The Fremantle-based marine support group said the authority's maritime support division, PSA Marine, would pay $7 million, or 30c a share, for a 20 % stake in Mermaid, with an option to move to 25% within two years.

Under the terms of the agreement, which remains subject to approval by the Foreign Investment Review Board, PSA Marine will also be issued with six million options in Mermaid, allowing it to lift its stake by 2.5% at 31c a share in 12 months, and another 2.5 per cent at 34c a share in 24 months.

"The $7 million generated by the placement will provide Mermaid Marine with further balance sheet strength and a world class shareholder to advance the marine side of the business," the company said.

Mermaid also said the deal coincides with the completion of the Dampier Supply Base and recently announced developments for the Burrup Peninsula in the North West of Western Australia.