Atlantic Sapphire ASA: Proposed fully underwritten rights issue of up to USD 60 million and directed convertible loan issue of minimum USD 20 million

20 Aug 2024 18:59 CEST

Atlantic Sapphire ASA: Proposed fully underwritten rights issue of up to USD 60
million and directed convertible loan issue of minimum USD 20 million

NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES, CANADA, AUSTRALIA, THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE
PEOPLE'S REPUBLIC OF CHINA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH THE
DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE.
PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT

Miami, 20 August 2024:

The board of directors of Atlantic Sapphire ASA (the “Company”) has today,
subject to approval by an Extraordinary General Meeting (the “EGM”), to be held
on or about 17 September 2024, resolved to carry out a rights issue of shares
(the “New Shares”) with preferential subscription rights for existing
shareholders (the "Rights Issue") to raise gross proceeds of up to the
NOK-equivalent of USD 60 million. The subscription price in the Rights Issue is
proposed set to NOK 0.10 per New Share. Subscribers in the Rights Issue will for
every two New Shares subscribed and allocated receive one warrant to subscribe
for one new share in the Company. In addition, Underwriters will receive one
warrant to subscribe for one new share in the Company for every two underwritten
offer shares (including offer shares that would have been allocated if the
Convertible Loan proceeds had participated in the Rights Issue) (the
“Warrants”). Subsequent exercise of Warrants will increase the gross proceeds to
the Company.

Certain existing shareholders, including Nordlaks Holding AS ("Nordlaks"),
Condire Management ("Condire") and Strawberry Capital AS, and external investors
(jointly the “Underwriters”) have underwritten the NOK-equivalent of USD 60
million of the Rights Issue. Further, certain existing shareholders, including
Nordlaks and Condire Management AS have pre-committed to use their subscription
rights to subscribe for their pro-rata share.

In addition to the Rights Issue, the Company has, subject to agreement and
execution of final loan documentation and approval by the EGM, secured a
convertible loan of the NOK-equivalent of minimum USD 20 million directed
towards Condire and potentially Nordlaks, in accordance with settlement
mechanics further described in this stock exchange notice (the “Convertible
Loan”, and together with the Rights Issue and the Warrants, the "Transaction").
Participants in the Convertible Loan will also receive one Warrant for every two
shares that would have been allocated as if the Convertible Loan proceeds had
participated in the Rights Issue.

The net proceeds from the Rights Issue is, together with existing cash on
balance sheet, an existing RCF, the amendments to the existing debt facility,
and the Convertible Loan, currently estimated to be sufficient to fund
investments and operations towards achieving positive EBITDA for Phase 1,
currently estimated for Q4 2025. The Company further estimates an optimized
Phase 1 to deliver 8,250-8,750 tons HOG of salmon in annual harvest at an EBITDA
of USD 1.5-2.0 per kg as if on a stand-alone basis. In connection with and
subject to the Transaction, DNB Bank has credit approved certain amendments to
the Company’s existing debt facilities. In total, the fundraise and adjustments
to the bank package are expected to fully finance the Company’s funding
requirement of USD 94 million to optimize Phase 1 and corresponding positive
EBITDA.

Any future proceeds from exercise of Warrants are expected to be used towards
the Company’s Phase 2 expansion at the same site in Florida, US. The Company’s
Phase 2 is expected to increase annual harvest volumes up to a total of 25,000
tons HOG of salmon at a target EBITDA of USD ~5 per kg.

Notice of the EGM, including proposed resolutions regarding the Rights Issue,
the Warrants and the Convertible Loan, is expected to be sent to the
shareholders on or about 27 August 2024.

Arctic Securities AS and DNB Markets, a part of DNB Bank ASA, have been engaged
as managers for the Rights Issue (the "Managers"). Advokatfirmaet CLP DA is
acting as legal advisor to the Company, and Advokatfirmaet BAHR AS is acting as
legal advisor to the Managers.

