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Proximar Seafood AS - Financing and operational update: Contemplated convertible bond issue, enabling production start during October 2022
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Proximar Seafood AS is contemplating a convertible bond issue of up to NOK 250m, enabling the milestone of initiating the production phase and partly securing its further funding needs.
Bergen/Yokohama, 5 October 2022. Reference is made to Proximar Seafood AS’ (“Proximar” or the “Company”) Q2 2022 update 31 August 2022. Proximar continues to be on track with construction of the 5,300 tons land-based salmon farming facility in Japan and is progressing towards first egg inlays in October and first harvest in medio 2024. As per 1 September 2022 approximately 67% of the civil works has been completed.
Approximately 95% of the construction and equipment costs are based on fixed price contracts and construction is progressing on time and on budget. Recent currency effects have increased the projected total capex by approximately NOK 15 million, while total project expenditure estimate until first harvest has increased by an additional NOK 55 million to approximately NOK 1,425 million due to increased cost of feed, electricity and financing, as well as currency effects. NOK 690 million has been invested to date.
Proximar will within short take delivery of the Hatchery and Nursery facility representing a major milestone and thus initiating salmon production in accordance with the communicated project timeline. Proximar’s total remaining financing need for Stage I production is estimated to NOK 735 million of which NOK 190 million is due in October in connection with the take-over and operational start-up. An additional NOK 110 million is needed to secure financing to the end of March 2023, thus bringing the total financing requirement to NOK 300 million.
The Company hereby announces its plans to solve its near term liquidity requirements by a combination of increasing its debt facility by approximately NOK 50 million and a contemplated NOK 250 million Convertible Bond (the “Convertible Bond”).
The Convertible Bond is structured as a 3-year subordinated convertible bond with a conversion price of NOK 6 per share and a coupon of 7%. Should the Company carry out a share issue of more than NOK 50 million, the bondholders have the right to convert at a lower strike if the price in a potential share issue is set lower than the NOK 6 strike price. Key existing shareholders have indicated strong interest in participating in the Convertible Bond and have pre-committed to subscribe for a total of more than NOK 150 million.
Additionally, and as referred to above, approximately NOK 50 million will be raised through increasing the existing debt financing from the Japanese financing institution JA Mitsui Leasing Ltd. (“JAML”). Grieg Kapital, the main guarantor for the loan, has agreed to increase its guarantee commitments by NOK 50 million which is subguaranteed by Grieg Kapital and Daimyo AS. In connection with the facility increase, JAML and more than 90% of the guarantors have agreed to extend the maturity to 31 March 2024, with possible extension to end of 2024. The facility increase is subject to formal credit approval at JAML.
The remaining NOK 435 million capital need to complete Stage I and take it to first harvest is expected to be solved through a combination of long term debt with Japanese banks, and a minor equity raise closer to project completion. The financing process with the Japanese banks is progressing with advanced discussions on both a construction loan and long term financing. An updated indicative term sheet for the long-term financing has been received, with conclusion expected in Q4 2022.
The Company will convene a general meeting of its shareholders to be held on or around 13 October 2022 (the “GM”) to seek shareholders’ approval of the Board of Directors’ resolution to make the Convertible Bond convertible into shares in the Company. The Company’s three largest shareholders (the Grieg Family, the Nielsen Family and Daimyo Invest AS) representing approximately 36.5% of the shares, have irrevocably committed to vote in favour of the Convertible Bond.
Company update
The Company has since March 2021 been constructing it’s first land-based salmon farm just outside Tokyo, Japan. With fixed price contracts and strong partners such as Daiwa House Ltd and AquaMaof, the construction has developed according to expectations. The Hatchery and Nursery is now being completed, with equipment installation works ongoing.
Proximar is now well prepared for the operational start-up in October 2022 with egg inlays. First harvest is expected in medio 2024, giving Proximar a significant first mover advantage in the Japanese market. With a location close to Mt Fuji in the proximity to a huge domestic market, the company is well positioned to present to Japanese costumers the freshest Atlantic salmon, harvested the same day.
