Prospectus. Pan Fish ASA

Transcription

1 Prospectus Pan Fish ASA 1. Write-down of share capital by adjusting the shares' face value 2. Conversion of NOK 500 million of the Company's bank debt to equity The debt conversion is conditional on the implementation of the Public Share Issue 3. Public Share Issue - Issuance of 200,000,000 new shares - Subscription price NOK 1 per share - Subscription period May 2005 This document is an English language translation of the Norwegian Prospectus. This English language translation of the Prospectus has not been approved by the Oslo Stock Exchange. In the event of any discrepancy between the Norwegian Prospectus and its English translation, the Norwegian text shall prevail. The subscription form for the Public Share Issue is not included with this translation of the Prospectus. The subscription form and the Norwegian Prospectus is available from DnB NOR Markets and First Securities and at their web sites and Managed by: 12 May 2005

2 Notices This Prospectus has been prepared to provide information in connection with (i) the listing on the Oslo Stock Exchange of the shares issued pursuant to the increase in share capital by means of the conversion of debt in Pan Fish ASA on the Oslo Stock Exchange and (ii) the offer to subscribe to shares in Pan Fish ASA. This Prospectus does not represent an offer to subscribe to or purchase securities other than the shares offered for subscription in this Prospectus. Nor does it constitute an offer to subscribe to shares if this is undertaken by someone not entitled to make such a offer. The Prospectus has been approved by the Oslo Stock Exchange in accordance with Section 5-7 of the Securities Trading Act of 19 June 1997 No 79 (the Securities Trading Act) and Section 14-4 cf. Chapters 15 and 18 of the Stock Exchange Regulations of 17 January 1994 No. 30 (the Stock Exchange Regulations). This English language translation of the Prospectus has not been approved by the Oslo Stock Exchange. In the event of any discrepancy between the Norwegian Prospectus and its English translation, the Norwegian text shall prevail. The Subscription form for the Public Share Issue is not included with this translation of the Prospectus. The Subscription form and the Norwegian Prospectus is available from DnB NOR Markets and First Securities and at their web sites and Distribution of this Prospectus shall, under no circumstances, be interpreted as indicating that, subsequent to its publication, no changes may have occurred with respect to such circumstances relating to Pan Fish ASA and its subsidiaries as are described in this Prospectus. Any new circumstance or material inaccuracy which may have an impact on an evaluation of the shares in Pan Fish ASA, and which occurs or becomes known between the publication of this Prospectus and the end of the subscription period, shall be included in addenda to the Prospectus, cf. Section 5-5 (2) of the Securities Trading Act and section 14-6 of the Stock Exchange Regulations. The right to distribute this Prospectus is restricted in certain countries because the Prospectus contains an invitation to subscribe to shares in Pan Fish ASA. Persons who receive this Prospectus must discover for themselves if any such restrictions exist in the jurisdiction to which they are subject, and are obliged to respect them. The Prospectus is not addressed to persons whose involvement would prompt the requirement for additional documentation or other registrations and/or obligations other than those required under Norwegian law. No one is authorised to provide information or make promises on behalf of Pan Fish ASA or the Lead Managers in connection with the refinancing package described herein, unless otherwise indicated in this Prospectus. Should anyone nevertheless provide such information, said person or persons must be regarded as not entitled to do so. Notices from Pan Fish ASA or the Lead Managers in respect of the Prospectus are considered to have been made when they have been published by means of a notice to the Oslo Stock Exchange. Unless otherwise indicated, the Company s management and/or board of directors are the source of the information set out in the Prospectus. Figures from the financial accounts that are reproduced herein have been prepared in accordance with generally accepted Norwegian accounting principles, unless otherwise specified. With effect from 1 January 2005, the Company has adopted IFRS (International Financial Reporting Standards) as its accounting principles. The financial statements for the first quarter 2005 have been prepared in accordance with these new accounting principles. It should be noted that the interim report for the first quarter 2005 is unaudited. In connection with the refinancing package a limited financial due diligence of the financial statements for 2004 has been carried out. Although no complete legal due diligence has been carried out with respect to the entire Pan Fish Group, a limited due diligence has been carried out with respect to legal circumstances occurring after 30 August 2004 and indicated as being of material significance to Pan Fish s Norwegian operations. Although the information contained in the Prospectus corresponds, as far as the board of directors is aware, with the actual situation, there may exist circumstances of which the board is not aware. The existence of important circumstances which are not mentioned in this Prospectus cannot, therefore, be ruled out. Any disputes that might arise regarding this Prospectus are subject to Norwegian law and the exclusive jurisdiction of the Norwegian courts. 1

