MMPCL-Investments in a New Associate Company/ Support Vessel

Ref: COR:MS/EL07030e/ms

6 December 2007

Subject: Mermaid Maritime Public Company Limited - Investments in a New Associate Company and One New Build Support Vessel

To: The President of the Stock Exchange of Thailand

Thoresen Thai Agencies Public Company Limited ("TTA") would like to confirm that Mermaid Offshore Services Ltd. ("MOS"), a 99.99% owned subsidiary of Mermaid Maritime Public Company Limited ("MMPCL"), has signed a Share Subscription Agreement to invest in Worldclass Inspiration Sdn. Bhd. ("WCI") in Malaysia and has signed a contract to build one new support vessel. The details of the investments are as follows:

A) Investment in WCI

1. Date of Transaction
On Thursday, 6 December 2007, MOS signed a Share Subscription Agreement with WCI.

2. Name of the New Associate Company
Worldclass Inspiration Sdn. Bhd.

3. Country of Incorporation
Malaysia

4. Type of Business
An investment holding company

5. Relationship between MOS and WCI
- None -

6. Registered and Paid-up Capital of WCI

Note: The par value of each share is RM 1.00 (Ringgit Malaysia One).

Cont. 2.../

 

7. List of Shareholders of WCI Before and After Acquisition by MOS (based on paid-up share capital)

8. General Characteristics of Transaction
WCI will issue 8,162,963 new ordinary shares with a par value of RM 1.00. MOS will subscribe for the 8,162,963 shares for a total investment of RM 33,511,111. WCI's paid-up share capital will increase from RM 24,448,889 to RM 32,651,852.

WCI acts as an investment company in offshore oil and gas service companies. At present, WCI's sole asset is its shares in Allied Marine & Equipment Sdn. Bhd. ("AME"). AME is a company incorporated on 28 November 1988 in Malaysia. It has a registered share capital of RM 10,000,000 (Ringgit Malaysia Ten Million) of RM 1.00 each, of which RM 8,700,000 (Ringgit Malaysia Eight Million Seven Hundred Thousand) is issued and fully paid up.

The current shareholders of AME are WCI holding 4,785,000 ordinary shares, representing 55% of the issued and paid up capital of AME, and AME Asset Holdings Sdn. Bhd. ("AAH") holding 3,915,000 ordinary shares, representing 45% of the issued and paid up capital of AME.

WCI and AAH had executed a share purchase agreement on 23 July 2007 whereby AAH has agreed to sell 3,045,000 ordinary shares of AME to WCI, representing 35% of the issued and paid up ordinary shares in AME. The acquisition is scheduled to conclude in December 2007. Upon the completion of this acquisition, WCI will own 7,830,000 ordinary shares of AME, representing 90% of the issued and paid up ordinary shares of AME. MOS will still retain its 25% shareholding in WCI subsequent to this acquisition.

9. Information about MOS and AME
MOS was incorporated in Thailand on 24 June 2003 with a registered and paid- up share capital of Baht 550 million, divided into 55 million ordinary shares at a par value of Baht 10 each. As MOS has continually expanded over the years, the registered share capital has risen. As of 4 December 2007, its registered share capital was Baht 2,003 million, divided into 200,300,000 shares at a par value of Baht 10 each.

Cont. 3.../

 

MOS provides a wide range of sub-sea engineering services, including but not limited to, infrastructure and submerged structure installation, inspection, repair, cleaning, and salvaging. MOS is certified to provide sub-sea inspection services by all major classification societies and is a member of the International Marine Contractors' Association ("IMCA").

Currently, MOS has a total fleet of six vessels, four of which are owned by MOS, namely M.V. Mermaid Performer, M.V. Mermaid Supporter, M.V. Mermaid Commander, and M.V. Mermaid Responder, and two chartered-in vessels, namely M.V. Team Siam and M.V. Binh Minh.

AME is primarily in the business of providing underwater services to national and international oil and gas companies in South East Asia. It holds self-operator licenses from Petroliam Nasional Berhad ("Petronas") for the provision of underwater services in Malaysia in the areas of underwater engineering construction and maintenance services, saturation and surface diving services, and remotely operated vehicle ("ROV") services.

AME owns one dive support vessel, saturation systems, air dive spreads, one ROV support vessel, and a range of ROVs. It also has skilled and experienced onshore and offshore personnel.

10. Source of Funds
From an increase in the issued share capital of MOS which was fully subscribed by MMPCL out of the proceeds received from the recent initial public offering of the shares of MMPCL.

