The 16-metre yacht Georgia issued a mayday call around 10pm (7pm Singapore time) on Friday after losing its rudder, race organisers said. At the time the boat was taking on water and was on the verge of sinking.

Two other yachts in the race Telcoinabox Merit and Ragtime, diverted from their course to come to their aid.

All of the crew were transferred using a life raft to Telcoinabox Merit and then to a police vessel. They arrived back in Batemans Bay on the New South Wales coast on Saturday.

'Merit did a great job,' Georgia's chief strategist Matt Hanaford told ABC radio. 'There was also another boat that came along ... they arrived after Merit.

'We weren't being picky. We took the first one there.' Owner Graeme Ainley said the yacht had been cruising along nicely when the incident happened.

'It all happened pretty quickly out there,' Ainley told the official race website (http: rolexsydneyhobart.com).

'We were running under spinnaker at about 15 knots, and ... we heard a loud bang, followed by a second bang.

'I guess we must have hit something reasonably solid, but we couldn't see it.

'The rudder stop had pulled out and water came through the back of the boat. We then had no steering and had to get the spinnaker down quickly.

'We then tried to stop the influx of water, but it was getting worse so we made the decision to abandon the vessel.' The yacht had since sunk.

A second yacht, Sanyo Maris, had also retired after suffering damage to a fitting on its mast and was heading back to Sydney, organisers said.

Australian super-maxi Skandia held a narrow 7.5-mile lead over pre-race favourite Wild Oats XI just before 1100 on Saturday in the race to the island state of Tasmania. -- REUTERS