,869)   $    (3,626)   $           --    $       (3,688)
                               ========    ===========    ===========    ==============    ==============
</TABLE>

<TABLE>
                               SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW

                                       FOR THE YEAR ENDED DECEMBER 31, 2004

                                       (stated in thousands of U.S. dollars)

<CAPTION>
                                                            Combined
                                            Combined       subsidiary                           Total
                                            subsidiary         non        Consolidating      consolidated
                                Parent      guarantors     guarantors      adjustments          amounts
                               --------     -----------    -----------    --------------    --------------
<S>                            <C>          <C>            <C>            <C>               <C>
Net income                     $  5,139     $    13,218    $     4,164    $      (17,382)   $        5,139
Adjustments to reconcile net
  income to net cash (used
  in) provided by operating
  activities                     (7,155)         10,333         (2,570)           17,382            17,990
                               --------     -----------    -----------    --------------    --------------
Net cash provided by
  operating activities           (2,016)         23,551          1,594                --            23,129
                               --------     -----------    -----------    --------------    --------------

Intercompany sources            (18,115)          6,402          2,154             9,559                --
Non-subsidiary sources               --         (14,982)       (42,574)               --           (57,556)
                               --------     -----------    -----------    --------------    --------------
Net cash provided by (used
  in) investing activities      (18,115)         (8,580)       (40,420)            9,559           (57,556)
                               --------     -----------    -----------    --------------    --------------

Intercompany sources             (8,556)          2,224         15,891            (9,559)               --
Non-subsidiary sources           28,063         (14,750)        24,468                --            37,781
                               --------     -----------    -----------    --------------    --------------
Net cash provided by (used
  in) financing activities       19,507         (12,526)        40,359            (9,559)           37,781
                               --------     -----------    -----------    --------------    --------------
Net increase (decrease) in
  cash and cash equivalents    $   (624)    $     2,445    $     1,533    $           --    $        3,354
                               ========     ===========    ===========    ==============    ==============
</TABLE>

<PAGE>

                 ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18.  SUBSEQUENT EVENTS

     Delivery of Alejandrina and loan draw down:

     On January 5, 2007 the Company took delivery of the Alejandrina (note 5)
     and paid the balance of the purchase price of $15,300. On January 29, 2007,
     Stanyan Shipping Inc. (our wholly owned subsidiary in the Ocean Business
     and the owner of the Alejandrina) entered into a loan agreement with
     Natixis for an amount of $13,616 to provide post-delivery secured financing
     on the Alejandrina.

     The loan is secured by a mortgage on the Alejandrina is guaranteed by
     Ultrapetrol (Bahamas) Limited, and contains customary covenants.

     Loan draw down and re-finance an existing loans

     On January 2, 2007, UP Offshore (Bahamas) Ltd. drew down $37,500 of its
     loan agreement with DVB AG of up to $61,306, which was used to refinance
     the current $30 million loan facility with DVB NV.

     On March 7, 2007, UP Offshore (Bahamas) Ltd. drew down $23,806 of its loan
     agreement with DVB AG of up to $61,306, which was partially used to funded
     the Otto Candies acquisition.

     Otto Candies acquisition

     On March 7, 2007, the Company through its subsidiaries in the River
     Business acquired all of the issued and outstanding shares of Candies
     Paraguayan Ventures LLC and Compania Paraguaya de Transporte Fluvial S.A.
     (the "Otto Candies acquisition") for $13,800 in cash. At time of
     acquisition, Otto Candies owned 12 river barges and 1 push boat.

     The purchase price allocation for this acquisition has not yet been
     completed, but the purchase price is expected to be in excess of the
     carrying value of the net assets acquired.

     PSVs construction

     On February 21, 2007, UP Offshore (Bahamas) Ltd. signed a shipbuilding
     contract with a shipyard in India for construction of two PSVs with a
     combined cost of $43,300, will be delivered schedule begins in 2009.

     UP Offshore (Bahamas) Ltd. has at its own, the option to acquire two
     additional PSVs.
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of Ultrapetrol
(Bahamas) Limited and subsidiaries, as of December 31, 2006 and 2005, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 2006. 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.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (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. We were not engaged
to perform an audit of the Company's internal control over financial reporting.
Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and 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 subsidiaries as of December 31, 2006 and 2005, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2006, in conformity with accounting
principles generally accepted in the United States of America.