3 Table of contents REFINANCING OF PAN FISH ASA NOTICES... 1 TABLE OF CONTENTS... 2 DEFINITIONS... 4 LIABILITY STATEMENTS... 6 STATEMENT BY THE BOARD OF PAN FISH ASA... 6 SUMMARY THE REFINANCING PACKAGE AND THE PUBLIC SHARE ISSUE BACKGROUND AND OBJECTIVES SHARE CAPITAL WRITE-DOWN THE PRIVATE PLACEMENT THE PUBLIC SHARE ISSUE PAN FISH BUSINESS IDEA, GOALS AND STRATEGY HISTORY OPERATING STRUCTURE CORE BUSINESS ASSOCIATED COMPANIES SHAREHOLDINGS ORGANISATION, BOARD OF DIRECTORS AND MANAGEMENT FINANCIAL INFORMATION ACCOUNTING PRINCIPLES KEY FIGURES FOR THE PAN FISH GROUP COMMENTS ON FINANCIAL RESULTS, BALANCE SHEET AND KEY FIGURES NGAAP VS. IFRS FINANCING AND REPAYMENT COMMITMENTS OTHER FINANCIAL MATTERS SHARE CAPITAL AND INVESTOR RELATIONS THE COMPANY S SHARE CAPITAL SHAREHOLDERS INVESTOR RELATIONS AND DIVIDEND POLICY TAX-RELATED ISSUES FOR SHAREHOLDERS VOTING RIGHTS AND TRANSFERABILITY REGISTRATION IN THE NORWEGIAN REGISTRY OF SECURITIES (VPS) THE MARKET FOR FARMED SALMON INTRODUCTION PRODUCTION OF ATLANTIC SALMON MAIN MARKETS FOR ATLANTIC SALMON MAIN FACTORS BEHIND THE EXPECTED GROWTH IN DEMAND FOR FARMED FISH RISK FACTORS FINANCIAL RISK MARKET RISK OPERATIONAL RISK REGULATORY FRAMEWORK ECONOMIC DEVELOPMENTS CURRENCY AND INTEREST RATE RISK

4 6.7. INSURANCE LEGAL ISSUES THE REGULATORY FRAMEWORK LEGAL ISSUES APPENDIX 1 ARTICLES OF ASSOCIATION OF PAN FISH ASA APPENDIX 2 ANNUAL REPORT 2004 FOR PAN FISH ASA APPENDIX 3 INTERIM REPORT FOR PAN FISH ASA AS AT 12 MAY

