The night closes in and the ship weighs anchor. There is no further sign of the mermaids but they could easily still be out there in the darkness.
Jaali, on watch at about 10 o' clock, hears something out in the darkness breach the water. It wasn't a mermaid. It was much bigger than that. He also notices that there is fog or steam rising from the surface of the water out in the edge of the lantern light.
There is opportunity to raise numerous extra people. Jaali and Maju were awake, the monk and paladin can be awake in a round, and the bard and captain are also woken easily.
The paladin is abou halfway through donning his armour when the breaching noise gets louder and the party are confronted with a large, serpentine head peering up at them, now about 20 yards away. The creature is staring at you curiously.
No one is exactly sure what it is, but it reminds Jaali of carvings of dragons that he once saw while he was exploriong a certain underwater tomb, on a previous adventure.
He looks like this, except you can only see his head and neck so far...