Increased financing risk after Atlantic Sapphire’s new operating problems

Aslak Berge

It goes from bad to worse.

Atlantic Sapphire’s share price has fallen 44.6 per cent to NOK 7.13, after the company announced on Monday morning about increased mortality and forced harvest of fish with an average weight of a modest two kilos.

Harvesting small fish means low price achievement and high operating costs per kilo. This usually also means a deficit.

Read also: Unusually high fish deaths lead to emergency harvest at Atlantic Sapphire

Source: Infront

Half built
“The company has never made money, and you don’t know if they will,” analyst Christian Nordby at investment bank Kepler Cheuvreux told E24.

He pointed out that the company must break even in order to get a bank loan from DNB. The loan will finance the second construction phase at the large fish farm facility, which is an hour’s drive from Miami.

“If they can’t do that, you are left with a half-built phase two and a lack of equity,” Nordby said.

He said Atlantic Sapphire will get $130 million in bank loans, mainly from DNB, to complete the development of phase 2 of the Florida facility, a development that is well underway.

Christian Nordby in Kepler Cheuvreux. Photo: Kepler Cheuvreux

“If it does not get the loans, it will be impossible for the company to complete the development of phase 2 without fresh money. With increased mortality, the hope of getting a bank loan is reduced,” Nordby told DN .

If the banks say no to lending the company money, the next option is to raise more equity via the stock exchange.

“The question is whether it manages to raise money, and at what price. It remains to be seen,” Pareto analyst Carl-Emil Kjølås Johannessen told DN.

Scorching losses
At the end of June, the land-based fish farming company raised NOK 1.2 billion (€120 million) in new equity, at a rate of NOK 20.50. Now the shareholders who participated in the issue, including Nordlaks and Petter Stordalen, are left with a total of NOK 460 million (€46 million) in share values.

Atlantic Sapphire’s total equity is now valued at just under NOK 1.1 billion (€110 million) on the Oslo Stock Exchange.

Photo: AS

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