Underwriting:

Pursuant to, and subject to, the terms and conditions of the underwriting
agreements between the Company and the Underwriters (the "Underwriting
Agreements"), the Underwriters have undertaken on a pro-rata basis (not jointly)
to underwrite an aggregate subscription amount in the Rights Issue of the
NOK-equivalent of up to USD 60 million (the "Total Underwriting Obligation"),
subject to potential reduction for Condire and Nordlaks described below. Any New
Shares subscribed in the Rights Issue will reduce the underwriting commitment of
the Underwriters but not pre-commitments from existing shareholders. Each
Underwriter is entitled to an underwriting fee of 10% of its respective
underwriting obligation, to be settled in new shares in the Company issued at
the subscription price in the Rights Issue (the “Underwriting Fee”). Further,
each Underwriter is entitled to Warrants as set out in a separate section of
this stock exchange notice. The selection of shareholders who have been invited
to underwrite has been based on objective criteria. The Underwriters have
undertaken to vote any shares held by them at the time of the EGM in favor of
the Transaction.

The Underwriters include, but are not limited to, the investors listed below:

• Nordlaks Holding AS (owning 12.95% of the Company) expects to participate in
the underwriting consortium with the NOK-equivalent of USD 15 million in the
Rights Issue.
• Condire Management LP (owning 12.48% of the Company) expects to participate in
the underwriting consortium with the NOK-equivalent of USD 15 million in the
Rights Issue.
• Strawberry Capital AS, (owning 8.57% of the Company) expects to participate in
the underwriting consortium with the NOK-equivalent of USD 5 million in the
Rights Issue.
• Nokomis Capital, LLC, as external Underwriter, has undertaken to participate
in the underwriting consortium with the NOK-equivalent of USD 15 million in the
Rights Issue.

A complete list of Underwriters will be provided in conjunction with the
Company’s EGM and in the Prospectus (defined below).

The underwritings and pre-commitments made by Nordlaks and Condire to subscribe
for New Shares are limited such that their holding of shares shall not exceed
19.99%, and any remaining underwriting and pre-commitments by Nordlaks and
Condire shall be satisfied in the form of addition to the Convertible Loan as
described below (the “Adjustment Mechanism”). Any such settlement in the
Convertible Loan is dependent on the level of use of preferential subscription
rights used by other shareholders, and any settlement into the Convertible Loan
will reduce the overall size of the Rights Issue on a dollar-for-dollar basis.

Subscription price, subscription rights, Warrants and proceeds:

The subscription price for the New Shares to be issued in the Rights Issue is
proposed set to NOK 0.10 per New Share. The exact number of New Shares to be
issued and the final size of the share capital increase will be proposed by the
board of directors to the EGM. A new face value of the shares will also be
proposed at the EGM.

Pursuant to section 10-4 of the Norwegian Public Limited Companies Act, the
shareholders of the Company at the date of the EGM, and who are not resident in
a jurisdiction where such offering would be unlawful or, (in jurisdictions other
than Norway) require any prospectus, filing, registration or similar action,
will be granted a preferential right to subscribe for and be allocated the New
Shares in proportion to the number of shares in the Company they own as of that
date, and will according to the board of directors' proposal receive
subscription rights proportionate to their existing shareholding as registered
in the Company's shareholder register in the Norwegian Central Securities
Depository (the VPS) at the expiry of the date of the EGM, currently expected 17
September 2024. Provided that a purchase of shares is made with ordinary T+2
settlement, shares purchased up to and including 17 September 2024 will give the
right to receive subscription rights, whereas shares purchased from and
including 18 September 2024, will not give the right to receive subscription
rights. The subscription rights will be sought tradable and listed on the Oslo
Stock Exchange from and including the first day of the subscription period and
until 16:30 (Oslo time) four trading days prior to the expiry of the
subscription period. Over-subscription and subscription without subscription
rights will be permitted.

The subscribers in the Rights Issue and Convertible Loan, and the Underwriters,
will without cost be allocated Warrants as follows:
• 0.5 tradeable Warrant will be issued for every underwritten offer share in the
Rights Issue (rounded down to the nearest whole number of Warrants);
• 0.5 tradeable Warrant will be issued for every allocated offer share in the
Rights Issue (rounded down to the nearest whole number of Warrants); and
• 0.5 tradeable Warrant issued per share that would have been allocated as if
the Convertible Loan proceeds had participated in the Rights Issue (rounded down
to the nearest whole number of Warrants).

