Salmon Evolution halts share offering after stock price drops

More og Romsdal, Norway-based Salmon Evolution ASA has canceled its latest share offering after seeing its share price drop below the offer price.

Earlier this year, Salmon Evolution, which is currently building its first hybrid flow-through system farm at Indre Harøy on the Norwegian west coast, successfully completed a NOK 500 million (USD 59.3 million, EUR 49.6 million) private placement at NOK 6.00 (USD 0.71, EUR 0.59) per share. It subsequently planned a further offering of up to 8,333,333 new shares in the company, also at NOK 6.00 per share, which would have raised another NOK 50 million (USD 5.9 million, EUR 5 million).

However, in a stock exchange notice, it advised that following its board of directors’ conditional resolution to carry out a subsequent offering, its share price “for an extended period and with substantial volume” traded below the subscription price. The share prices of numerous land-based salmon farming start-ups have struggled since last week, when Atlantic Sapphire, the operator of a recirculating aquaculture system (RAS) salmon farm in Miami, Florida, U.S.A., reported underwhelming results in its 2020 annual financial report and its Q1 2021.

“Existing shareholders wanting to avoid or reduce the dilutive effect of the private placement have had the opportunity to purchase shares in the open market at prices below the subscription price in the private placement and the contemplated subsequent offering,” the notice stated. “The company has therefore resolved to cancel the subsequent offering.”

Earlier this month, Salmon Evolution entered into a committed term sheet with banks Nordea and Sparebanken Vest for a senior secured debt financing package of up to NOK 625 million (USD 74.1 million, EUR 62 million) relating to the phase-one build-out of its first production facility at Indre Harøy. The financing package comprises a NOK 525 million (USD 62.2 million, EUR 52 million) senior secured credit facility to be used to finance the first phase of construction of the Indre Harøy farm, and a NOK 100 million (USD 11.9 million, EUR 9.9 million) senior secured overdraft facility which will be used for working capital purposes, the financing of biomass, and receivables.

On completion, the Indre Harøy farm is expected to have an annual production capacity of approximately 31,500 metric tons (MT) head-on-gutted weight salmon.

Last month, Salmon Evolution also entered into a joint-venture agreement with its minority owner, Dongwon Industries, for the development, construction, and operation of a land-based salmon farming facility in South Korea with an annual production capacity of 16,800 MT.

Photo courtesy of Salmon Evolution