Grieg-backed land based salmon farmer Proximar has ended plans to take out a bond loan the company first announced in April.
The company had meetings with potential bond investors between April 19-30, but the group has decided to push back bond financing, CFO Paal Grimsrud said.
"The meetings were of a proactive nature in order to be able to identify the most attractive debt financing for the company at an early stage," Grimsrud told IntraFish.
The decision was reached after an overall assessment, but was also affected by a recent development with Japanese trading giant Marubeni, which strengthens Proximar's creditworthiness, he added.
On Tuesday, Proximar announced it had signed a memorandum of understanding (MoU) with Japan's Marubeni Corporation lining out a potential sales and marketing agreement.
Marubeni is one of the largest general trading companies in Japan, with 136 branches and offices in 68 countries and regions.
The intention with the MoU is to conclude in a firm off-take agreement once the parties have found a suitable long-term model.
“We have been in discussions with Marubeni for more than a year now and are very happy to finally complete the first step towards a long and fruitful cooperation with one of the leading sales and marketing companies within seafood in Asia," said Proximar CEO Joachim Nielsen.
No desire for fresh equity
Despite the plans for the bond loan falling through, Grimsrud said the company has "no desire" to raise fresh equity at the moment.
"I will never say that it is not relevant," he said, "but we have no desire for it."
A possible issue depends on what the company achieves on the debt side.
According to Grimsrud, the company now has sufficient cash to cover the year, including the agreed milestone payments to the contractors who are building the facility.
On April 15, Proximar announced it was working on issuing a secured bond loan, in Norwegian kroner. The brokerages ABG Sundal Collier and Nordea were hired to assist.
According to rumors in the market, the loan was for around NOK 600 million (€59.8 million/$72.8 million), over four years. The interest rate was expected to be sky-high, however -- up to 10 percent.
Grimsrud will not say how much interest they would have had to pay if they had chosen to issue the planned bond loan. He pointed out that there was a large spread among the stakeholders.
The company was initially to finance the development of its facility in Japan through equity and loans from Japanese banks, wrote in its annual report that it was demanding to negotiate with Japanese banks when they could not meet physically.
The uncertainty surrounding financing has contributed to the company's share price dropping recently.
Last month, the price was down 35 percent, and since the listing in February, the price has roughly halved.
With the current share price of NOK 8.85 (€0.88/$1.10), the company's equity is priced at NOK 350 million (€34.9 million/$42.4 million).
The company raised NOK 400 million (€39.9 million/$48.5 million) in fresh equity in connection with the listing on Euronext Growth in February.