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The Norwegian company Salmon Evolution has signed a binding loan agreement with DNB and Nordea for a new green debt financing package totaling NOK 1,550 million that will be used to finance phases 1 and 2 of Indre Harøy.

The new debt financing package is the result of a thorough process that has attracted strong interest from several major banks and investors, such as DNB and Nordea, following Salmon Evolution’s solid operational development over the past year.

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Furthermore, it has several positive effects, such as a significantly lower margin and financial flexibility to finance the initial capital expenditures of phase 2 at Indre Harøy.

There is evidence of successful growth in the company. This time last year the Norwegian company announced that it completed the first smolt release at its pioneering land-based salmon farming facility. Some 100,000 smolts were released that day, with an average weight of about 300 grams.

Therefore, about a month ago the company commented regarding Q2 that meetings regarding funding were on track. “The feedback from banks has been very positive and the company expects both significantly higher leverage for phase 2 compared to phase 1 as well as improved overall terms and cost”, the company stated.

Photo: Salmon Evolution.
Salmon box. Photo: Salmon Evolution.

Full details of the financing package

The agreement explains that all facilities have a term of 3 years with extension options of 2×1 years. Additionally, the debt funding program allows the existing overdraft margin to be increased. In other words, if the business did not have enough money to cover a transaction, the bank would pay for it. This margin has increased from NOK 100 million to NOK 300 million.

Regarding Indre Harøy phase 2, the capital expenditure is currently estimated at NOK 1,600 – 1,700 million with the new RCF Facility and Construction Facility representing total funding of NOK 1,025 million. This would represent incremental borrowing worth about 60-65%. Thus, the remaining capital requirements are planned and financed from available cash, operating cash flow, capital, or other sources.

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Finally, the Company clarified in the press release that it has not made any major investment decision or finalized any definitive construction agreements for Indre Harøy Phase 2. It also explained that it retains “complete flexibility in terms of timing and expenditure. In addition, faced with a possible investment decision, the Company currently expects moderate investments during the first 6 to 9 months of the project.”

The RCF line will be fully available at the time of closure, which is expected in April 2023. This means that the company will have significant flexibility to finance the initial capital expenditure of phase 2. Therefore, the use of the Construction Facility is fully funded as approved by the Lenders on customary terms.

About Salmon Evolution

Salmon Evolution is land-based in Indre Harøy (Norway). This salmon farming company targeting a production capacity of 100,000 tonnes HOG by 2032. The Company’s core focus is on extending the ocean’s potential by transferring the best preconditions offered by the sea to farm fish on land through its chosen hybrid flow-through system technology (HFS). This secures a truly sustainable production process with controlled and optimal growth conditions and limits operational and biological risk.

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