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Private placement of NOK
23.6 million
The board of directors (the
"Board") of Hofseth BioCare ASA ("HBC" or the "Company") has today
completed a private placement of NOK 23.6 million towards certain
existing shareholders and external investors through issuance of
11,800,000 new shares at a subscription price of NOK 2 per share
(the "Private Placement"). The Private Placement has been resolved
based on the Board's authorization to raise the share capital given
on 26 May 2015.
The Company is very pleased
that it is able to complete the Private Placement at a subscription
price which represents a premium of 22.7% to the closing price of
the Company's shares as of today. The Company has raised
approximately NOK 12.9 million in cash and approximately NOK 10.7
million through conversion of debt. The new shares issued in the
Private Placement will be initially issued on a separate ISIN
awaiting approval of a prospectus to list the new shares.
The Private Placement will
strengthen the Company's ability to leverage the ongoing expansion
at the Midsund facility. The investment is expected to increase
yields and volumes of the protein fractions, improve taste and
smell of the protein supplement ProGo® and substantially lower the
cost of producing all four product fractions. Production ramp-up is
planned to start in June 2016 and HBC will then be able to produce
the new version of the ProGo® peptides for humans with a higher
protein concentration, and significantly less smell and odor.
The Private Placement
deviated from the rules on equal treatment and existing
shareholders preferential right as set out in the Securities
Trading Act section 5-14 and the Public Limited Liability Companies
Act sections 10-4 as the subscription offer was not be directed
towards all existing shareholders.
The Board considers that the
capital raised through the Private Placement is raised at favorable
terms as the subscription price is higher than the current market
price of the Company's shares. The Board has considered other
sources of financing, but have not deemed such sources as suitable
or more preferable than raising of equity through the Private
Placement.
The Board has further
decided to propose a subsequent offering to limit the dilutive
effect of the Private Placement. Such subsequent offering will be
subject to approval by the general meeting of the Company.
On this background, the
Board 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.
Turnaround project
ongoing
HBC is currently expanding
the Midsund hydrolysis facility to ramp up production from June.
The rationale for this project is to significantly lower production
cost on all products and be able to produce and pack PHP and
Calcium in full scale.
Significant lower CoGS will
make HBC able to do high volume sales to feed and pet commodity
market for improved revenues and cash flow from the third and
fourth quarter. Sales into the feed market have already been
executed, which in turn will reduce storage and logistics
costs.
The project also looks for
further changes and add-ons in the sales organization and
management team for stronger sales power and focus on revenues. As
part of the ramp-up plan, HBC will sell out a large amount of
current inventory at low prices to be in position to produce at
order-based deliveries in all three market segments; Human, Pet and
Feed. This will impact the first and second quarter results of
2016, but result in improved revenues and cash flow by the end of
the year.
HBC's product development is
world leading within its field. The investments in the production
process represent a step change in the company's ability to
commercialize its product portfolio and meet the strong demand for
high-quality biomarine ingredients.
Meanwhile, HBC has completed
a new study on ProGo® together with the Norwegian School of Sport
Sciences. The study shows that ProGo® from HBC is significantly
faster to achieve maximum blood concentration of the essential
amino acid Leucine, than whey protein. This is exciting findings
and important for athletes. The full study will be published later
in 2016 and the Norwegian School of Sport Sciences will do further
studies to prove ProGo® and OmeGo® clinical effects.
Annual report
At the same meeting today,
the Board approved the annual report. HBC had an operating loss
(EBIT) of NOK 93.3 million in 2015, compared to a preliminary loss
of NOK 69.7 million stated in the unaudited report for the fourth
quarter. The loss before taxes was NOK 100.2 million, compared to a
preliminary loss of NOK 76.6 million. The changes are primarily
caused by write-down of inventory to future potential sales at low
prices as part of the turnaround project and precaution write-down
on late trade receivables.
Detailed figures are in the
attached annual report in English and Norwegian.
For more information, please
contact:
Jon Olav Ødegård, CEO Hofseth BioCare ASA
Mobile: +47 936 32 966
Email: joo@hofsethbiocare.no
About Hofseth BioCare
ASA:
HBC 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, HBC is able to preserve the quality of
salmon oil, proteins and calcium, prepared of fresh salmon
off-cuts. HBC's 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.