Otto Marine Ltd : Acquisitions And Disposals :: Discloseable Transaction :: Otto Marine Disposed Two Vessels For Usd30 Million

(Company Registration Number 197902647M)

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

Following the announcement on 30 September 2013 entitled "Company Charter Two Workboats to its Malaysia Partners Worth USD32m", the board of directors (the "Board") of Otto Marine Limited (the "Company") wishes to announce that Charterers, Go Marine Services (M) Sdn Bhd (formerly known as Expro Synergy Sdn Bhd) ("Expro") through the assignment of the original contract to its wholly owned subsidiary, Workboats 1 Limited, ("Buyer"), executed its purchase obligation for the two vessels (the "Vessels") for an aggregate sum of USD30 million (the "Transaction"). The Group's wholly owned subsidiary, Koi Marine Limited (the "Koi") was the other party to the contract with the Charterers. Workboats 1 Limited is a company incorporated in Labuan.

The Vessels are two 61m Work Maintenance Vessels are called "SEASAFE SALVO" and "SEASAFE SUPPORTER".

3.1 Purchase Consideration: The purchase obligation price of the Vessels paid by the
Purchaser was USD30.0 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 USD30.0 million would be settled by cash.
3.4 The proceeds from the Purchase Consideration will be applied first towards total satisfaction of the debt secured by the existing mortgage over the Vessels and other securities and the remainder will be for Koi's own account.

As announced on 30 September 2013, the Vessels were chartered by Koi to the Charterers with a purchase obligation at the end of the charter period. As a result, the Vessels had already been physically delivered to the Buyers subject to the execution of the purchase obligation and receipt of Purchase Consideration by Koi. The execution of the purchase obligation has been completed.

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 Vessels;
and
(b) the gain from the Transaction would improve the liquidity of the Company and its subsidiaries.

On completion of the Transaction, the Group would realize an estimated net gain of approximately USD6.4 million which represents the excess of the Purchase Price of the Vessel over its carrying value net of a deferred gain of USD6.2 million relating to the unrealized profit for sale of vessel to an associated company.
The financial effects of the Transaction are as set out below. The financial effects are shown for illustrative purposes only and do not necessarily reflect the exact future financial position and performance of the Company and its subsidiaries (the "Group").
6.1 Use of proceeds: The net proceeds from the sale of the Vessels would be used to repay bank loan, thus improving the working capital of the Group.
6.2 Book and market value: The carrying net book value of the Vessels in the accounts of the Group was approximately USD17.4 million in total. The market value of USD30.0 million is derived on a willing buyer, willing seller basis. A subsequent third party independent valuation report dated 28 January 2014 for a valuation commissioned by the bankers of the Buyers placed the Vessels at USD32.0 million, which supported the market value of the Vessels.

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

For illustration purposes, assuming that the Transaction had taken place on 31
December 2012, 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 2012, the Transaction would have had the following effect on the Group's NTA as presented in the table below: -

6.4 Earnings (Loss) per Share ("EPS"):

For illustration purposes, assuming that the Transaction had been completed on 1
January 2012, being the beginning of the most recently completed financial year
(for which financial results are available) of the Group for financial year ended 31
December 2012, the Transaction would have had the following effects on the
Group's EPS as presented in the following table: -

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.

8.1 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: -

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.
By Order of the Board
See Kian Heng
Group Executive Director
4 February 2014

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