11. Basis used to Determine the Value of Consideration
The total consideration for the Subscription of the Shares is RM 33,511,111 (Ringgit Malaysia Thirty Three Million Five Hundred Eleven Thousand One Hundred Eleven). The consideration was arrived based on negotiations on a willing-buyer willing-seller basis with regards to current market conditions and is within the fair value as assessed by MMPCL based on the current market value of the assets and future growth and earnings potential of AME.

12. Rationale of Investment
Malaysia represents a key market for the provision of offshore services. The transaction enables MOS to formally enter the Malaysian market and to work closely with AME to deliver high quality sub-sea engineering services into the Malaysian market, while maintaining AME's status as a Malaysian self-operator. Both AME and MOS will benefit from access to each other's clients, assets, and skilled and experienced personnel to provide a complete and high quality sub-sea engineering service to the offshore oil and gas sector in the South East Asian region.

Cont. 4.../

13. Total Value of Consideration
The investments in WCI will not exceed RM 33,511,111, or Baht 346,364,141.07, using a RM/THB exchange rate of 10.3358. The investment transaction equals 1.23% of total assets of TTA and its subsidiaries as of 30 September 2007 (the total assets of TTA and its subsidiaries as of 30 September 2007 amounted to Baht 28,135,873,864).

14. Board of Directors' Opinion For The Transaction
The Board of Directors considers that the investment in WCI is fair and reasonable in the current business environment and is in line with TTA's business strategy to increase the contribution from non-dry bulk shipping operations.

15. Audit Committee/or Directors' Opinions, Which Are Different From The Board of Directors
- None -

B) New Build Support Vessel

1. Date of Transaction
On Thursday, 6 December 2007, MOS signed a contract (the "Contract") with Jaya Shipbuilding and Engineering Pte. Ltd. ("JSE") in Singapore to design, construct, complete and deliver a 63-metre dynamic positioning class 2 ("DP2") vessel. It is the intention of MOS to use this vessel for sub-sea ROV intervention projects and air dive support.

2. The Parties Involved

3. General Characteristics of the Transaction/Details of the Acquired Asset
Pursuant to the Contract, MOS has engaged JSE to design, construct and complete the New ROV Support Vessel, which is expected to be delivered around the third quarter of 2009.

Cont. 5.../

4. Total Value of Consideration
The price for the New Build ROV Support Vessel is USD 26,390,000 (United States Dollars Twenty Six Million Three Hundred and Ninety Thousand Only), which is equivalent to Baht 900,954,600 (Nine Hundred Million Nine Hundred Fifty Four Thousand and Six Hundred) using a USD/THB exchange rate of 34.14.

Payment terms are as follows:

 

5. Size of Transaction
The size of transaction equals 3.20% of the total assets of TTA and its subsidiaries as of 30 September 2007 (the total assets of TTA and its subsidiaries as of 30 September 2007 amounted to Baht 28,135,873,864).

6. Basis Used to Determine the Value of Consideration
The consideration was arrived based on negotiations on a willing-buyer willing-seller basis with regards to current market conditions and is within the fair market value as assessed by M3 Marine Pte. Ltd. on 5 December 2007.

7. Benefit Expected to be Generated from the Transaction
The transaction will allow MMPCL to expand its existing fleet of offshore sub-sea support vessels in order to cater for the anticipated increase in demand for offshore sub-sea services in the oil and gas industry in South East Asia. The New ROV Support Vessel will be dynamically positioned to IMO class 2 with a full array of positioning measuring equipment suited for sub- sea and ROV intervention.

8. Source of Funds
The consideration will be funded by a combination of the proceeds received from the recent initial public offering of MMPCL and commercial bank debt. New shares will be fully subscribed by MMPCL from time to time pursuant to the payment terms in the Contract.

Cont. 6.../

9. Board of Directors' Opinions For The Transaction
The Board of Directors considers that the purchase of New ROV Support Vessel is fair and reasonable in the current business environment and is in line with TTA's business strategy to increase the contribution from non-dry bulk shipping operations.

10. Audit Committee/or Directors' Opinions, Which Are Different From The Board of Directors
- None -

When the investments in WCI and the New ROV Support Vessel are included with other asset acquisition transactions in the past six months, there has been a 40.72% increase in the total assets of TTA and its subsidiaries as of 30 September 2007.

Yours faithfully,
Thoresen Thai Agencies Public Company Limited

Note:
Disclosure of Information by MMPCL on the Singapore Exchange ("SGX-ST") can be viewed at:

http://info.sgx.com/webcorannc.nsf/b3b0c35c9025f91e4825735f00232564/ 3883af9188d69d98482573790055d57a?OpenDocument

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