Grieg Seafood ASA (OSE: GSF) has signed Share Purchase Agreements (SPA) for the acquisition of Grieg Newfoundland AS inNewfoundland, Canada .- The
Newfoundland project includes exclusivity for salmon farming inPlacentia Bay , which has a farmable area bigger than theFaroe Islands . - The project currently comprises licenses for 11 sea sites. 3 licenses are approved, 3 are expected to be approved in 2020 and the rest are in different stages of application. The project also includes a high-end Recirculating Aquaculture System (RAS) facility under construction.
- The project has a long-term annual harvest potential of 30 000 - 45 000 tonnes
Atlantic salmon.
Growth will be achieved through post-smolt investments, M&A activity and organic growth. Value chain repositioning will be achieved through increased presence in the market with partnerships, category development and brand cultivation. The acquisition of Grieg Newfoundland AS strongly underpins the 2025 strategy. The first harvest will be in 2022/23, and the region is expected to contribute 15 000 tonnes annual harvest by 2025.
Commenting on the acquisition,
“For the past few years, we have focused on utilizing our existing licenses with success. This year, we will reach our target of 100 000 tonnes. Now we are ready for the next step on our growth journey. By developing salmon farming operations in
The US market is the world’s largest and fastest growing market for
A brief history of the
- The
Newfoundland project was initiated by Grieg Kapital AS and PerGrieg Jr . in collaboration with their local partnerOcean Choice International Ltd. in 2014. Grieg Kapital AS is owned by the majority owner ofGrieg Seafood ASA , theGrieg Group . PerGrieg Jr . is Chairman of the Board ofGrieg Seafood ASA . - In 2015, a memorandum of understanding (MOU) to produce
Atlantic salmon on seawater grow-out sites across four areas ofPlacentia Bay was signed with the Province ofNewfoundland . 11 licenses for sites are currently approved or in different stages of application. - The
Newfoundland project received Environmental Impact Study (EIS) approval inAugust 2018 forPlacentia Bay . - The
Newfoundland project also comprises a high-end Recirculating Aquaculture System (RAS) facility. Construction of the onshore smolt-facility commenced inApril 2019 .
Specific conditions of the
- The
Newfoundland project includes long-term exclusive farming rights to thePlacentia Bay area. - The marine sites are in an area with favourable biological conditions for salmon farming.
- Temperature profile is similar to the Grieg Seafood’s Norwegian operations. Fluctuating temperatures in the water can occur in
Newfoundland , with low temperatures in the winters and a recent incident of high summer temperatures in another part of the island. - The area is highly isolated from other salmon farmers in the region. Long distances and low interconnectivity between sites lower risk of biological contamination between sites.
- Licenses require sterile salmon.
Equipment plan for the
- The sites are exposed to high seas and all sites will be equipped with state-of-the-art technology and systems for harsh environments.
- 40-meter-deep pens and underwater feeding will reduce risk related to super-chilled or potential warm water.
- Grieg Seafood’s post-smolt strategy will be implemented in the region, increasing robustness of the fish at all stages in the sea and reducing time in the sea to potentially comprise only one winter.
- The fresh water RAS facility is planned to include a hatchery, a smolt facility and three post-smolt modules with potential annual capacity of 7 000 tonnes upon completion.
A stepwise approach to ensure risk management
The
Production plan for the
- The first phase has an annual harvest volume target of 15 000 tonnes to be reached by 2025. First harvest in 2022/2023.
- The second phase has an annual harvest volume target of up to 33 000 tonnes.
- The long-term harvest potential in
Placentia Bay of 45 000 tonnes will depend upon prudent risk management, approvals according to EIS plan and sustainable and profitable production. - On harvesting and processing,
Grieg Seafood will collaborate with their local partnerOcean Choice International Ltd.
“Grieg Seafood has close to 30 years of experience with fresh water, post-smolt and sea water production of
Also commenting on the transaction,
“Over the last few years, we have been able to make significant progress in the planning and development of this project and in 2019 we started construction of an advanced RAS facility at
Transaction details
- Grieg Newfoundland AS is owned by Grieg Kapital AS (39%), Kvasshøgdi AS (39%),
Ocean Choice International Ltd. (OCI) (19.5%) and Knut Skeidsvoll (2.5%). - Agreement to acquire 99% of the shares of Grieg Newfoundland AS and
Grieg Seafood ASA has an option agreement to acquire the remaining 1% of the shares, which is retained by OCI. - Settlement for phase one of the production plan includes an up-front payment of
NOK 620.5 million .NOK 264 million of this amount is for the work thatGrieg NL has done in the project so far, including licenses with harvest capacity of 15 000 tonnes (NOK 17.6 per kilo). The remaining amount is related to investments already made in the project by Grieg Newfoundland AS. - When phase two is initiated, a further potential settlement of up to
NOK 930 million is triggered by harvest volume milestones to be reached during the first 10 years of operation following the transaction. - The first milestone payment will be made when the company reaches planned annual harvest volume of more than 15 000 tonnes and the last at annual harvest volume of 33 000 tonnes.
- Milestone payments will amount to
NOK 43 per kg from 15 000-20 000 tonnes andNOK 55 per kg from 20 000-33 000 tonnes. NOK 250 million of the up-front payment will be settled through issuance of newGrieg Seafood shares to the sellers of Grieg Newfoundland. The subscription price for the consideration shares will equal the volume weighted average closing price of the shares inGrieg Seafood over the three days prior to signing. The rest of the transaction will be financed through increased debt facilities.- The transaction is conditioned upon approval from Extraordinary General Meeting.
Fairness opinion
Conference call:
A conference call and audiocast followed by Q&A will be hosted by CEO
The presentation is attached to this notice and available on https://www.griegseafood.no/inverstors/investor/.
The audiocast with supporting slides will be available on https://grieg.eventcdn.net/202002/
Dial in details for the conference call and Q&A:
CA: +18447479615
DE: +4969222220377
DK: +4582333194
FI: +358981710523
IE: +35312232016
NO: +4723500236
SE: +46850558359
US: +18446251570
Please note that it will only be possible to ask questions over the conference call.
For more information, contact:
Investors
+ 47 90 77 14 41
andreas.kvame@griegseafood.com
+ 47 90 84 52 52
atle.harald.sandtorv@griegseafood.com
Media
+47 48 18 55 05
kristina.furnes@griegseafood.com
About
Our farming facilities are in Finnmark and Rogaland in
To learn more, please visit www.griegseafood.com
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
Attachment
- Presentation
© OMX, source