Hofseth BioCare launching € 17m private placement

Loss-making biotech company chasing new equity.

Hofseth BioCare, a leading Norwegian producer of healthy and high-value nutritious products from fish offcuts, will expand its current capacity at the Midsund Process Facility in order to optimize its current production process and to meet the increase in demand for its products. Accordingly, HBC will continue renting out available capacity at one of its current production facilities at Berkåk, and rather invest approximtaley € 4.2 million in two plant extensions at Midsund in the second half of 2018.

According to the company, the expected payback on the investment in the Midsund plant is estimated to less than three years, and the first extension is expected to be in operation during summer 2018 and the second in the third quarter of 2019.

After heavy losses the last years, the target is “Consolidating operations to reduce costs and to enhance product quality”. To the benefit their customers, which are mainly in the B2B human-grade and pet-food segment, the consolidation of activities should result in an enhanced product quality, due to inter alia, significantly reduced time from raw material processing to finished product.

In connection with the capacity expansion, HBC has engaged SpareBank 1 Markets as manager to carry out a private placement of new shares in the company raising gross proceeds of minimum € 12.6 million and a maximum of € 14.7 million.

The subscription price in the private placement is set at NOK 2.25 per share, based on negotiations between the company and investors who have pre-committed to subscribe for shares in the private placement. Certain existing shareholders have already committed to subscribe for the minimum subscription amount of NOK 120.4 million (including through conversion of debt in the amount of approximately NOK 65.8 million).

The following shareholders have entered into pre-commitment agreements with the company to subscribe for shares in the private placement for a total of NOK 120.4 million: Alliance Seafoods Inc. (17.1), Bonafide (25.0), Hofseth Aalesund AS (10.9), Hofseth AS (24.7), Hofseth International AS (1.3), Hofseth Logistics AS (2.2), Chairman Ola Holen (0.5), CEO Roger Hofseth through Roger Hofseth AS (23.0), Hofseth North America partner Matt Mixter through Norinvest, LLC. (1.2), Seafood Farmers of Norway AS (13.7), and other investors (0.7).

The application period for the private placement is starting on 19 June and to close on 22 June.

The company will also make a contemplated NOK 20 million (€ 2.1 million) repair issue with non-tradable subscription rights for eligible shareholders.