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Contemplated underwritten private placement
Atlantic Sapphire ASA (“Atlantic Sapphire” or the “Company”, and together with its consolidated subsidiaries, the “Group”) has retained Arctic Securities AS and DNB Markets, a part of DNB Bank ASA (the “Managers”) as Joint Bookrunners in connection with a contemplated underwritten private placement (the “Private Placement”) to raise gross proceeds of the NOK equivalent of approximately USD 35 million in new shares to be issued by the Company (the “Offer Shares”) (the “Offer Size”). The subscription price per Offer Share will be determined through an accelerated book-building, but will not be lower than NOK 1.20 per Offer Share (the “Offer Price”) and the final number of Offer Shares to be issued will be determined (subject to approval by the EGM with respect to the Offer Shares in Tranche 2, as defined below) by the Company’s Board of Directors (“Board”) on the basis of an accelerated book-building process.
The net proceeds from the Private Placement will be used to support Phase 1 to proven state and for general corporate purposes, as described in the Q4 2023 Operational Update.
As previously announced, the Company would present its Q4 2023 Operational Update on February 29, 2024 (the “Operational Update”). The complete Operational Update is attached to this stock exchange notice and a recorded version of the presentation is available at the following link: Atlantic Sapphire Q4 2023 Operational Update Presentation on Vimeo .
Please note that this recorded version replaces the planned live webcast that was due to be held at 17:00 CET today.
Underwriting and pre-commitments
The Company has entered into an underwriting agreement (the “UWA”) with an underwriting consortium consisting of certain existing shareholders (jointly, the “Underwriters”) securing gross proceeds from the Private Placement corresponding to the Offer Size. The Underwriters include, amongst others, the largest shareholders represented on the Board:
• Nordlaks Holding AS, one the largest and most profitable family-owned salmon farming companies in the world (owning 12.32% of the Company), will participate in the guarantee consortium with the NOK equivalent of USD 7.5 million (equal to ~1.75x their pro-rata) and will subscribe minimum their pro-rata.
• Strawberry Equities AS (owning 8.15% of the Company) will participate in the guarantee consortium with the NOK equivalent of USD 5.0 million (equal to ~1.75x their pro-rata) and will subscribe minimum their pro-rata.
• Blue Future Holding AS (“Blue Future”), owned by EW Group, a leading global provider of animal genetics, nutrition and health products (owning 3.75% of the Company), will participate in the guarantee consortium with the NOK equivalent of USD 2.3 million (equal to ~1.75x their pro-rata) and will subscribe minimum their pro-rata.
Further, the following primary insiders and employees have pre-committed to subscribe for Offer Shares in the Private Placement:
- André Skarbø, board member, will subscribe for 1.2x his pro-rata; and
- Karl Øystein Øyehaug, CFO, will subscribe for NOK 100,000
The remaining Underwriters consist of other large shareholders in the Company.
The portion of the underwriting commitment exceeding 1.5x the pro-rata of any shareholder participating in the underwriting consortium will be scaled back to 1.5x before all underwriting commitments are scaled back equally.
The Underwriters will receive an underwriting commission of 5.00 % of their respective underwriting obligations, which shall be settled through the issuance of new shares in the Company subject to the approval of a board authorization from the EGM (as described below). The shares to be issued as underwriting commission will be issued following the EGM.
The application period for the Private Placement will commence on 29 February 2024 at 16:30 CET and end on 1 March 2024 at 08:00 CET. The Company, together with the Managers may, however, at their sole discretion extend or shorten the application period at any time and for any reason. If the application period is extended or shortened, the other dates referred to herein might be changed accordingly.
The Private Placement is directed towards Norwegian and international investors, subject to applicable exemptions from relevant registration, filing and offering prospectus requirements, and subject to other applicable selling restrictions. The minimum application and allocation amount has been set to the NOK equivalent of EUR 100,000. The Company may however, at its sole discretion, allocate amounts below EUR 100,000 to the extent exemptions from the prospectus requirement in accordance with applicable regulations, including the Norwegian Securities Trading Act and ancillary regulations, are available.
