Hofseth Biocare ASA: SIGNIFICANT NEW INVESTMENT OF NOK 144 MILLION FROM HOFSETH INTERNATIONAL INTO HBC

13 Dec 2023 22:49 CET

The board of directors (the "Board") of Hofseth BioCare ASA ("HBC" or the
"Company") has reached an agreement with Hofseth International AS ("Hofseth
International") whereby HBC will issue a new class of preference shares ("B-
Shares") to Hofseth International for an approximate investment amount of NOK
144 million (the "Investment Value") at a subscription price of NOK 9 per B-
Share (the "Transaction").

The Investment Value will be settled by offsetting it with the equivalent amount
of trade payables owed to Hofseth International by HBC. Hofseth International's
receivables have been incurred historically in exchange for fresh raw material
of salmon heads, backbone, and skin, that the company has supplied to HBC over
the years. Hofseth International will continue to supply HBC in the coming
years.

The completion of the Transaction is conditional upon the approval of an HBC
extraordinary general meeting, to be convened on 4 January 2024 (the "EGM"),
registration of the share capital increase pertaining to the issuance of the B-
Shares in the Norwegian Registry for Business Enterprises and registration of
the B-Shares in Euronext Securities Oslo (VPS). The Company has already received
voting undertakings from shareholders representing the necessary majority
requirement to approve the Transaction and related resolutions at the EGM.

The B-Shares will not hold any voting rights and will carry a preferential right
to receive dividends over the Company's ordinary shares (listed on the Oslo
Stock Exchange under ticker code "HBC") (the "Ordinary Shares") and will receive
an annual dividend corresponding to 3-month NIBOR + 0% p.a for the first four
years. After this period, the return will be as follows:

* after five (5) years, the return will be 3-month NIBOR + 1 %,
* after seven (7) years, the return will be 3-month NIBOR + 2 %, and
* after nine (9) years, the return will be 3-month NIBOR + 3 %.

In the event HBC does not distribute preferred dividends to B-Shares in any
given year, the unpaid portion shall carry an interest of 3-month NIBOR + any
additional margin based on the periods shown above per year. Furthermore, the
unpaid dividend plus interest shall be accumulated and added to the preferred
dividend for the subsequent year (collectively the "Preferred Amount").

Following a minimum of five (5) years after the issuance of the B-Shares,
Hofseth International can request the B-Shares to be converted into Ordinary
Shares. The subscription price shall be NOK 9 per new Ordinary Share. If
conversion rights are exercised after seven (7) years, a subscription price of
NOK 12 per new Ordinary Share shall apply. Such conversion into Ordinary Shares
will technically be done through a redemption value, equivalent to the
Investment Value in addition to the Preferred Amount.

Jon Olav Ødegård, CEO of HBC, said: "This transaction represents a milestone
moment and a significant capital restructuring for HBC by significantly reducing
our liabilities and boosting the equity ratio and thereby meaningfully
strengthening our Balance Sheet. This will hopefully increase confidence in
stakeholders across our business. It is important that we take the necessary
steps in a shareholder friendly manner to position HBC for growth. Hofseth
International has been our strongest supporter and this transaction endorses
this view, communicating to us the confidence that they have in our business
model. HBC has accumulated trade payables debt to the Hofseth International
group over the past few years whilst its business has been growing towards
profitability. Given the confidence in management and market outlook for HBC
products, Hofseth International is now willing to exchange that debt into an
equity investment at a significant premium to market value. The decision reached
by our Board to approve this transaction with Hofseth International is a
testament to our unwavering commitment to financial prudence and putting
shareholder interests first. We continue to see a bright outlook for HBC, with
growing global demand for marine based nutrition for pet and human health."

For further information, please contact:
Jon Olav Ødegård, CEO at HBC
Phone: +47 936 32 966
E-mail: joo@hofsethbiocare.no

The Board has reviewed the Transaction structure considering the equal treatment
obligations rules under the Norwegian Public Limited Liability Companies Act,
the rules on equal treatment set out in the continuing obligations for companies
admitted to trading on the Oslo Stock Exchange and the pertaining guidelines on
the rules of equal treatment. It is of the opinion that the proposed Transaction
follows these requirements. In reaching this conclusion, the Board has
emphasized, among other things, that the Transaction will significantly reduce
the incurred liabilities of the Company and strengthens the Company's balance
sheet providing it with a long-term financing on attractive terms compared with
alternative options using either debt or equity. The Board has further
emphasized that the subscription price for the B-Shares has been set at NOK 9,
which is significantly higher than the closing price of the Ordinary Shares at
NOK 2.70 on the last trading day, Wednesday, 13 December 2023. Against this
background, the Board considers that the subscription price and entitlement to
preferred dividend carried by the B-Shares represents an attractive opportunity
for the Company and its current shareholders when viewed together with the
benefits entailed by the Transaction.

About Hofseth BioCare ASA:

HBC is a Norwegian consumer and pet health ingredient supplier and an incubator
for new pharmaceutical drug leads. Research is ongoing to identify the
individual elements within its ingredients that modulate inflammation and the
immune response with pre-clinical studies ongoing in multiple clinics and
university research labs. Lead clinical and pre-clinical candidates are focused
on developing an oral treatment for inflammatory disease driven by eosinophils
(a type of white blood cell). Clinical trial work with the oil is ongoing to
ameliorate lung inflammation in eosinophilic asthma and COPD ("smokers lung").

Other leads are focused on using the company's bioactive peptides as a Medical
Food for the protection of the Gastro- Intestinal (GI) system against
inflammation (including ulcerative colitis and the orphan condition necrotizing
enterocolitis).

The company is founded on the core values of sustainability, optimal utilization
of natural resources and full traceability. Through innovative and patent
protected hydrolysis technology, HBC can preserve the quality of the lipids,
proteins and calcium from fresh salmon off-cuts.

Hofseth BioCare's headquarters are in Ålesund, Norway with offices in Oslo,
London, Zürich, New Jersey and Palo Alto, CA.

This information was considered to be inside information pursuant to the EU
Market Abuse Regulation (MAR) and is subject to the disclosure requirements
pursuant to MAR article 17 and section 5-12 of the Norwegian Securities Trading
Act. This stock exchange announcement was published by CEO Jon Olav Ødegård on
13 December 2023 at the date and time set out above.

More information:
Access the news on Oslo Bors NewsWeb site