Buenos Aires, Argentina
  March 21, 2007                      PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
                                            Member of Ernst & Young Global


                                                 EZEQUIEL A. CALCIATI
                                                       Partner
<PAGE>

ITEM 19 - EXHIBITS

EXHIBIT INDEX

Exhibit Number      Description
--------------      -----------

       1.1          Articles of Incorporation and By-laws of Ultrapetrol
                    (Bahamas) Limited.*
       1.2          Articles of Incorporation (English translation) and By-laws
                    of Baldwin Maritime Inc.*
       1.3          Articles of Incorporation (English translation) and By-laws
                    of Bayham Investments S.A.*
       1.4          Articles of Incorporation (English translation) and By-laws
                    of Cavalier Shipping Inc.*
       1.5          Bylaws (English translation) of Corporacion De Navegacion
                    Mundial S.A.*
       1.6          Articles of Incorporation (English translation) and By-laws
                    of Danube Maritime Inc.*
       1.7          Articles of Incorporation and By-laws of General Ventures
                    Inc.*
       1.8          Articles of Incorporation (English translation) and By-laws
                    of Imperial Maritime Ltd. (Bahamas) Inc.*
       1.9          Articles of Incorporation (English translation) and By-laws
                    of Kattegat Shipping Inc.*
       1.10         Memorandum of Association and Articles of Association of
                    Kingly Shipping Ltd.*
       1.11         Memorandum of Association and Articles of Association of
                    Majestic Maritime Ltd.*
       1.12         Articles of Incorporation and Bylaws of Massena Port S.A.
                    (English translation)*
       1.13         Memorandum of Association and Articles of Association of
                    Monarch Shipping Ltd.*
       1.14         Memorandum of Association and Articles of Association of
                    Noble Shipping Ltd.*
       1.15         Articles of Incorporation (English translation) and Bylaws
                    (English translation) of Oceanpar S.A.*
       1.16         Articles of Incorporation (English translation) and By-laws
                    of Oceanview Maritime Inc.*
       1.17         Articles of Incorporation and Bylaws of Parfina S.A.
                    (English translation)*
       1.18         Articles of Incorporation (English translation) and By-laws
                    of Parkwood Commercial Corp.*
       1.19         Articles of Incorporation (English translation) and By-laws
                    of Princely International Finance Corp.*
       1.20         Memorandum of Association (English translation) and Articles
                    of Association of Regal International Investments S.A.*
       1.21         Articles of Incorporation (English translation) and By-laws
                    of Riverview Commercial Corp.*
       1.22         Memorandum of Association and Articles of Association of
                    Sovereign Maritime Ltd.*
       1.23         Articles of Incorporation (English translation) and By-laws
                    of Stanmore Shipping Inc.*
       1.24         Articles of Incorporation (English translation) and By-laws
                    of Tipton Marine Inc.*
       1.25         Articles of Incorporation (English translation) and By-laws
                    of Ultrapetrol International S.A.*
       1.26         Articles of Incorporation and Bylaws of Ultrapetrol S.A.
                    (English translation)*
       1.27         Memorandum of Association and Articles of Association of UP
                    Offshore (Holdings) Ltd.*
       2.1          Form of Global Exchange Notes (attached as Exhibit A to
                    Exhibit 4.3).*
       2.2          Registration Rights Agreement dated November 10, 2004.*
       2.3          Indenture dated November 24, 2004.*
       2.4          Form of Subsidiary Guarantee (attached as Exhibit F to
                    Exhibit 10.4).*
       4.1          Stock Purchase Agreement dated March 21, 2006 by and between
                    Ultrapetrol (Bahamas) Limited and LAIF XI, LTD**
       4.2          Stock Purchase Agreement dated March 20, 2006 by and among
                    Ultrapetrol (Bahamas) Limited, Crosstrade Maritime Inc, and
                    Crosstrees Maritime Inc.**
       7            Statement of Ratio of Earning to Fixed Charges
       12.1         Section 302 Certification of Chief Executive Officer
       12.2         Section 302 Certification of Chief Financial Officer
       13.1         Section 906 Certification of Chief Executive Officer
       13.2         Section 906 Certification of Chief Financial Officer

----------
*    Incorporated by reference to the Registration Statement on Form F-4 of
     Ultrapetrol (Bahamas) Limited filed March 4, 2005 (Reg. No. 333-8878).

**   Incorporated by reference to the Registration Statement on Form F-1 of
     Ultrapetrol (Bahamas) Limited filed March 30, 2006 (Reg. No. 333-132856).

SIGNATURE

     The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf on March 21, 2007.

ULTRAPETROL (BAHAMAS) LIMITED


/s/ Felipe Menendez Ross
-----------------------------
Felipe Menendez Ross
President

SK 02351 0010 756388 v3