NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, TO THE U.S NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL.
Hofseth BioCare ASA ("HBC" or the "Company") hereby announces that the Company's board of directors has proposed that the general meeting resolves to issue a convertible loan with a nominal value of minimum 80 million and maximum NOK 160.5 million at a subscription price of 74.73% (the "Convertible Bond Issue" or the "Bond Loan") and a private placement of minimum NOK 30 million and maximum NOK 60 million (the "Private Placement") at subscription price NOK 3.
As further described below, the Company has already received binding pre-commitments exceeding the minimum subscriptions in both the Convertible Bond Issue and the Private Placement.
Both the Convertible Bond Issue and the Private Placement are open for further subscriptions in the period towards the Company's annual general meeting to be held on 25 May 2015. If the Convertible Bond Issue is fully subscribed, the Company will issue a convertible loan with nominal value of NOK 160.5 million with proceeds from the subscription of approximately 120 million. If the Private Placement is fully subscribed, the Company will raise additional NOK 60 million in gross proceeds.
The Company decided to raise additional capital to further develop and commercialize the Company's products after several successful test productions in cooperation with existing and new customers. The further commercialization of the Company's product portfolio is a key factor for securing the Company's success and attractive returns on the shareholders' investments. The Convertible Bond Issue and the Private Placement will secure the Company's financing needs for further product development, an enhanced and broader sales force, and the upcoming global launch of the products' unique marine ingredients and the Company' new finished product lines. In addition, the proceeds from the Convertible Bond Issue and the Private Placement will be used for other general corporate purposes of the HBC group and repayment of debt.
Further information on the Convertible Bond Issue and the Private Placement follows below:
The Convertible Bond Issue
The Convertible Bond Issue is offered to certain Norwegian and international investors and consists of up to 321 bonds, each with a nominal par value of NOK 500,000. The Company has already received binding pre-commitments to subscribe bonds for a nominal amount of equal to NOK 80.5 million from the Swiss company Bonafide Ltd., on behalf of the fund Deep Blue Ventures Holdings, and from the Company's main shareholder Roger Hofseth, on behalf of Hofseth International AS.
Further, the Company has received binding pre-commitments from shareholders holding more than 2/3 of the Company's shares to vote for the Convertible Bond Issue on the Company's annual general meeting to be held on 25 May 2015.
The Company will not pay interest during the 5 year loan period and will also be exempt from paying instalments. The final maturity date for the Bond Loan will be five years after issuance.
The subscription price of the bonds is 74.73 % of the par value of the bonds which means that the implicit interest on the Bond Loan corresponds to 6 % interest (based on conversion after 5 years).
The subscribers will be entitled to convert the loan and accrued implicit interest to shares in the Company instead of demanding repayment. The conversion right may be exercised at a price of NOK 3.25 per share and may be exercised at any time in the period starting 180 banking days prior to the Final Maturity Date until 5 banking days prior to the Final Maturity Date. The bonds will not be listed.
The completion of the Convertible Bond Issue is conditional upon the following conditions being satisfied:
- All necessary corporate resolutions being validly made, including without limitation approval by the Company's annual general meeting, to be held on 25 May 2015; and
- Payment being received for the bonds issued in the Convertible Bond Issue
The Company's board of directors reserves the right, in its sole discretion, to cancel the Convertible Bond Issue at any time.
The Private Placement
The Private Placement is directed towards certain of the Company's existing shareholders and certain other external investors and will be completed through issuance of minimum 10,000,000 and maximum 20,000,000 new shares, each with a par value of NOK 1. The subscription price in the Private Placement will be NOK 3 per share.
Certain of the Company's existing shareholders including main shareholder Roger Hofseth, Chairman of the Board Kjetil Olsen, CEO Jon Olav Ødegård and CSO Dr. Bomi Framroze and certain other institutional and private investors have committed to subscribe for minimum NOK 31.6 million in the Private Placement.
Further, the Company has received binding pre-commitments from shareholders holding more than 2/3 of the Company's shares to vote for the Private Placement on the Company's annual general meeting to be held on 25 May 2015.
The completion of the Private Placement will be conditional upon the following conditions being satisfied:
- All necessary corporate resolutions being validly made, including without limitation approval by the Company's annual general meeting, to be held on 25 May 2015; and
- Payment being received for the bonds issued in the Convertible Bond Issue
The new shares to be issued through the Private Placement will not be tradable until a listing prospectus has been approved by the Financial Supervisory Authority of Norway.
The Board reserves the right, in its sole discretion, to cancel the Private Placement at any time.
Regarding equal treatment of existing shareholders
The Convertible Bond Issue and the Private Placement will deviate from the rules on equal treatment and existing shareholders preferential right as set out in the Norwegian Securities Trading Act section 5-14 and the Norwegian Public Limited Liability Companies Act sections 10-4 and 11-4 as the subscription offer will not be directed towards all existing shareholders.