The Warrants will, among other things, have the following terms:
• Each Warrant will give the holder a right to subscribe for one new share in
the Company.
• The Warrants may be exercised in the following windows and at corresponding
exercise prices:
o During the first 10 trading days of December 2025, at a 20% premium to the
subscription price in the Rights Issue, after which the exercise price will be
at a 30% premium to the subscription price in the Rights Issue.
o During the first 10 trading days of December 2026, at a 30% premium to the
subscription price in the Rights Issue, after which the Warrants will lapse
without any value to the holder.
o Notwithstanding the above, in the event the Company launches one or more
equity raises following completion of the Rights Issue where the Company in the
aggregate raises gross proceeds of at least USD 100 million prior to December
2026 (the “Qualifying Equity Raise”), the Warrants shall be exercisable in
conjunction with such equity raise at a 15% premium to the share price of the
Rights Issue.
o Beginning four months following a Qualifying Equity Raise, the Company shall
promptly inform the market whenever the daily volume-weighted average price
(VWAP) of the Company's shares exceeds 200% of the then-effective Warrant
exercise price over any consecutive 20-trading-day period. The exercise price
per share shall be at a 20% premium to the Offer Price until the end of the
first 10 trading days of December 2025 and thereafter the exercise price per
share will be at a 30% premium to the Offer Price. Following such stock exchange
notice, Warrant holders will have the right to exercise their Warrants the
subsequent 10 trading days.
The Warrants will also be governed by the following provisions:

• The exercise price shall be subject to Euro-market standard anti-dilution
provisions dealing with, inter alia, share consolidations, share splits,
spin-off events and reorganisations (provided that no adjustment shall occur as
a consequence of issuance or exercise of the Convertible Loan contemplated to be
issued in connection with the Transaction). The anti-dilution provisions will
also provide for fair market value compensation to the warrant holders in
respect of any event that would otherwise cause an anti-dilution adjustment
resulting in an exercise price lower than the nominal value of a share.
• The terms of the Warrants and the Company's articles of association will
regulate that the Warrants shall be subject to the same disclosure obligations
that apply to certain financial instruments pursuant the Norwegian Securities
Trading Section 4-3. The disclosure obligation shall apply when a Warrant
holder’s proportion of shares and Warrants reaches, exceeds or falls below 10
per cent, 15 per cent, 20 per cent, 25 per cent, one-third, 50 per cent,
two-thirds or 90 per cent of the votes calculated pursuant to the Securities
Trading Act Chapter 4. No warrant holder shall be permitted to exercise Warrants
in the event of a material breach of these disclosure obligations.

The Company shall use reasonable efforts to seek to ensure that the Warrants are
admitted to trading on Oslo Børs as soon as possible following completion of the
Rights Issue but there can be no assurance that such admittance to trading will
be obtained.

Subject to balancing between the Rights Issue and the Convertible Loan dependent
on use of subscription rights, as further described below, the maximum gross
proceeds from the Rights Issue will be the NOK-equivalent of USD 60 million and
a minimum of USD 49 million (notwithstanding Underwriting Fee and Warrants).

The gross proceeds from the exercise of Warrants will depend on the number of
Warrants issued and exercised, as well as the final exercise price for the
Warrants, determined as described above.

Convertible Loan:

The Company has, subject to agreement and execution of final loan documentation
and approval by the EGM, secured a directed Convertible Loan from Condire
amounting to a minimum of USD 20 million. In accordance with the Adjustment
Mechanism, the Convertible Loan may be increased by up to USD 11 million by way
of settlement of Underwriting made by Condire and Nordlaks, subject to the total
utilization levels of the preferential subscription rights and in order to
ensure that the ownership of Condire and Nordlaks individually does not exceed
19.99%. If the Adjustment Mechanism comes into effect, each of Condire and
Nordlaks may be allocated up to USD 5.4 million in the Convertible Loan which
would come in addition to the minimum size of the Convertible Loan of USD 20
million.

Further, the terms of the Convertible Loan are expected to be as follows:
• 6 years tenor, senior unsecured.
• Strike price corresponding to a premium of 30% to the subscription price in
the Rights Issue.
• Conversion incentive following a Qualifying Equity Raise where the strike
premium will be reduced to 15% premium to the subscription price in the Rights
Issue for a period of 20 business days. If the conversion right is not exercised
within such period, the conversion right will lapse and the Convertible Loan may
no longer be converted.
• 10% PIK interest p.a. or 8% cash interest at the Company's sole discretion.
• Each Lender may require that as an alternative to an exercise of Warrants with
a cash settlement, the Company shall issue new shares where the subscription
price is settled by way of set-off against that Lender's participation in the
Convertible Loan, subject to applicable law and a procedure to be agreed between
the Company and that Lender.
• No Lender shall be permitted to exercise Conversion Rights if and to the
extent that such exercise would result in such Lender, taken together with its
affiliates and related parties, owning more than 19.99 per cent. of the issued
share capital of the Company.
• Customary anti-dilution mechanisms.

