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Marine Log

March 16, 2006

Deep Sea Supply acquires 22 new build contracts

Norwegian offshore services operator Deep Sea Supply ASA (DESS) is set to become a much bigger player. It has reached an agreement to acquire 22 shipbuilding contracts for a total consideration of $394 million from Hemen Holding Ltd. ("Hemen"), a company controlled by John Fredriksen.

The acquisition is subject to DESS raising the necessary financing and Hemen is expected to become the largest shareholder in DESS, holding an estimated 20--22% of the outstanding share capital subsequent to private placement set to end this morning.

Deep Sea Supply ASA is a publicly quoted company, listed on the Oslo Stock Exchange. It was established in April 2004 by Jon B. Skabo and Klaus Tollefsen for the purpose of building up an offshore support vessel business, primarily targeted towards North Sea spot market operations. In 2005, negotiations with Tidewater resulted in it acquiring six AHTS vessels of the KMAR 404 design.

These six vessels, although among the newest and most powerful in TidewaterÕs fleet, were not ideally suited for their operations.

Acquisition of the Hemen newbuild contracts will catapult DESS into the supply vessel big time.

The vessels involved are:

two large 15,000 bhp, Anchor Handling Tug & Supply vessels BHP being built at the Jaya yard in Singapore for delivery first half of 2007,

eight UT755L Platform Supply Vessels of 3,250 DWT of the UT 755L design being built at the Cochin yard in India for delivery in 2006-2008, and

twelve 6,500 bhp AHTS being built at the ABG yard in India to be delivered in 2006-2009.

The $394 million will be paid by a cash consideration of $120 million to Hemen, and DESS assuming the remaining construction and project costs estimatedat $274 million.

The total newbuilding program will be financed with a share issue of $150-165 million, a subsequent share Issue of up to $5 million (directed to DESS shareholders not offered to participate in the Private Placement) and a bank facility of $225 million from Fortis Bank. DESS has retained First Securities, Pareto Securities and Fortis as managers for the Private Placement.

"We are satisfied that we have been able to secure this fleet of attractive new-buildings at a competitive price. This will make DESS a company of substantial size, giving us access to better deal flow and more opportunities, which suits our strategy well.", says Olav Fjell, Chairman of Deep Sea Supply.

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