The Company has since inception had the strategy of partnering up with industry experts. During the last 6 months, a sales and distribution agreement has been signed with Marubeni Corp, securing an off-take for the entire volume for 10 years. This partnership has as expected proved valuable in discussions and progress with Japanese financial institutions, also bringing more banks to consider debt facilities.
The prices for fresh Atlantic salmon in Japan are high driven by transportation costs as all volumes are imported by air freight. This represents a large and sustainable cost advantage for Proximar. During the pandemic, followed by the geopolitical tense situation, these prices related to transportation have increased significantly. In such environment, local produce increase popularity and Proximar has seen a raising awareness of the company’s presence. Proximar, together with Marubeni, plans to position the brand in the premium segment with a corresponding price premium.
Advisors
ABG Sundal Collier ASA and Pareto Securities AS are acting as managers and bookrunners to the Company in connection with the Convertible Bond (the “Managers”). Advokatfirmaet Thommessen AS is acting as legal advisor to the Company, while Advokatfirmaet Wiersholm AS is acting as legal advisor to the Managers.
For further information, please contact:
Joachim Nilsen, CEO, Proximar Seafood AS
Tel: +81 70 28 11 98 98
Email: jn@proximar.com
Pål K. Grimsrud, CFO, Proximar Seafood AS
Tel: +47 99477599
Email: pkg@proximar.com
About Proximar Seafood
Proximar Seafood is a Norwegian land-based salmon farming company with its first production facility under construction at the foot of Mount Fuji in Japan. Through land-based fish farming, using high-quality ground water secured close to Mount Fuji, the company will produce fresh Atlantic Salmon, harvested the same day. Proximar’s location, near one of the world’s most important fish markets, implies significant advantages, both in terms of reduced cost and carbon footprint.
Important Notice
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 the Company. The distribution of this announcement and other information may be restricted by law in certain jurisdictions. Copies of this announcement are not being made and may not be distributed or sent into any jurisdiction in which such distribution would be unlawful or would require registration or other measures. Persons into whose possession this announcement or such other information should come are required to inform themselves about and to observe any such restrictions.
The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “US Securities Act”), and accordingly may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of
the US Securities Act and in accordance with applicable U.S. state securities laws. The Company does not intend to register any part of the offering or their securities in the United States or to conduct a public offering of securities in 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.
In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that EEA Member State within the meaning of the EU Prospectus Regulation, i.e., only to investors who can receive the offer without an approved prospectus in such EEA Member State. The expression “EU Prospectus Regulation” means Regulation 2017/1129 as amended together with any
applicable implementing measures in any EEA Member State.
This communication is only being distributed to and is only directed at persons in the United Kingdom that are (i) 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) high net worth entities, and other persons to whom this announcement may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only for 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 “believe”, “expect”, “anticipate”, “strategy”, “intends”, “estimate”, “will”, “may”, “continue”, “should” 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, the 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 the Company’s control.
Actual events may differ significantly from any anticipated development due to a number of factors, including without limitation, changes in investment levels and need for the Company’s services, changes in the general economic, political and market conditions in the markets in which the Company operates, the Company’s ability to attract, retain and motivate qualified personnel, changes in the Company’s ability to engage in commercially acceptable acquisitions and strategic investments, and changes in laws and regulation and the potential impact of legal proceedings and actions. 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 forward -looking statements. The Company does not provide any guarantees that the assumptions underlying the forward-looking statements in this announcement are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this announcement or any obligation to update or revise the statements in this announcement to reflect subsequent events. You should not place undue reliance on the forward-looking statements in this document.
The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice. The Company does not undertake any obligation to review, update, confirm, or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this announcement.
Neither the Managers nor any of their respective affiliates make any representation as to the accuracy or completeness of this announcement and none of them accept 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 in the Company. Neither the Managers nor any of their affiliates accept any liability arising from the use of this announcement.
This announcement is an advertisement and is not a prospectus for the purposes of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on prospectuses to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (as amended) as implemented in any Member State.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation, and is subject of the disclosure requirements of section 5-12 of the Norwegian Securities Trading Act.
The stock exchange announcement was published by Pål Grimsrud, CFO of Proximar Seafood AS at the time set out above.
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