Mermaids, page-9

Hi Croasian.

Good post above, appreciate your points of view to the debate.

In relation to 25 percent of book value as the sale price of vessels, 25 percent is actually pretty hard to get and its only the cheaper, older and more depreciated boats that will even sell.

For MRM I do not argue that they need to impair all of their boats as we know some will find work on the good contracts such as Inpex and we know the newer or new boats go on such contracts and their values are OK.

But at the same time industry utilisation seems to be around 30 to 40 percent of vessels. This means that 60 to 70 percent of boats are sitting unused based on industry stats. I have not seen an MRM stat for some time.

The cheapest way to store an unused boat is to cold stack it. Basically that means anchor it, take out the keys and turn it off. Pretty soon tho problems arise. Rusted hydraulics, cooling systems not working, safety gear stuffed, moisture in electrics, the list goes on and on. After all, these are iron based boats sitting in salt water. Boats can not be compared to prepared alloy jets sitting in the dry desert of the airline industry (which springs to mind sometimes when thinking of OSV's). Putting a cold stacked boat back to work requires capex and even then that boat is likely lower valued in real terms as you can hang your hat on one thing and that is that it it will be less reliable.

I am firmly of the belief that MRM will need to write down their fleet and we should see that in the coming weeks. At that point the NTA backing many investors hold on to will be significantly weakened.