OTTO MARINE LIMITED

(Company Registration Number 197902647M)

(Incorporated with limited liability in the Republic of Singapore on 5 September 1979)

SALE AND LEASEBACK OF A WORK MAINTENANCE VESSEL 1. INTRODUCTION

Further to the announcement made on 16 August 2012, the board of directors (the "Board") of Otto Marine Limited (the "Company") wishes to announce that the sale of a vessel (the "Vessel") by its subsidiary, Oranda 1 Limited (the "Seller") to an unrelated party (the "Purchaser") for a sum of US$38.0 million (the "Transaction") and the bareboat charter by its subsidiary, Karp Marine Limited have been completed.

2. INFORMATION ON THE VESSEL

The Vessel is a 75M Work Maintenance Vessel and is called the Oranda 1 Hull
7064.

3. THE SALE AND PURCHASE AGREEMENT

3.1 Purchase Consideration: The purchase price of the Vessel paid by the
Purchaser was US$38.0 million (the "Purchase Price").
3.2 Basis for determining the Purchase Consideration: The Purchase Price was arrived at on an arm's length willing buyer, willing seller basis.
3.3 Terms of payment: The Purchase Price was satisfied in the following manner:
(a) US$3.8 million, representing 10% of the Purchase Price was paid within three
(3) banking days from the date of the Memorandum of Agreement; and
(b) the remaining 90% of the Purchase Price was paid in full, free of bank charges to the Seller on completion and delivery of the Vessel.
3.4 The proceeds from the Purchase Price were first applied towards total satisfaction of the debt secured by the existing mortgage over the Vessel and the remaining proceeds were for the Seller's own account.

4. MATERIAL CONDITIONS TO THE TRANSACTION

Notices, time and place of delivery:

(a) the Seller shall provide the Purchaser with 7 and 3 days' notice of the estimated time of delivery. When the Vessel is at the place of delivery and in every respect ready for delivery in accordance with the Memorandum of Agreement, the Seller shall give the Purchaser a written notice of readiness for delivery; and
(b) the Vessel shall be delivered to the Purchaser and taken over safely afloat at a safe and accessible berth or anchorage at or in a place to be determined.

5. RATIONALE FOR THE TRANSACTION

The Board is of the view that the Transaction is in the best interests of the Company and its shareholders (the "Shareholders") as:
(a) the Purchase Price took into account the proper market value of the Vessel;
and
(b) the gain from the Transaction would improve the liquidity of the Company and its subsidiaries.

6. FINANCIAL EFFECTS OF THE TRANSACTION

6.1 Use of proceeds: The net proceeds from the sale of the Vessel would be used to repay bank loans, thus improving the working capital of the Company and its subsidiaries (the "Group").
6.2 Book value: The carrying net book value of the Vessel in the accounts of the Group was approximately US$21.2 million as at 31 August 2012. On completion of the Transaction, the Group has realised an estimated net gain of approximately US$16.8 million.

6.3 Net Tangible Asset ("NTA") per share:

For illustration purposes, assuming that the Transaction had taken place on 31
December 2011, being the end of the most recently completed financial year (for which financial results are available) and based on the audited consolidated financial statements of the Group at 31 December 2011, the Transaction would have had the following effect on the Group's NTA as presented in the table below: -

Before the Transaction

After the Transaction

NTA per share (US cents)

12.6

13.5

6.4 Earnings per Share ("EPS"):

For illustration purposes, assuming that the Transaction had been completed on 1
January 2011 being the beginning of the most recently completed financial year (for which financial results are available) of the Group for the financial year ended 31
December 2011, the Transaction would have had the following effects on the
Group's EPS as presented in the following table: -

Before the Transaction

After the Transaction

Loss per share

(US cents)

Basic

(2.8)

(2.0)

Fully Diluted

(2.8)

(2.0)

7. INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS

None of the directors or controlling Shareholders of the Company has any interest, whether direct or indirect, in the Transaction other than through their shareholdings in the Company.

8. COMPLIANCE WITH THE SGX-ST LISTING MANUAL

8.1 Rule 1006 of the Listing Manual: The relative figures computed on the bases set out in the Rule 1006 of the Listing Manual are as follows: -

Rule 1006(a) - the net asset value of the assets to be disposed of, compared with the Group's net asset value.

7.6%

Rule 1006(b) - The net profits attributable to the assets disposed, compared with Group's net profits.

The net profit attributable to the assets acquired is US$16.8 million compared with the FY2011 Group's net loss of S$72.5 million (approximately US$57.7 million).

Rule 1006(c) - The aggregate value of the consideration given, compared with the Company's market capitalisation based on the total number of issued shares excluding treasury shares.

19.4%

Rule 1006(d) - The number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue.

Not applicable

8.2 As the relative figures under Rules 1006(a) and 1006(c) of the Listing Manual exceed 5%, the Transaction constitutes a discloseable transaction as defined in Chapter 10 of the Listing Manual.
Contemporaneous with the Transaction, the Vessel has been bareboat chartered back for a period of 5 years by the Company's subsidiary, Karp Marine Limited and is currently operating under a 450-day time charter in the Gulf of Mexico under a contract (the "Time- charter") worth US$14.9 million (the Time-charter having been previously announced by the Company on 19 March 2012).
By Order of the Board
See Kian Heng
Group Chief Financial Officer
19 September 2012

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