Update turnaround project
Reference is made to the ongoing turnaround
project of Hofseth BioCare ASA (the "Company", "Hofseth BioCare" or
"HBC") which includes reconstruction of the Midsund plant to
further improve the production process, increase production
capacity and significantly reduce unit costs. The new private
placement will strengthen the Company's ability to leverage the
ongoing expansion at the Midsund facility, increasing yields and
volumes of the protein fractions, improving taste and smell of the
protein supplement ProGo(TM) and substantially lowering the
production cost of all four product fractions. The investment at
the Midsund facility will also enable HBC to produce a new version
of the ProGo® protein peptides for humans.
The reconstruction process is expected to be
completed in September 2016 and the Company then plans to ramp up
production volumes significantly. The implementation of these
measures is expected to provide the Company with a competitive cost
base on a per unit basis, enabling mass sales of excess volumes to
the feed and pet industry. As previously announced, the Company has
already entered into off-take agreements for substantial
volumes.
The Company's strategy towards the human nutrition
market remains intact and the Company will in the coming months
further intensify its efforts in this respect.
At the same time, the Board of Directors has
elected Mr. Tor Erik Andersen as new CEO of Hofseth BioCare.
Mr. Ødegård will take the position as CFO in the Company. Roger
Hofseth, Chairman of the Board comments: "Jon Olav
Ødegård has done an excellent job in leading this company through
the final R&D phase, very often in a difficult financial
environment. Under his leadership the Company has done extensive
work on clinical studies etc, and the Company has, on his watch,
come further than anyone else on Marine Ingredients for human
consumption. The Company is now in a position to intensify the
commercial phase, and we thank Mr Ødegård for his hard work and
dedication so far."
Equity issue
In order to strengthen the Company's financial
platform and provide a solid foundation for operations under the
new business plan, the Company hereby announces an equity issue of
minimum NOK 165m (the "Equity Issue") at a subscription price of
NOK 1.50 per share (the "Subscription Price").
The minimum amount of NOK 165m is already
subscribed, and more than 2/3 of the shareholders have given a
proxy to vote for the proposal at the upcoming EGM. The Equity
Issue consists of the following elements:
-
Cash equity issue of minimum NOK 59m
towards Alliance Seafoods Inc. ("Alliance Seafoods") and certain
shareholders of which Alliance Seafoods will subscribe for NOK 50m.
The NOK 50m proceeds from Alliance Seafoods will be made available
to the Company in advance of the implementation of the Equity Issue
and will technically be converted into new shares.
-
Buy-back of all outstanding convertible
bonds (the "Bonds") by issuing new shares worth approx. NOK 75.3m
based on the Subscription Price (the "Buy-back value"). The face
value of the Bonds is NOK 90.5m and the Buy-back value is
calculated as the balance of the Bonds adjusted for the discounted
subscription price to the face value of the Bonds when issued and
the implied interest under the Bond Agreement until 31 August 2016
which gives a Buy-back value of approx. NOK 75.3m. The holders of
the Bonds include international financial investors as well as
Hofseth International AS whereas the latter owns 40/181 of the
outstanding Bonds.
-
Minimum NOK 30.7m will be subscribed
for by certain creditors of HBC including but not limited to the
Hofseth International group of companies, Roger Hofseth AS and key
employees of the Company. This subscription amount will be settled
through conversion of debt.
If the Equity Issue is subscribed with just the
minimum amount of NOK 165m, the total number of outstanding shares
in HBC will be 232,472,297. As such, the dilution for existing
shareholders not participating in the Equity Issue will be
approximately 47%.
After completion of the Equity Issue with
subscription of the minimum amount, the Company will have the
following main shareholders:
-
Hofseth International group of
companies (Hofseth International AS, Hofseth AS, Seafood Farmers of
Norway AS and Hofseth Logistics AS) will have an ownership interest
in HBC of approximately 22.4%,
-
Companies directly controlled by Roger
Hofseth will have an ownership interest in HBC of 13.4% including
3,850,000 shares indirectly controlled by Roger Hofseth AS
-
Bondholders excluding Hofseth
International AS will have an ownership interest in HBC of
16.8%
-
Alliance Seafoods will have an
ownership interest in HBC of approximately 14.3%
Hofseth BioCare will as soon practically possible
call for an extraordinary general meeting to resolve the Equity
Issue. The Company is pleased to announce that shareholders
representing more than 2/3 of the outstanding shares of HBC have
already undertaken to vote in favour of the Equity Issue and that
the Company already has received pre-commitments for subscription
of NOK 165m in the Equity issue.
