Aerial view of Atlantic Sapphire facilities in Miami, Florida.
Photo: Atlantic Sapphire.
Land-based Florida salmon farming company Atlantic Sapphire has announced it has received an offer for a bridge loan of up to $10 million (€9.2 million), giving it access to short-term funding while it negotiates a wider refinancing.
The loan offer, made public today (27 March), follows Atlantic Sapphire's warning earlier this week that the company was in risk of breaching its loan agreements if it failed to secure new funding by the end of the month.
The proposed bridge loan has been put forward by a group of existing shareholders and lenders, who together control a large share of the company’s equity and debt. If agreed, the loan would be paid in two parts and carry relatively high costs, including 12% annual interest and a 15% fee. The first portion could be released around 30 March, subject to conditions including consent from the main lender, DNB Bank, and the loan would run until mid-May, unless a longer-term deal is reached, the company said.
Alongside this, Atlantic Sapphire said it is working on a broader plan to restructure its finances, including raising new money and converting some existing debt into shares in the company.
As part of this plan, the company said its investors are considering offering to buy shares from existing shareholders at NOK 0.5 (€0.04) per share, followed by a new share issue at NOK 0.1 (€0.009) per share to raise additional funds. If the refinancing goes ahead, the bridge loan would also be converted into shares at the same price. Some lenders have also indicated they would write off part of what they are owed and convert the rest into shares.
However, the company warned, these steps "would result in significant changes to the Company’s capital structure, substantial dilution and could lead to a compulsory acquisition of existing shareholders."
According to the company’s advisers, Atlantic Sapphire’s overall business is currently valued at between $25 million and $75 million (€23 million to €69 million), while its total debt exceeds $114 million (€105 million).
The need for refinancing comes despite reported improvements in operations, including higher production, better fish quality and stronger prices. However, the company has said cash flow remains under pressure, partly due to the timing of these improvements and ongoing costs.
Earlier this week, Atlantic Sapphire said it required between $25 million and $30 million to maintain sufficient liquidity, an increase from earlier estimates.
The company says it has appointed Arctic Securities to help it secure a longer-term solution, and is continuing discussions with investors.