Carve-out and sale of NRS Region South in €124 million deal

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Three small salmon farmers take over the troubled NRS business in Southern Norway.

Listed salmon farmer Norway Royal Salmon (NRS) has entered into an agreement with Tombre Fiskeanlegg, Lingalaks and Eidesvik Laks regarding the sale of all shares in Sør Farming, a wholly owned subsidiary of NRS, which subject to the completion of a demerger of NRS Farming, will own NRS Farming’s salmon farming business “Region South”.

As consideration for the shares in Sør Farming a purchase price of €124 million on a cash and debt free basis has been agreed. The purchase price shall be settled in cash and is financed by the buyers partly through equity and partly through debt financing.

In connection with the transaction, the parties have also entered into a long-term cooperation with regards to sale and purchase of fish.

The transaction is estimated to close in December 2019, and is subject to the demerger of NRS Farming being completed.

“The strategic assessment of Region South is now completed, and we have decided to sell the business. NRS is pleased with the achieved purchase price, and that we can continue to develop our cooperation with the Buyers with regards to export of fish, and thus also continue to strengthen our sales department. We are also pleased that the Buyers are local, and have the ambitions and resources to continue to develop the business,” says Charles Høstlund, group CEO of NRS.

The business in Region South that is to be carved out from NRS Farming to Sør Farming owns and operates six salmon farming licenses with a total maximum allowed biomass (MAB) of 4,680 tonnes in the area around Haugesund, Western Norway. The business has approximately 30 employees, and is managed by region director Rolf Berg.

The board of directors of Sør Farming is currently comprised of Charles Høstlund and Ola Loe, but the composition of the board will be amended after the closing of the Transaction.

Key figures profit and loss for Region South

Profit and   loss (NOKm) 2016 2017 2018 Q2 2019 YTD Q2 2019 Q2 2018 YTD Q2 2018
Operating revenues 322.5 415.6 317.7 53.5 113.5 150.9 223.4
Operating costs 220.9 265.6 240.3 51.1 108.4 95.4 146.5
Operational EBIT 101.6 150.0 77.4 2.3 5.1 55.5 76.9
Harvested volume
(tonnes HOG)
5,151 7,221 5,586 869 1,949 2,407 3,746
Operational EBIT/ kg NOK 19.7 20.8 14.2 2.7 2.6 23.9 21.1

Historic balance sheet figures for the business are not available, as the business is established through a demerger of an existing business.

The transaction is part of NRS’ strategy to concentrate and strengthen its operations in Northern Norway and in Iceland.

“Through the sale of this business, we intend to focus our activities on Northern Norway and Iceland. The company has large investments which will contribute to develop our business in the north. Our ambition is to develop the fish farming industry for the future through the continued development of our operations, innovation and new technology, and we intend to do this with Northern Norway at the center of our efforts. The transaction provides NRS with more financial flexibility to assess new opportunities for growth,” says Charles Høstlund.

Bonus agreements with certain key employees in region South have been entered into in connection with the transaction.

DNB Markets is acting as NRS’ financial advisor in connection with the transaction and Advokatfirmaet Wiersholm is acting as NRS’ legal advisor in connection with the transaction.