5 Definitions In this document the terms and abbreviations given below have the following definitions, unless otherwise indicated by the context in which they are used: Aquaculture Fish farming or food production in water to supplement nature s own production of fish and other seafood Basis point One-hundredth of a percentage point Brood fish Fish that are used for reproduction purposes Degree days The sum of the average daily temperature in a given period DnB NOR DnB NOR Bank ASA DnB NOR Markets A division of DnB NOR Bank ASA, which is owned by DnB NOR ASA ESA The EFTA Surveillance Authority EU The European Union FAO The UN s Food and Agriculture Organisation Feed factor The relationship between feed input and growth of farmed production FHL The Norwegian Seafood Federation First First Securities ASA Fry The stage in the life of a fish from hatching to smolting GATT General Agreement on Tariffs and Trade Hatchery A facility into which roe are placed for hatching, starter feeding and development into fry IHN A viral illness in salmon Kudoa A parasite that can reduce the shelf-life of salmon products Net cage An open facility for the production of fish in the sea, consisting of a specially shaped net cage and a float and brace system NIBOR Norwegian InterBank Offer Rate; the reference interest rate quoted between Norwegian banks NOK Norske kroner Nordea Nordea Bank Norge ASA Pan Fish ASA Pan Fish ASA is the parent company in the Pan Fish Group and has the following subsidiaries: Pan Fish Norge AS (100%), Pan Fish Sales USA AS (100%), Pan Fish Scotland Ltd. (100%), Pan Fish Canada Inc. (100%), Pan Fish USA Inc. (100%), Pan Fish Faeroes (72.6%), Pan Fish Denmark (100%), Pan Fish France SA (100%) and Pan Fish Japan Ltd. (60%) Pan Fish or the Pan Fish Group Pan Fish ASA and its subsidiaries Pan Fish Canada Pan Fish Canada Inc, which is the parent company for Pan Fish s business activities in Canada and owns the subsidiaries: Orca Shipping Inc. (100%) and Orca Aquaculture Service Inc. (100%) Pan Fish Faeroes A term for Pan Fish s business activities in the Faeroe Islands Pan Fish France Pan Fish France SA Pan Fish North America Pan Fish Canada and Pan Fish USA Pan Fish Norway Pan Fish Norway AS is a wholly-owned subsidiary of Pan Fish Norge AS and has the following subsidiaries: Pan Fish Aukra AS (100%), Kinn Salmon AS (100%), Pan Fish Investments BV (100%) and Pan Logistics BV (51%) Pan Fish Scotland Pan Fish Scotland Ltd. Pan Fish USA Pan Fish USA Inc. PLCA The Public Limited Companies Act of 13 June 1997 No. 45 Primary processing The slaughter and initial processing of farmed fish, eg filleting or cutting into portions 4

6 Private Placement Share capital increased by means of a private placement with the Banks in which they convert NOK 500 million of the Company s debt to equity as described in section 1.3 of the Prospectus. Prospectus This document, containing an offer to subscribe to new shares in Pan Fish and such information as is required for prospectuses in respect of shares for which a stock market listing is being sought, including appendices Public Share Issue Share capital increase by means of a public share issue, in accordance with the Refinancing Agreement as described in section 1.4 of the Prospectus. Refinancing Agreement The refinancing agreement between the Company and the Syndicate Banks, dated 6 May 2005, which is described in Chapter 1 of the Prospectus Refinancing package The refinancing of Pan Fish as described in Chapter 1 of the Prospectus Round fish Ungutted fish Round weight Weight of ungutted fish Secondary processing Processing subsequent to primary processing Smolt Small (salmon) fish that are ready to be transferred to the sea for further growth to marketable size STA Securities Trading Act of 19 June 1997 No. 79 The Company Pan Fish ASA, unless otherwise indicated by the context The Board The board of directors of Pan Fish ASA, unless otherwise indicated by the context Superior Fish of the highest quality The Banks Nordea and DnB NOR The Lead Managers DnB Nor Markets and First Securities ASA The Syndicate Banks DnB NOR, Nordea, Sparebanken Møre, Sparebanken Rogaland, Sparebanken Midt-Norge and Sparebanken Nord-Norge. The Syndicated Loan Loan to the Company from the Syndicate Banks, under the terms of the loan agreement of 17 January 2003 (subsequently amended), which, following debt conversion, will amount to approx. NOK 1,125 million, and which is described in further detail in section 3.5 of the Prospectus. USD American dollar Vp.no Securities number in the Norwegian Registry of Securities (VPS) VPS Norwegian Registry of Securities Well boat A special vessel for the transportation of live fish WTO World Trade Organisation 5

