Proximar Seafood shareholders have approved a resolution to issue a convertible bond worth between NOK 150 million and NOK 250 million (USD 14.2 million and USD 23.8 million, EUR 14.4 million and EUR 24.1 million).
The funds will enable the company to begin its production phase and partly secure its further funding needs for its planned recirculating aquaculture system (RAS) facility near Japan's Mount Fuji, according to Proximar. Proximar’s three largest shareholders, the Grieg family, the Nielsen family, and Daimyo Invest – representing approximately 36.5 percent of the shares – supported the measure.
The Bergen, Norway-based company is building its land-based RAS in Oyama Town, Sunto District, Shizuoka Prefecture, Japan, with a planned annual production capacity of 5,300 metric tons head-on, gutted weight of Atlantic salmon. The location is within easy trucking distance of Tokyo and other major Japanese cities.
Currently, most fresh Atlantic salmon sold in Japan is airfreighted from Norway at high cost, which the company said will give its salmon a competitive edge. Proximar has already signed a sales and distribution agreement with Marubeni, which will cover the farm's entire production volume for 10 years.
Proximar plans to use an RAS designed and tested by AquaMaof, and site preparation for the facility began in 2021, followed by simultaneous work on the hatchery and grow-out facilities. The hatchery is now completed, and the company said it expects the grow-out facility to be finished in the third quarter of 2023.
Proximar's first egg inlays are planned for October 2022. These will hatch in 10 months, after which the resulting smolt will grow to harvest weight in 12 months, with the first harvest planned for mid-2024.
Approximately 95 percent of the construction and equipment costs are based on fixed-price contracts, diminishing the effect of recent inflation, and construction is progressing on time and on budget. However, recent movements in exchange rates have increased the projected total capital expenditures by approximately NOK 15 million (USD 1.42 million, EUR 1.44 million), while the total project expenditure estimate until first harvest has increased by an additional NOK 55 million (USD 5.2 million, EUR 5.3 million) to approximately NOK 1.425 billion (USD 135 million, EUR 137 million) due to increased cost of feed, electricity, and financing, as well as currency effects. The company has invested NOK 690 million (USD 65 million, EUR 66 million) to date, with some of that money coming from a successful private placement in 2021 that raised gross proceeds of NOK 400 million (USD 38 million, EUR 38.6 million).
To meet its near-term liquidity requirements, in addition to issuing the convertible bonds, the company will increase and its debt facility with JA Mitsui Leasing (JAML) by approximately NOK 50 million (USD 4.7 million, EUR 4.8 million), with Grieg Kapital as the main guarantor for the loan, and extend its repayment period.
The company expects to raise the remaining NOK 435 million (USD 41.3 million, EUR 41.9 million) in capital needed to complete the project's first stage and take the company to first harvest through a combination of long-term debt with Japanese banks and a minor equity raise closer to project completion, it said.
Photo courtesy of Proximar