As mentioned above, the Company's decision to raise additional capital to further develop and commercialize the Company's products and the commercialization of the products is a key factor for the Company securing a successful development and attractive returns on the shareholders' investments. The purpose of the Convertible Bond Issue and the Private Placement is thus in the best interest of both the Company and its shareholders.
The board of directors considers that the capital raised through the Convertible Bond Issue and the Private Placement is raised at favorable terms and will secure further development and commercialization of the Company's products.
To limit the dilutive effect, the board of directors will, following completion of the Private Placement, offer shareholders that did not subscribe for new shares in the Private Placement or for bonds in the Convertible Bond Issue to subscribe new shares in a repair offering. To complete the repair offering, the board of directors will use its current authorization to increase the share capital. Further information on the repair offering will be given at a later time.
On this background, the board of directors considers that the deviation from the rules on equal treatment and preferential right is fair and in the best interest of the Company and its shareholders.
As the board of directors uses its current authorization to increase the share capital to complete the repair offering, the board of directors suggests that the ordinary general meeting shall give the board of directors a new authorization to increase the share capital with up to 10% of the share capital, however, it will be suggested that the board of directors' existing authorization to increase the share capital with up to NOK 9,753,608 shall lapse after completion of this repair offering, or at the latest on 1 July 2015.
Market update
Since the last quarter, HBC has seen an enormous interest in the global market for its products. The situation can best be described as out-of-scale request for more information about and tests of the innovative products of the Company. HBC's products have reached the understanding in the market to be the next up-and-coming products, with its clean and innovative production technology at hand. HBC has on several occasions been pointed out as the trendsetter and pioneer for future human and medical nutrition.
The increased interest stretches from Australia, China, Russia, South-East Asia and to the Nordics and America. After opening an office in the US and signing up with several agents covering the largest markets in the world, the sports nutrition-, whole-foods- and high-end customers are becoming increasingly aware of the strong potential of the Company's products.
Asia in general and China and Japan especially, represent new markets for HBC with a growing interest and new orders coming in. This situation demands a more agile and adjusted sales organization in place. Although HBC is working though different direct and agent channels into these markets, it is necessary building local and strong partnerships. HBC previously anticipated presenting its partner in Japan during the first quarter, but negotiations has led to a possible much stronger and wider business partnership than first anticipated. The discussions are still ongoing and are expected to successfully close during the second or third quarter of 2015.
The successful launch of OmeGo(TM) and NattoPharma's MenaQ7 at Expo West in Anaheim this spring, has resulted in a strong interest in the new product. HBC expects to deliver the first combination product during August 2015. A new study on CalGo(TM) has resulted in orders on marine calcium, after presenting the product in USA earlier this year.
Launch of the new ProGo(TM) II in Q4 2014, has led to strong traction for the Company's salmon protein. After presenting the new product from the Company's test runs, several of the main brand owners in the world have been doing test production with the innovative product. The feedback from this testing is better than the Company expected and HBC now knows that it's possible to produce a marine protein with better properties than the current market leader, whey protein, and can promise high quality and high volume production from the Midsund and Berkåk plant. HBC is planning to ramp up production of the new ProGo(TM) II in November 2015. The production capacity on ProGo(TM) II for 2016 is most likely already sold out.
- HBC is currently in final discussions with several of the market leaders in high-end sports nutrition, sports drinks, dietary supplements, cosmetics, pharma and high-end pet nutrition. These strong markets and well-known brand owners, are being sure of the effects and claims of HBCs product portfolio and the launch of such claims takes time. HBC is determined to still be the pioneer and define the market for marine ingredients in the world, and will continue to build a strong IPR-driven strategy to secure the values for our investors in the future. The commercialization strategy launched in 2014, will continue into 2016 to build strong partnerships and agent networks in the most interesting markets for our products. The execution of our refinancing plan is important to be able to deliver the products that the market demands. Solid financing and a strong ownership from the Hofseth Group, will enable HBC also to deliver on new markets in the future, such as medical nutrition, fermented products and collagen for the cosmetics industry. HBC will continuously look for new opportunities and niches for our high-quality and unique marine ingredients, says CEO Jon Olav Ødegård in Hofseth BioCare.
For further information, please contact:
Jon Olav Ødegård, CEO Hofseth BioCare ASA
Tel +47 936 32 966
E-mail: joo@hofsethbiocare.no
Øystein Omvik, CFO Hofseth BioCare ASA
Tel: +47 936 99 400
E-mail: oo@hofsethbiocare.no
About Hofseth BioCare:
Hofseth BioCare is a Norwegian biotech company that offers high-value ingredients and finished products for humans and pets. The company is founded on the core values of sustainability, traceability and optimal utilization of natural resources. Through an innovative hydrolysis technology, Hofseth BioCare is able to preserve the quality of salmon oil, proteins and calcium, prepared of fresh salmon off-cuts. HBCs objective is to contribute to the efficient use of marine resources and deliver quality products for ingredients and finished consumer products in the nutrition market.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.