Deep Sea Supply in Sale & Leaseback for Five OSVs

Deep Sea Supply Plc has entered heads of agreement for a sale and leaseback transaction with Ship Finance International Limited for five of its offshore supply vessels.

Gross sales proceeds from sale of the five vessels are US $198.5 million The transaction strengthens Deep Sea Supply's cash position with US $96 million (the 'net sales proceeds') after repayment of the existing debt on the vessels. The Board is currently considering the application of the net sales proceeds with a view to improve the dividend capacity and facilitate additional growth.

Deep Sea Supply has currently a fleet of 12 offshore supply vessels in operation and a newbuild program of another 16 vessels at shipyards in Norway, Singapore and India with expected deliveries in 2007 - 2009.

The sale and leaseback transaction involves the two Anchor Handling Tug and Supply Vessels (AHTS vessels) Sea Cheetah and Sea Jaguar which were delivered from Jaya Shipyard in Singapore in 2007 and the three Platform Supply Vessels (PSVs) Sea Trout, Sea Halibut and Sea Angler which were delivered from Cochin Shipyard in 2007.

The sales price for the AHTS vessels will be US $55 million each and the sales price for the PSV vessels will be US $29.5 million each. Gross sales proceeds are hence US $198.5 million

A seller's credit of US $17.5 million has been agreed and the sales proceeds net of such seller's credit will hence be US $181 million. Net proceeds to Deep Sea Supply, after repayment of the existing debt related to the vessels, are US $96 million.

The bareboat charters with Ship Finance International Limited are for a period of 12 years with several purchase options during the charter period. The bareboat rates will be as follows; Years 2 x AHTS 3 x PSV Sum per day 1-2 $18,000 $10,000 $66,000 3-5 $16,500 $9,150 $60,450 6-7 $15,250 $8,150 $54,950 8-10 $13,000 $7,150 $47,450 11-12 $13,000 $6,500 $45,500 (The final rates may vary dependent on actual LIBOR interest rates on closing.)

The charter contracts are on bareboat basis and Deep Sea Supply will therefore be responsible for all operating and maintenance costs during the charter period. The vessels are currently on time charters at significantly higher rates.

The purchase options for each of the vessels are as follows: Year 2 x AHTS 3 x PSV 3 $42.10 million $22.50 million 5 $36.40 million $19.15 million 7 $30.70 million $16.05 million 10 $23.10 million $11.65 million 12 $16.90 million $8.65 million.

Once final detailed agreement for the transaction has been executed, more detailed information will be made public. Following this sales and leaseback transaction, Deep Sea Supply has a balanced financing of its assets consisting of senior loan facility from shipping banks, bond financing and the above mentioned sales and leaseback transaction.

The Company considers the sale and leaseback transaction a useful financing tool providing additional financial flexibility to the Group. Deep Sea Supply is continuously examining ways to enhance return to equity holders.

The above mentioned arrangement for 5 of our vessels highlights the financial flexibility that exists in our fleet of 28 units, to either facilitate growth or increase dividend capacity. The transaction is subject to final detailed documentation of purchase, charter and financing being agreed.

Please be informed that Hemen Holding Ltd. owns approximately 35% of Deep Sea Supply Plc and - together with an associated company - 41% of Ship Finance International Limited.