Atlantic Sapphire's new private placement completed in just one day

The company announced the issuance plans along with its Q4 2023 Operational Update at the close of trading on Thursday and reported completion the following day.
Atlantic Sapphire will use the net proceeds from the private placement to support Phase 1 to proven state and for general corporate purposes. The land-based salmon producer is currently constructing its Phase 2 expansion.

Atlantic Sapphire will use the net proceeds from the private placement to support Phase 1 to proven state and for general corporate purposes. The land-based salmon producer is currently constructing its Phase 2 expansion.

Photo: Atlantic Sapphire.

Atlantic Sapphire announced it has raised NOK 369 million, equivalent to USD 35 million (EUR 32.26), in gross proceeds through the private placement it announced on Thursday, February 29, while presenting its Q4 2023 Operational Update. In just one day, the company managed to place 307,125,000 new shares, at a price per new share of NOK 1.20 (EUR 0.10 - USD 0.11).

According to the public notice sent to the Oslo Stock Exchange by the land-based salmon producer, the net proceeds from the private placement - which was conducted through an accelerated bookbuilding process after the markets closed on Thursday - will be used "to support Phase 1 to proven state and for general corporate purposes."

Guarantee consortium to reduce uncertainty

The success of the placement was practically guaranteed since, already in the announcement of the issue, the company said that several of its main shareholders had guaranteed their participation. Nordlaks Holding - owner of 12.32% of the company - would participate in the guarantee consortium with the NOK equivalent of USD 7.5 million (EUR 6.9 million); Strawberry Equities - owner of 8.15% - would take part with the NOK equivalent of USD 5 million (EUR 4.6 million); and Blue Future Holding, owned by EW Group - owner of 3.75% - with the NOK equivalent of USD 2.3 million (EUR 2.1 million).

In addition, Atlantic Sapphire also informed of the names of those employees and insiders who had also previously committed to subscribe for shares in the offering in this private placement. André Skarbø, member of the Board of Directors, who would subscribe 1.2 times his pro rata; and Karl Øystein Øyehaug, CFO, who will subscribe NOK 100,000 (EUR 8,739 - USD 9,474). Upon completion of the transaction, it has been confirmed that Øyehaug has received 83,333 shares.

Moreover, ASInvest, a close associate of Skarbø, has been allocated 3,878,204 shares, corresponding to a total subscription amount of approximately NOK 4.6 million (EUR 406,945 - USD 441,281); Strawberry Equities, a close associate of Chairman Kenneth Jarl Andersen, has been allocated 28,789,670 shares for a subscription amount of approximately NOK 34.5 million (EUR 3 million - USD 3.2 million); and Nordlaks Holding, a close associate of Vice Chairman Eirik Welde, has received 43,499,907 shares, corresponding to a total subscription amount of NOK 52.19 million (EUR 4.5 million - USD 4.9 million).

The accelerated process used for this private placement means that the guarantors of the transaction will obtain a guarantee of 5% of the guaranteed amount in shares of the company. Despite this, the Board of Directors of Atlantic Sapphire emphasized that it is advantageous as it allows raising equity capital "in a time- and cost-efficient manner."

"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 of Directors 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," the note sent to the stock exchange stated.

Temperature problems seem to be solved

As said above, the land-based salmon producer said the net proceeds from the private placement will be used to support Phase 1 until proven status and for general corporate purposes described in the Q4 2023 Operational Update. A few months ago, Atlantic Sapphire experienced problems at its Florida facility, and some of its batches were exposed to elevated temperatures. As a result, the company expects higher maturity levels and lower price achievement for those lots to be harvested in the coming months. According to the Operational Update, this private placement is necessary "to secure sufficient runway to prove Phase 1 operations with a liquidity buffer."

Concerning those issues, the Q4 2023 Operational Update also notes that farming temperatures in the grow-out systems have stabilized at around 14°C following delivery of the new chillers in September 2023. "All chiller systems have been performing in accordance with expectation in the past ~5 months since installation," the statement reads.

Likewise, it highlights that the batches of fish transferred to the grow-out tanks following the installation of the new chillers show strong growth with performance in line with expectations or better. It also says that overall rearing conditions are stable and support good biomass growth, and that total net biomass gain in Q4 2023 was ~1,100 t RLW, with a standing biomass of ~3,050 t RLW at the end of 2023.

Atlantic Sapphire forecasts that batches of fish affected by previous temperature problems will be harvested in the coming months, while the proportion of high-quality salmon and average price attainment is expected to increase. Also, most of the biomass increase in the coming period is expected to come from batches that have not been exposed to temperature problems.

This private placement is in addition to the one the company already subscribed to in September when it raised USD 65 million (NOK 702 million / EUR 60.8 million, at the time of its conclusion). Atlantic Sapphire is thus trying to get back on track after the year 2023 in which the land-based salmon producer based in Florida suffered a series of setbacks that even led to the resignation of its CEO, Johan Andreassen, who nevertheless remains in the position on an interim basis during the transition phase until a permanent successor is appointed.

About Atlantic Sapphire

Atlantic Sapphire ASA is a Norwegian aquaculture company. The company breeds Bluehouse® (land-raised) salmon farming locally with the aim of transforming protein production globally. In the USA, the Company operates just south of Miami, in Homestead, Florida. The company's Phase 1 facility is in operation, which provides the capacity to harvest approximately 10,000 tons (HOG) of salmon annually. It 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.

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