The cash equity issue deviates from the rules on
equal treatment and existing shareholders preferential right as set
out in the Securities Trading Act section 5-14 and the Public
Limited Liability Companies Act sections 10-4 as the subscription
offer was not directed towards all existing shareholders.
The Board finds it necessary to restructure the
majority of HBC's debt through conversion to equity in combination
with a significant capital injection, to establish a sustainable
debt to equity level for the Company's operations. The Board
considers that the equity raised through the Equity Issue is raised
at favourable terms as the subscription price is approximately the
same as the current market price of the Company's shares. More
importantly, the Board considers the Equity Issue strategically
important for HBC and its shareholders as a key supplier (Hofseth
International) and key customer (Alliance Seafoods) will benefit
from a further positive development of the Company through their
significant ownership in HBC. The Board has considered other
sources of financing, but has deemed such sources as less
beneficial than the raising of equity through the Equity Issue.
The Board will propose a subsequent offering up to
NOK 20m to limit the dilutive effect of the Equity Issue.
For more information about the Equity Issue and
the financial situation of HBC, please refer to the Company's
second quarter 2016 report issued today.
About Alliance Seafoods
Inc.:
Alliance Seafoods is a fully owned subsidiary of
Yokohama Reito Co., Ltd ("Yokorei"), a Japanese conglomerate listed
on the Tokyo Stock Exchange. Yokorei is a leading player in the
frozen storage market in Japan. In addition, through Alliance
Seafoods and other subsidiaries, Yokorei is involved in sales and
distribution of fish and meat with a particular focus on the Asian
market. Yokorei's consolidated turnover for 2015 was approximately
USD 1.5 billion.
HBC and Alliance Seafoods have already had a
business relationship for more than a year, and Alliance Seafoods
is a key partner for HBC in the Asian market.
On 17 June 2016 Yokorei announced the acquisition
of Fjordlaks Aqua, a leading trout farming company in Norway. The
acquisition of Fjordlaks Aqua is made through a joint venture owned
together with Hofseth International, which is a major shareholder
of HBC. Hofseth International is also HBC's key supplier of raw
material and the Fjordlaks Aqua transaction is expected to
significantly increase Hofseth International's processing activity
and thereby also significantly increase HBC's access to a stable
source of raw material. Equally important, the Fjordlaks Aqua
transaction will contribute to a further strengthening of the
relationship between the Hofseth group of companies and Yokorei /
Alliance Seafood, ultimately benefitting HBC.
"We expect Hofseth BioCare to
supply high quality products to our market with its advanced
technology which enables maximum utilisation of limited biological
resources. We are absolutely delighted to strengthen our
relationship with Hofseth BioCare and the Hofseth group and
contribute in building a vertically integrated business model from
farming, processing and lastly sustainable use of bi-products,"
says Fumio Iwabuchi, CEO of Alliance Seafoods.
Jon Olav Ødegård, CEO of Hofseth BioCare comments:
"We are extremely pleased to have Alliance
Seafoods on board as a significant shareholder. We are already
seeing that the relationship is starting to bear fruits and look
forward to closely co-operate with Alliance Seafoods in order to
further penetrate the Asian market for high quality nutrition
products."
For further information, please
contact:
Jon Olav Ødegård, CEO of Hofseth BioCare
ASA
Mob: +47 936 32 966
E-mail: joo@hofsethbiocare.no
Tor Erik Andersen, COO of Hofseth BioCare
ASA
Mob: +47 911 79 854
E-mail: tea@hofsethbiocare.no
About Hofseth BioCare
ASA:
HBC is a Norwegian biotech company that offers
high-value ingredients and finished products for humans and pets.
The company is founded on the core values of sustainability,
traceability and optimal utilization of natural resources. Through
an innovative hydrolysis technology, HBC is able to preserve the
quality of salmon oil, proteins and calcium, prepared of fresh
salmon off-cuts. HBC's objective is to contribute to the efficient
use of marine resources and deliver quality products for
ingredients and finished consumer products in the nutrition
market.
Hofseth BioCare's headquarters are located in
Ålesund, Norway with branches in Oslo, Chicago, Mumbai and Tokyo.
HBC is listed on Oslo Stock Exchange Axess list with ticker "HBC".
More information about Hofseth BioCare at www.hofsethbiocare.com
and www.facebook.com/hofsethbiocare
This information is subject
of the disclosure requirements pursuant to section 5-12 of the
Norwegian Securities Trading Act.