Amendments to bank debt terms:

In connection with, and subject to the contemplated fundraise, DNB Bank has
agreed to the following amendments to the current loan facility:
• No installments on Term Loan for remaining of 2024 and 2025.
• Adjustments of financial covenants to reflect current business plan.
• In addition to the abovementioned adjustments to Phase 1 Term Loan facility,
the Company and DNB Bank have jointly agreed to cancel the uncommitted and
undrawn Phase 2 Delayed Term Loan, in order to remove commitment fees on the
undrawn debt and improve liquidity.
• DNB Bank has credit approved a reduction in the minimum liquidity covenant of
USD 5 million that can be utilized towards the construction of the well
investment for Phase 2 once 50% of the well is completed. The new minimum
liquidity will post drawdown be USD 10 million.
• Subject to a fully guaranteed fundraise, DNB Bank has agreed for the Company
to draw up to USD 10 million above its borrowing base on the RCF until proceeds
from the fundraise is received.

Prospectus and indicative timeline:

In connection with the Right Issue, a prospectus (the "Prospectus") will be
prepared which is subject to the approval by the Norwegian Financial Supervisory
Authority (the "NFSA"), expected to be obtained on or about 19 September 2024.
The Prospectus will be published prior to the commencement of the subscription
period and will form the basis for subscriptions in the Right Issue. Provided
that the prospectus is approved by the NFSA in time, the subscription period for
the Rights Issue will commence on 20 September 2024 and expire on 4 October 2024
at 16:30 hours (Oslo time). In the event that the Prospectus is not approved in
time to uphold this subscription period, the subscription period will commence
on the second trading day on the Oslo Stock Exchange following the approval and
expire at 16:30 hours (Oslo time) two weeks thereafter. A further description of
the Rights Issue and of other circumstances that must be considered upon
subscription of shares in the Rights Issue will be included in the Prospectus.

Included below is an indicative timeline for the Rights Issue:
• 17 September 2024: Extraordinary general meeting
• 17 September 2024: Last day of trading in the shares including subscription
rights
• 18 September 2024: First day of trading in the shares excluding subscription
rights
• 19 September 2024: Record date for determination of the right to receive
subscription rights
• On or around 19 September 2024: Publication of the Prospectus
• 20 September 2024: Commencement of the subscription period and first day of
trading in the subscription rights
• On or around 30 September 2024: Last day of trading in the subscription rights

• On or around 4 October 2024: Last day of the subscription period
• On or around 7 October 2024: Allocation of the New Shares and Warrants
• On or around 10 October 2024: Payment of the New Shares
• On or around 15 October 2024: Registration of the share capital increase with
the Norwegian Register of Business Enterprises

An updated company presentation is available through the Company’s web page.

For further information, please contact:

Gunnar Aasbø-Skinderhaug, Atlantic Sapphire ASA, Deputy CEO/ CFO
Gunnar@atlanticsapphire.com

Investorrelations@atlanticsapphire.com

This information is 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 Gunnar Aasbø-Skinderhaug,
Deputy CEO/ CFO on the time and date provided, on behalf of the Company.

About Atlantic Sapphire ASA:

Atlantic Sapphire is pioneering Bluehouse® (land-raised) salmon farming,
locally, and transforming protein production, globally. Atlantic Sapphire
operated its innovation center in Denmark from 2011 until 2021 with a strong
focus on R&D and innovation to equip the Company with the technology and
procedures that enable the Company to commercially scale up production in end
markets close to the consumer. 

In the US, the Company holds the requisite permits and patents to construct its
Bluehouse® in an ideal location in Homestead, Florida, just south of Miami. The
Company's Phase 1 facility is in operation, which provides the capacity to
harvest up to approximately 9,500 tons (HOG) of salmon annually. The Company
completed its first commercial harvest in the US in September 2020. Atlantic
Sapphire is currently constructing its Phase 2 expansion, which will bring total
annual production capacity to 25,000 tons and has a long-term targeted harvest
volume of 220,000 tons.
***

- IMPORTANT INFORMATION –

This announcement does not constitute an offer of securities for sale or a
solicitation of an offer to purchase securities of the Company in the United
States or any other jurisdiction. Copies of this document may not be sent to
jurisdictions, or distributed in or sent from jurisdictions, in which this is
barred or prohibited by law. The securities of the Company may not be offered or
sold in the United States absent registration or an exemption from registration
under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act").
The securities of the Company have not been, and will not be, registered under
the U.S. Securities Act.

