Norcod secures the minimums of its next private placement

An unknown "high-quality long-term industrial investor" has joined the current largest shareholders, and together, they cover NOK 124.9 million of the target amount, which ranges between NOK 100 and 150 million.
The strong long-term market outlook for farmed cod is encouraging investors who, ahead of the launch, have already secured the minimums of Norcod's next private placement.

The strong long-term market outlook for farmed cod is encouraging investors who, ahead of the launch, have already secured the minimums of Norcod's next private placement.

Photo: Norcod.

During its Q4 2023 results presentation just a few days ago, Norcod said it had identified "an equity need to cover the company’s working capital need" in order to continue with its expansion plans and announced the upcoming launch during Q1 2024 of a private placement of new shares to raise funds of NOK 100-150 million (EUR 8-13 million - USD 9-14 million) at a price per share of NOK 12 (EUR 1.05 - USD 1.14). Today, the company announced that it has already secured NOK 124.9 million (EUR 10.9 million - USD 11.8 million) of the target amount even before the launch.

A new high-quality long-term industrial investor

All Norwegian cod producers agree on one thing: demand is increasing. In the particular case of Norcod, its vision towards new markets such as the United States, Japan, or China - where it recently won a lucrative export deal with a local distributor - means that its need for biomass has increased and, with it, also its need for working capital due to the expected high operating and financial costs.

Thus, in the Q4 2023 report, the company had already identified this need for equity to cover its working capital needs and announced it would be financed with a private placement of NOK 100-150 million (EUR 8-13 million - USD 9-14 million) to take place in the first quarter of 2024 in which the largest shareholders intended to subscribe shares.

As expected, these main shareholders - representing in total 56.07% of the company's shares - have complied as planned and undertaken to pre-subscribe a total of NOK 72.5 million (EUR 6.34 million - USD 6.89 million) at the offer price of NOK 12 (EUR 1.05 - USD 1.14).

However, today, we have learned they have been joined by "a new high-quality long-term industrial investor" who has confirmed it will participate in the private placement with a total of NOK 52.4 million (EUR 4.58 million - USD 4.98 million). According to the announcement sent to the Oslo Stock Exchange, the final confirmation of this participation is subject to the allocation of the full subscription amount and the approval by the extraordinary general meeting of the nomination of a representative to Norcod’s Board of Directors.

Based on the pre-commitments and confirmations of interest to subscribe received, both amounts added together, Norcod already has a total of NOK 124.9 million (EUR 10.9 million - USD 11.8 million) before the launch of the private placement, securing the minimums foreseen by the cod farmer for its future growth.

Solid long-term market prospects for cod

In its latest report, Norcod reported a 61% increase in revenue during Q4 2023 and a 58% increase in earnings for the full year. It also said that during 2023, the company accounted for approximately 71% of the total Norwegian export volume of farmed cod. Its main markets were Central and Western Europe, and, as mentioned above, it now expects to strengthen its position in markets such as the United States, Japan, and China, with great potential in terms of both volume and price.

Norcod's harvest increased by 60% in 2023, with a 90% increase during the last three months at the Jamnungen and Forså sites. It is true that there was also a rise in production costs due to price increases for feed, labor, raw materials, etc., but the company is confident of covering them with the increase in working capital it will get after this private placement.

The cod producer highlights that its customers value not only the high quality of the product but also the stability in terms of price and supply. Moreover, in a longer-term perspective, in addition to these advantages of farmed cod, significant quota reductions in Barents Sea cod planned from 2024 onwards will bring bottlenecks in the supply of Atlantic cod.

This imbalance between supply and demand will surely lead to higher cod prices, so the long-term market outlook for this species looks strong, and the Norwegian cod farmer is prepared for that moment. "Norcod has reached a point where it can supply cod year-round, clearly differentiating it from wild-caught cod, which is only available seasonally," the company stated in its last report.

"Our vision is clear, and we are standing firm on it. Farmed cod is a sustainable and viable alternative for the customers securing year-round supply and helping reduce the pressure on the wild stocks positioning farmed cod as a reliable and sustainable future protein source. The world is looking for pure and sustainable sources of food to serve increased human demand. The Norcod product clearly demonstrates its market potential and naturally fits in," it continued. Following today's announcement, it seems there is a new player in the market who agrees with Norcod's analysis and is willing to support it with its investment.

About Norcod

The core business of Norcod AS is commercial cod farming nevertheless, it is involved in the entire value chain through ownership and partnerships. Its fish farms are located in central Norway, with ideal conditions for cod performance. The company contributes to value creation in the blue ocean with minimal impact on the environment, while supporting local communities. Norcod is listed on the Euronext Growth market in Oslo.

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