Bank debt update
In connection with, and subject to the Private Placement, DNB Bank ASA has credit approved certain amendments of the Company’s existing debt facilities:
• Extension of the facility from April 2025 to October 2026;
• Adjustments of financial covenants;
• 50% instalment reduction for 2024. Instalments reduced in 2024 will be distributed evenly for the remaining loan profile of the debt facility;
• Adjustment of the borrowing base of the RCF, increasing the drawdown availability; and
• Adjustment of the incurrence tests for the undrawn Phase 2 debt to reflect the latest Company budget.
Q4 2023 Operational Update
Below are selected highlights from the attached Operational Update:
• Farming temperatures in grow-out systems are stabilized around 14°C after delivery of new chillers in September 2023. All chiller systems have been performing in accordance with expectation in the past ~5 months since installation;
• Fish batches transferred to grow-out tanks after the new chiller installations showing strong growth with performance in line with expectation or better;
• Overall farming conditions stable and supportive of good biomass growth, the total net biomass gain in Q4 2023 was ~1,100t RLW, with a standing biomass of ~3,050t RLW at year-end 2023;
• Batches of fish impacted by prior temperature issues to be harvested out in coming months, meanwhile the share of high-quality salmon and average price achievement is expected to increase;
• Clear majority of biomass gain in the period ahead is expected to come from batches that have not been exposed to temperature challenges;
• Cash balance of USD 38 million plus an available RCF of USD 10-17 million as of YE 2023, comparable to the estimate given in September 2023;
• As previously announced, the Company expects higher maturation levels and lower price achievement for the batches that were exposed to the elevated temperatures, and will be harvested in the coming months. As such, the Company has considered the Private Placement, together with the amendments to the debt facility as described above, as necessary to secure sufficient runway to prove Phase 1 operations with a liquidity buffer.
Settlement and conditions
The Private Placement consists of one tranche with up to 156,080,000 Offer Shares (“Tranche 1”) and a second tranche with a number of Offer Shares which results in a total transaction (i.e., both tranches) that equals the final offer size (“Tranche 2”). Delivery of Offer Shares in both Tranche 1 and Tranche 2 will be made on a delivery versus payment (“DVP”) basis with existing and unencumbered shares in the Company that are already listed on the Oslo Stock Exchange, pursuant to a share lending agreement between DNB Markets (on behalf of the Managers), the Company, Nordlaks Holding AS and Strawberry Capital AS (the “Share Lending Agreement”). The Offer Shares delivered to the applicants will thus be tradable from allocation.
Delivery of Tranche 1 Offer Shares will be made on a DVP basis on or about 5 March 2024 pursuant to the Share Lending Agreement. The Managers will settle the share loan in Tranche 1 with new shares in the Company to be issued by the Company’s Board pursuant to an authorization granted by a general meeting of the Company held on 11 October 2023.
Delivery of Tranche 2 Offer Shares will be made on a DVP basis on or about 26 March 2024, following and subject to approval of the issuance of the Tranche 2 Offer Shares by the EGM. The new shares in the Company to be issued in Tranche 2 will initially be delivered to the share lenders on a separate non-listed ISIN pending approval and publication of a combined listing and offer prospectus for the listing of the new shares to be issued in Tranche 2 and potentially for carrying out the Subsequent Offering (as defined below (the “Prospectus”)).
Applicants will receive a pro-rata portion of Offer Shares in Tranche 1 and Tranche 2 based on their overall allocation in the Private Placement, subject to adjustments to the extent any applicants accept to receive a larger portion of their allocated Offer Shares in Tranche 2.
Completion of the Private Placement by delivery of Offer Shares to investors is subject to all necessary corporate resolutions being validly made by the Company, including the Board resolving to complete the Private Placement, at its sole discretion, including by resolving to increase the share capital and issue the Tranche 1 Offer Shares. Completion of delivery of the Tranche 2 Offer Shares to applicants is further subject to an extraordinary general meeting of the Company to be held on or about 22 March 2024 (the “EGM”) resolving the share capital increase pertaining to the issuance of the Tranche 2 Offer Shares. Completion of Tranche 1 is not conditional upon completion of Tranche 2, and acquisition of Offer Shares under Tranche 1 will remain final and binding and cannot be revoked or terminated by the respective applicants if Tranche 2, for whatever reason, is not completed.
