DESSC: Deep Sea Supply and Marine Harvest ASA to establish an aquaculture shipping joint venture

Deep Sea Supply and Marine Harvest ASA (Marine Harvest) have entered into a Heads of Agreement to establish a 50/50 owned aquaculture shipping joint venture (the "JV") that is to build, own and operate aquaculture vessels. The JV represents a unique opportunity for Deep Sea Supply to capitalize on the Company's experience from the OSV sector to enter into a new and attractive market together with an industry leading partner. Marine Harvest and Deep Sea Supply believe there is significant room for efficiency improvements across the value chain in aquaculture shipping, ranging from reduction in newbuilding cost to more cost-efficient operations. Accordingly, Deep Sea Supply and Marine Harvest aims to significantly reduce costs related to vessel services through establishing the JV. Over the past few years aquaculture vessels have increasingly become an integrated part of the value chain. Marine Harvest charters today 44 vessels with a combined cost of approximately EUR 100 million per year, making Marine Harvest the industry's largest charterer of such vessels. The JV expects to enter into contracts for the construction of aquaculture vessels which will be chartered by Marine Harvest upon delivery. Current discussions indicate a substantial reduction in newbuilding cost compared to solutions provided by alternative aquaculture providers. The JV entity will be Marine Harvest's preferred provider of aquaculture vessels. The intention of the JV is to also compete for external contracts. Deep Sea Supply will enter into management agreements with the JV covering all necessary management services, including technical management, ship management and other corporate services. The aquaculture shipping industry is fragmented and characterised by lack of competition. Through the JV, Deep Sea Supply and Marine Harvest aim to consolidate the industry to achieve economies of scale. The JV will explore any opportunity that may improve building cost or operating cost, including taking advantage of the current imbalance in the offshore service vessel market through potentially convert surplus offshore vessels into aquaculture vessels if project economics are favourable. Deep Sea Supply sees the establishment of the JV together with Marine Harvest as an attractive opportunity for the Company to expand its business into a related industry where we can benefit from long term charters at attractive rates. The JV also allows the Company to further capitalize on our strong operational platform through management of the JV's vessels. Deep Sea Supply will establish a new 100% owned subsidiary to be the 50% owner of the JV and will seek to finance the JV-investment on a stand-alone basis directly through this subsidiary. With back-end loaded payment terms on the newbuilds, no material upfront investment is expected. The Company's largest shareholder, Hemen Holding Limited, currently owning approximately 35% of the shares in the Company, has indicated support for the establishment of the JV. Limassol, 02 June 2016 Deep Sea Supply Plc This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act) This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Deep Sea Supply via GlobeNewswire