Ålesund, Norway-based salmon farmer and processor Hofseth International has agreed to a deal with Hofseth BioCare (HBC) that will see NOK 144 million (USD 13.8 million, EUR 12.7 million) of the latter company’s debt converted into shares with a subscription price of NOK 9.00 (USD 0.86, EUR 0.79) per B share.
The move, according to a release from HBC, will cover its debt to the salmon farmer for raw materials it has received from the company – mainly salmon heads, backbones, and skins. Hofseth International, meanwhile, will continue to supply HBC with materials for the coming years.
“Hofseth International has been our strongest supporter and this transaction endorses this view, communicating to us the confidence that they have in our business model,” Hofseth BioCare CEO Jon Olav Ødegård said in a release. “HBC has accumulated trade payables debt to the Hofseth International group over the past few years whilst its business has been growing towards profitability. Given the confidence in management and market outlook for HBC products, Hofseth International is now willing to exchange that debt into an equity investment at a significant premium to market value.”
The completion of the transaction, HBC said, is still conditional on the deal’s approval at an extraordinary general meeting on 4 January 2024.
Both Hofseth International and Hofseth BioCare were founded by Roger Hofseth. Hofseth also served as the CEO of HBC until July 2022, when he ceded control to Ødegård – formerly the company’s CFO. Hofseth International has its sites focused on greater penetration into European markets as it continues to develop its unique land-based salmon farm in an abandoned olivine mine.
“This transaction represents a milestone moment and a significant capital restructuring for HBC by significantly reducing our liabilities and boosting the equity ratio and thereby meaningfully strengthening our balance sheet,” Ødegård said. “This will hopefully increase confidence in stakeholders across our business.”
Photo courtesy of Hofseth BioCare
