Atlantic Sapphire CEO Pedro Courard.
Photo: ASC / Atlantic Sapphire.
Land-based Florida salmon farming company Atlantic Sapphire has moved a step closer to delisting from the stock exchange, after a group of major investors transferred their shares into a holding company which will now control 63.58% of the company’s shares and votes.
The Miami, Florida-based company said Coral HoldCo now holds 22,799,132 shares in Atlantic Sapphire following the transfer, which was completed on 26 June.
Coral HoldCo is a joint investment company set up by existing Atlantic Sapphire investors Condire Management L.P., Nordlaks Holding AS, Nokomis Capital Master Fund L.P., Strawberry Capital AS and Joh. Johannson Eiendom AS. The group includes some of Atlantic Sapphire’s largest shareholders and convertible loan holders.
The transfer is part of a broader restructuring plan announced in May, which aims to stabilise Atlantic Sapphire’s finances and take the company off the stock exchange.
Because Coral HoldCo now controls more than 63% of Atlantic Sapphire, it is expected to make an offer for the remaining shares in the company. Atlantic Sapphire said this mandatory offer will replace the voluntary offer that had previously been planned, but will be made on the same terms, including a price of NOK 0.80 per share.
Atlantic Sapphire’s board of directors has maintained its recommendation of the offer, but this remains subject to approval by the Norwegian Financial Supervisory Authority.
Atlantic Sapphire has also agreed to double the size of its previously issued $10 million bridge loan, after having previously warned that it would need more funding to stay afloat during its restructuring.
The company said the additional bridge loan has been agreed with four members of its investor group to improve liquidity while the wider restructuring is carried out.
Atlantic Sapphire announced in May that it had signed a restructuring agreement with Condire Management, Nordlaks Holding, Nokomis Capital, Strawberry Capital and Joh. Johannson Eiendom. At the time, the company said the deal was expected to provide at least $20 million in new liquidity, reduce debt through a partial write-down of its convertible loan, and convert the remaining loan amount into new shares for participating lenders.
The restructuring plan also includes a private placement of up to approximately $16 million at NOK 0.10 per share. The first $10 million tranche was fully underwritten by the investor group, while smaller tranches may be offered to certain former loan holders and shareholders, the company said.
Atlantic Sapphire has repeatedly warned this year that it needed additional capital. In February, the company said it required between $15 and 25 million, later increasing that estimate to $25-30 million in March. The company secured a $10m bridge loan the same month, after warning that it risked breaching its loan agreements if it failed to secure new funding.
In May, announcing the planned delisting, Atlantic Sapphire further warned that the restructuring would not fully cover its estimated funding needs for the next 12 months or fully restore its equity and liquidity to adequate levels. However, the company’s board said entering into the agreement was “right and prudent”, adding that no alternative financing solution had been available.
The urgency for refinancing came despite reported improvements in operations. The company said that despite operational gains, its cash flow remained under pressure, partly due to the timing of these improvements and ongoing costs.
Without the transaction, the board said Atlantic Sapphire would likely have faced a “highly uncertain situation” for employees, limited recovery for creditors, and a total loss of value for shareholders.