Completion of the Private Placement is further conditional upon; (i) all underwriting commitments for subscription and payment for Offer Shares in the Private Placement remaining in full force and effect pursuant to the terms and conditions of the UWA, and (ii) the Share Lending Agreement remaining in full force and effect pursuant to its terms and conditions.
By applying for Offer Shares in the Private Placement, each applicant undertakes to vote for all its shares in the Company in favour of, or give a voting proxy to be used in favour of, the resolutions at the EGM to issue the Offer Shares pertaining to Tranche 2 and to provide the Board with an authorization to resolve the share issue related to the Subsequent Offering, and the settlement of the underwriting commission payable (through providing the Board with an authorization to resolve the share issue required to settle the underwriting commission) to those who have provided underwriting commitments in connection with the Private Placement. The undertaking applies to all shares held by the applicant as of the date of the EGM. Subject to the completion of the Private Placement, customary lock-up agreements are expected to be entered into with the following individuals and their related companies:
• Key management (CEO Johan E. Andreassen, CFO Karl Øystein Øyehaug, COO Mario Palma and CDIO Svein Taklo): 90 days
• Board members: 90 days
• The Company: 180 days
In connection with, and subject to the Private Placement, the Managers have agreed to waive the lock-up agreement for the Company entered into in relation to the Private Placement announced 19th September 2023, that was due to expire in March 2024.
Equal treatment
The Board has considered the Private Placement in light of the equal treatment obligations under the Norwegian Public Limited Companies Act, the Norwegian Securities Trading Act, Oslo Børs’ Circular no. 2/2014 and the rules on equal treatment under Oslo Rule Book II for companies listed on the Oslo Stock Exchange, and is of the opinion that the contemplated Private Placement is in compliance with these requirements.
In reaching this conclusion, the Board has particularly emphasized that the amendments to the Company’s bank debt facility described above is subject to completion of the Private Placement.
Furthermore, the Board has emphasized that it is advantageous to raise equity capital in a time- and cost-efficient manner. The Private Placement is expected to be placed in an efficient manner, with little uncertainty concerning the number of subscribers and the gross proceeds. The fact that the subscription of Offer Shares for a value corresponding to the Offer Size was guaranteed by a guarantee consortium contributed to reducing uncertainty, and the Board considered it to be in the best interest of the Company and its shareholders to enter into an agreement for such a guarantee even though the guarantors are to receive a guarantee fee of 5.00% of the guaranteed amount to be settled by the issuance of shares in the Company.
On the basis set out above and based on an assessment of the current equity markets, the Board has considered the Private Placement to be in the common interest of the Company and its shareholders. As a consequence of the Private Placement structure, the shareholders’ preferential rights to subscribe for the Offer Shares will be deviated from.
Potential Subsequent Offering
Subject to, among other things, completion of the Private Placement, approval by the EGM and the market price of the Company’s shares, the Board will consider whether it is in the Company’s best interest to carry out a subsequent share offering (the “Subsequent Offering”) at the Offer Price. Any such Subsequent Offering would be directed towards existing shareholder in the Company as of 29 February 2024 (as registered in the VPS on 4 March 2024) who (i) were not allocated Offer Shares in the Private Placement and (ii) are not resident in a jurisdiction where such offering would be unlawful, or would (in jurisdictions other than Norway) require any prospectus filing, registration or similar action. The Company reserves the right in its sole discretion to not conduct or cancel the Subsequent Offering.
Advisors
Arctic Securities AS and DNB Markets, a part of DNB Bank ASA, are acting as Joint Bookrunners in the Private Placement.
Advokatfirmaet CLP DA is acting as a legal advisor for the Company in connection with the Private Placement. Advokatfirmaet BAHR AS is acting as legal advisor to the Managers in connection with the Private Placement.
For further information, please contact:
Johan E. Andreassen, CEO;
or
Karl Øystein Øyehaug, CFO
investorrelations@atlanticsapphire.com
About Atlantic Sapphire ASA
Atlantic Sapphire is pioneering Bluehouse® (land-raised) salmon farming, locally, and transforming protein production, globally. Atlantic Sapphire operated its innovation center in Denmark from 2011 until 2021 with a strong focus on R&D and innovation to equip the Company with the technology and procedures that enable the Company to commercially scale up production in end markets close to the consumer.
