Mermaid Purchases M.V. "Team Siam", A DP2 Construction Support Vessel With Saturation Diving Capabilities

M.V. "Team Siam" has been a part of Mermaid's sub-sea fleet since 2004. Acquisition of this chartered-in vessel, presently operating in the Persian Gulf, allows Mermaid to secure long term access to this asset as part of its sub-sea growth strategy.

1. Introduction

Mermaid Maritime Public Company Limited ("Mermaid") wishes to announce that its wholly owned subsidiary, Mermaid Offshore Services Ltd. ("MOS"), has entered into a Memorandum of Agreement with Team III Ltd. for the purchase of the M.V. "Team Siam" ("Purchase").

The M.V. "Team Siam" is a DP2 construction support vessel, under long-term charter from Team III Ltd. to MOS and currently operating in the Persian Gulf. The vessel has a moon pool for diving operations and is equipped with a semi-permanently installed 10-man single bell saturation diving system which belongs to MOS. The M.V. "Team Siam" has a 70-tonne crane and accommodation for 135 personnel.

2. About Team III Ltd. and MOS

Team III Ltd. is a wholly owned subsidiary of Topaz Energy & Marine Ltd., a provider of marine services and oil and gas fabrication services in the Middle East. Topaz Energy & Marine Ltd. is itself a wholly owned subsidiary of Renaissance Services SAOG, a company listed on the Muscat Securities Market.

MOS is a leading provider of sub-sea engineering services to the offshore oil and gas industry in the region. MOS provides sub-sea inspection, repair and maintenance services, light construction services, and emergency repair and call out services. MOS's existing fleet consists of six (6) sub-sea vessels which it owns, and one (1) sub-sea vessel (M.V. "Team Siam") which it charters. MOS operates its vessels as part of a 'one stop' solution utilizing a highly skilled workforce and other key assets, including four (4) saturation diving systems (inclusive of those systems in the current newbuild program), ten (10) offshore air diving systems and fourteen (14) Remotely Operated Vehicle ("ROV") systems including deepwater and ultra-deepwater heavy construction class systems. MOS also has two (2) additional dive support vessels on order.

3. Rationale for the Purchase

The utilization of the M.V. "Team Siam" as part of MOS's provision of sub-sea engineering services to its clients has materially contributed to the earnings of MOS since the commencement of its charter in 2004. The Purchase allows MOS to secure greater control over MOS's long term access to the vessel. It will also allow MOS to exercise control over the operations of the vessel, its use, maintenance and any future upgrades thus ensuring that the quality of service of this asset to its clients is maintained. All these are expected to contribute to greater efficiency and returns.

4. Consideration

The total consideration for the Purchase is USD 29,500,000 (United States Dollars Twenty Nine Million Five Hundred Thousand). The consideration was arrived based on negotiations on a willing-buyer willing-seller basis with regard to current market conditions, cost savings arising from becoming an owner instead of charterer, quality and efficiency enhancements and potential future utilization of the vessel; and is on that basis within fair market value as assessed by MOS. The consideration does not include the installed 10-man single bell saturation diving system which already belongs to MOS. The consideration will be funded by debt and equity. The equity portion will be funded out of the proceeds received from the recent rights issue of Mermaid.

The payment terms are twenty percent (20%) by no later than 31 December 2009 and eighty percent (80%) upon delivery of the vessel to MOS. Accordingly, the deposit, equivalent to the sum of USD 5,900,000 (United States Dollars Five Million Nine Hundred Thousand), is scheduled to be paid into a joint account held in the name of both parties next week. Delivery is scheduled to be anytime when the vessel is ready for delivery with conditions precedent lifted (see below), but in any case no later than 31 March 2010.

5. Conditions Precedent

The Purchase is conditional upon Team III Ltd. obtaining bank consent to release the statutory mortgage over the vessel by 31 January 2010.

6. Rule 1006 of the Listing Manual of the Singapore Exchange Securities Trading Limited ("SGX-ST")

In order to determine the classification of the Purchase, the relative figures as computed on the bases set out in Rule 1006 of the Listing Manual are as follows:

(a) Net Asset Value Test (Rule 1006(a))

The net asset value test is not applicable to the Purchase.

(b) Net Profits Test (Rule 1006(b))

The net profits test is not applicable since the vessel is already operating as part of the existing sub-sea fleet and not an additional vessel.

(c) Market Capitalization Test (Rule 1006(c))

The consideration of USD 29,500,000 is equivalent to approximately SGD 41,025,650 (based on the exchange rate of USD 1.00 = SGD 1.3907). This represents 6.57% of Mermaid's market capitalization of SGD 624,384,541. The market capitalization is computed based on the weighted average price of Mermaid's shares transacted on 22 December 2009 (SGD 0.79565), being the market day preceding the date of this announcement, multiplied by the number of shares in issue (784,747,743 shares).

(d) Equity Securities Test (Rule 1006(d))

The equity securities test is not applicable to the Purchase as no equity securities are being issued as consideration for the Purchase.

Having regard to the above, the Purchase constitutes a "discloseable transaction" under Rule 1010 of the Listing Manual.

7. Financial Effects

For illustrative purposes only, the financial effects based on the latest audited consolidated financial statements of Mermaid for the year ended 30 September 2009 ("FY2009") are as follows:

(a) Assuming that the Purchase had been effected at the end of FY2009, the pro forma effects on the consolidated net tangible assets ("NTA") of Mermaid for FY2009 are as follows:

Before the Purchase:

-NTA (THB'000) [a] : 14,273,097
-NTA per share (THB) [c] : 26.37
-NTA per share (SGD) [d] : 1.12

After the Purchase:

-NTA (THB'000) [a] : 15,259,037 [b]
-NTA per share (THB) [c] : 28.19
-NTA per share (SGD) [d] : 1.20

Note:

[a] NTA as at 30 September 2009 is calculated based on Thai Generally Accepted Accounting Principles (GAAP) and for the purpose of this illustration is total assets minus total liabilities since Mermaid has minimal intangible assets.

[b] based on an exchange rate as at 30 September 2009 of USD 1.00 = THB 33.4217.

[c] based on 541,205,340 issued and paid-up ordinary shares of the Company as at 30 September 2009 (the rights issue was concluded post 30 September 2009).

[d] based on an exchange rate as at 30 September 2009 of SGD 1.00 = THB 23.4965.

(b) Assuming that the Purchase had been effected at the beginning of FY2009, Mermaid's earnings per share ("EPS") would have been increased by THB 0.06 per share if we assume the present charter rate which Mermaid is subject to in respect of the vessel had been applicable throughout FY2009.

8. Interest of Directors and Controlling Shareholders

None of the directors or controlling shareholders of Mermaid has any interest, direct or indirect, in the Purchase. There are also no new directors proposed to be appointed to Mermaid in connection with the Purchase.

9. Documents for Inspection

A copy of the Memorandum of Agreement may be inspected at the registered office of Mermaid at 26/28-29, Orakarn Building 9th Floor, Soi Chidlom, Ploenchit Road, Lumpinee, Pathumwan, Bangkok 10330, Thailand during normal business hours for a period of three (3) months from the date of this announcement.

Please be informed accordingly.


Vincent Siaw
Company Secretary
26 December 2009

For more information about Mermaid, please visit: www.mermaid-maritime.com