Any sale in the United States of the securities mentioned in this communication
will be made solely to "qualified institutional buyers" as defined in Rule 144A
under the U.S. Securities Act. No public offering of the securities will be made
in the United States. Any offering of the securities referred to in this
announcement will be made by means of the Prospectus. This announcement is an
advertisement and is not a prospectus for the purposes of Regulation (EU)
2017/1129 of the European Parliament and of the Council of 14 June 2017 on
prospectuses to be published when securities are offered to the public or
admitted to trading on a regulated market, and repealing Directive 2003/71/EC
(as amended) as implemented in any EEA Member State (the "Prospectus
Regulation"). Investors should not subscribe for any securities referred to in
this announcement except on the basis of information contained in the
Prospectus. Copies of the Prospectus will, following publication, be available
from the Company's registered office and, subject to certain exceptions, on the
websites of the Managers.

In any EEA Member State, this communication is only addressed to and is only
directed at qualified investors in that Member State within the meaning of the
Prospectus Regulation, i.e., only to investors who can receive the offer without
an approved prospectus in such EEA Member State.

In the United Kingdom, this communication is only addressed to and is only
directed at Qualified Investors who (i) are investment professionals falling
within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (as amended) (the "Order") or (ii) are persons falling
within Article 49(2)(a) to (d) of the Order (high net worth companies,
unincorporated associations, etc.) (all such persons together being referred to
as "Relevant Persons"). These materials are directed only at Relevant Persons
and must not be acted on or relied on by persons who are not Relevant Persons.
Any investment or investment activity to which this announcement relates is
available only to Relevant Persons and will be engaged in only with Relevant
Persons. Persons distributing this communication must satisfy themselves that it
is lawful to do so.

This document is not for publication or distribution in, directly or indirectly,
Australia, Canada, Japan, the United States or any other jurisdiction in which
such release, publication or distribution would be unlawful, and it does not
constitute an offer or invitation to subscribe for or purchase any securities in
such countries or in any other jurisdiction. In particular, the document and the
information contained herein should not be distributed or otherwise transmitted
into the United States or to publications with a general circulation in the
United States of America.

The Managers are acting for the Company in connection with the Rights Issue and
no one else and will not be responsible to anyone other than the Company for
providing the protections afforded to their respective clients or for providing
advice in relation to the Rights Issue or any transaction or arrangement
referred to in this announcement.

Matters discussed in this announcement may constitute forward-looking
statements. Forward-looking statements are statements that are not historical
facts and may be identified by words such as "anticipate", "believe",
"continue", "estimate", "expect", "intends", "may", "should", "will" and similar
expressions. The forward-looking statements in this release are based upon
various assumptions, many of which are based, in turn, upon further assumptions.
Although the Company believes that these assumptions were reasonable when made,
these assumptions are inherently subject to significant known and unknown risks,
uncertainties, contingencies and other important factors which are difficult or
impossible to predict and are beyond its control. Such risks, uncertainties,
contingencies and other important factors could cause actual events to differ
materially from the expectations expressed or implied in this release by such
forwardlooking statements. The information, opinions and forward-looking
statements contained in this announcement speak only as at its date and are
subject to change without notice. This announcement is made by and is the
responsibility of the Company. Neither the Managers nor any of their respective
affiliates makes any representation as to the accuracy or completeness of this
announcement and none of them accepts any responsibility for the contents of
this announcement or any matters referred to herein.

This announcement is for information purposes only and is not to be relied upon
in substitution for the exercise of independent judgment. It is not intended as
investment advice and under no circumstances is it to be used or considered as
an offer to sell, or a solicitation of an offer to buy any securities or a
recommendation to buy or sell any securities of the Company. No reliance may be
placed for any purpose on the information contained in this announcement or its
accuracy, fairness or completeness. Neither the Managers nor any of their
respective affiliates accepts any liability arising from the use of this
announcement.

More information:
Access the news on Oslo Bors NewsWeb site

625705_2024-08-20 - Atlantic Sapphire ASA - Company Presentation.pdf