In the US, the Company holds the requisite permits and patents to construct its Bluehouse® in an ideal location in Homestead, Florida, just south of Miami. The Company’s Phase 1 facility is in operation, which provides the capacity to harvest approximately 10,000 tons (HOG) of salmon annually. The Company completed its first commercial harvest in the US in September 2020. Atlantic Sapphire is currently constructing its Phase 2 expansion, which will bring total annual production capacity to 25,000 tons, and has a long-term targeted harvest volume of 220,000 tons.
This information was considered to be inside information pursuant to the EU Market Abuse Regulation. This stock exchange announcement was published by Karl Øystein Øyehaug, CFO, on the time and date provided.
Important information
This announcement is not and does not form a part of any offer to sell, or a solicitation of an offer to purchase, any securities of Atlantic Sapphire. The distribution of this announcement and other information may be restricted by law in certain jurisdictions. The release is not for publication or distribution, in whole or in part directly or indirectly, in or into Australia, Canada, Japan or the United States (including its territories and possessions, any state of the United States and the District of Columbia). This release is an announcement issued pursuant to legal information obligations and is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. It is issued for information purposes only, does not purport to be full or complete and does not constitute or form part of any offer or solicitation to purchase or subscribe for securities, in the United States or in any other jurisdiction where such offer of solicitation is unlawful. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”), or under the applicable securities laws of Australia, Canada or Japan. The securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the US Securities Act and in accordance with applicable United States state securities laws. The Company does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into Australia, Canada, Japan or the United States. Any sale in the United States of the securities mentioned in this announcement will be made solely to “qualified institutional buyers” as defined in Rule 144A under the US Securities Act as well as to major U.S. institutional investors under SEC Rule 15a-6 to the United States Exchange Act of 1934.
The issue, subscription or purchase of shares in the Company is subject to specific legal or regulatory restrictions in certain jurisdictions. Neither the Company nor the Managers assume any responsibility in the event there is a violation by any person of such restrictions.
In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation, i.e., only to investors who can receive the offer without an approved prospectus in such EEA Member State. The expression “Prospectus Regulation” means Regulation (EU) 2017/1129 as amended (together with any applicable implementing measures in any Member State).
In the United Kingdom, this communication is only addressed to and is only directed at “qualified investors” within the meaning of Regulation (EU) 2017/1129 as it forms part of the laws of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (including any statutory instruments made in exercise of the powers conferred by such act) who (i) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “Order”) or (ii) are persons falling within Article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations, etc.) (all such persons together being referred to as “Relevant Persons”). These materials are directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. Persons distributing this communication must satisfy themselves that it is lawful to do so.
Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “anticipate”, “believe”, “continue”, “estimate”, “expect”, “intends”, “may”, “should”, “will” and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The information, opinions and forward-looking statements contained in this announcement speak only as at its date and are subject to change without notice. This announcement is made by, and is the responsibility of, the Company. The Managers are acting exclusively for the Company and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, or for advice in relation to the contents of this announcement or any of the matters referred to herein. The Managers and their respective affiliates disclaim any obligation or undertaking to update, review or revise any forward looking statement contained in this announcement whether as a result of new information, future developments or otherwise.
The distribution of this release may in certain jurisdictions be restricted by law. Persons into whose possession this release comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
Neither the Managers nor any of their respective affiliates makes any representation or warranty, express or implied, as to the accuracy and completeness of this announcement (or whether any information has been omitted from the announcement) or as to any other information relating to the Company its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith, and none of them accepts any responsibility for the contents of this announcement or any matters referred to herein. This announcement is for information purposes only and is not to be relied upon in substitution for the exercise of independent judgment. It is not intended as investment advice and under no circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy any securities or a recommendation to buy or sell any securities of the Company. Neither the Managers nor any of their respective affiliates accepts any liability arising from the use of this announcement.
In connection with any offering of the shares, the Managers and any of their affiliates acting as an investor for their own account may take up as a principal position in any shares and in that capacity may retain, purchase or sell for their own accounts such shares. In addition, they may enter into financing arrangements and swaps with investors in connection with which they may from time to time acquire, hold or dispose of shares. They do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.
Kilde
