DESS in expansion mood

Deep Sea Supply ASA (DESS) in Norway has today entered into 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 the approval of the ordinary general meeting to be held on 31 March 2006.

Hemen will, through participation in a private placement, likely become the largest shareholder in DESS, holding an estimated 20 – 22% of the outstanding share capital. Through this acquisition DESS will become one of the leading owner/operators of supply vessels on a global basis, and the acquisition is a significant first step towards a further industry consolidation. The acquisition of the 22 shipbuilding contracts is in line with DESS? strategy of acquiring large and/or relatively new tonnage.

The contracts acquired consist of 2 large Anchor Handling Tug & Supply (AHTS) vessels with 15,000 BHP being built at the Jaya yard in Singapore to be delivered first half of 2007, 8 Platform Supply Vessels (PSV) of 3,250 DWT of the UT 755L design being built at the Cochin yard in India to be delivered in 2006-2008, and 12 AHTS vessels with 6,500 BHP being built at the ABG yard in India for delivery 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 estimated to $274 million.