7 Liability statements Statement by the Board of Pan Fish ASA The Prospectus has been prepared for the purpose of providing information regarding the refinancing of the Company which was approved at the Annual General Meeting on 9 May The Board of Pan Fish ASA confirms that, as far as the Board is aware, the information in the Prospectus corresponds to the actual situation and that there are no omissions of such a nature as could change the meaning of the Prospectus. Market conditions and future prospects have been evaluated in accordance with the Board s best judgement. Oslo, 12 May 2005 Gabriel Smith (chair) Arthur Duus Pål Skoe Kathrine Mo Bjørn Simonsen Claes Erik Axel Östberg Lead Manager In their capacity as Lead Managers, First Securities ASA and DnB NOR Markets have provided the Company with financial advice in connection with the refinancing package. The Prospectus has been prepared by the Company with the assistance of the Lead Managers. The Prospectus has been prepared on the basis of information provided by the Company and external sources. PriceWaterhouseCoopers has conducted a limited financial due diligence in connection with the refinancing package. The law firm Wiersholm, Mellbye & Bech, advokatfirma AS has conducted a limited legal due diligence with respect to circumstances occurring after 30 August 2004 and indicated as being of material significance to Pan Fish s Norwegian operations. With the assistance of the Company, the Lead Managers have made very effort to ensure that the Prospectus provides a consistent and comprehensive assessment of Pan Fish, but accept no legal or financial liability with respect to the completeness or accuracy of the contents of the Prospectus. Nor can the Lead Managers accept any legal or financial liability resulting from any share subscription based on the information presented in this Prospectus. As at the date of publication of the Prospectus, First Securities ASA, its group companies and employees own 14 shares in the Company. DnB Markets is a division of DnB NOR ASA. As at the date of publication of the Prospectus, DnB NOR and its subsidiaries own 132,724,399 shares in the Company, and its employees own 0 shares. Oslo 12 May 2005 DnB NOR Markets and First Securities ASA 6

8 Kluge Advokatfirma DA Kluge Advokatfirma DA has acted as legal adviser to Pan Fish ASA in connection with the writedown of share capital, the private placement and the public share issue and matters related thereto. We have reviewed and evaluated the information regarding legal matters which are set out in Chapter 1 The refinancing package and Public Share Issue. We confirm that the resolution to write down the Company s share capital from 1,004,600,436 to NOK 376,725, by means of a reduction in the share s face value from NOK 2.00 to NOK 0.75; the resolution to undertake a private placement of not less than NOK 150,000,000 and not more than NOK 375,000,000; and the resolution to undertake a public share issue of not less than NOK 60,000,000 and not more than NOK 150,000,000 were properly passed by the Annual General Meeting of Pan Fish ASA on 9 May We confirm that the Board of Pan Fish ASA on 11 May 2005 properly resolved to set the subscription price in the public share issue and the private placement at NOK 1.00, such that the share capital increase from the private placement will be NOK and NOK from the public share issue. The share capital increase in both the private placement and the public share issue is conditional on the implementation of the public share issue. Oslo, 12 May 2005 Kluge Advokatfirma DA Wiersholm, Mellbye & Bech, advokatfirma AS The law firm Wiersholm, Mellbye & Bech, advokatfirma AS has assisted the Lead Managers in connection with the Private Placement and the Public Share Issue as described in the Prospectus. We have reviewed the information relating to Norwegian legal matters included in Chapter 1 (The refinancing package and the Public Share Issue), Chapter 4 (Share capital and investor relations) and Chapter 7 (Legal issues) of the Prospectus. In our opinion, and based on the information that has been presented to us, these sections of the Prospectus provide a fair and balanced description of the Norwegian legal matters described therein. This statement is limited to the above-mentioned and does not extend to references in the Prospectus to and/or opinions on accounting, financial, technical or commercial matters. Our statement is limited to Norwegian law. Oslo 12 May 2005 Wiersholm, Mellbye & Bech advokatfirma AS 7

9 Summary Pan Fish in brief Pan Fish is a dedicated global aquaculture group of companies producing Atlantic salmon in Norway, Scotland, Canada and the Faeroes. The Company also owns two major processing plants in France and Denmark. The cornerstone of Pan Fish s strategy is its vision of being the lowest-cost supplier of quality salmon to the global market. Achieving cost leadership is a goal that has the wholehearted backing of the entire organisation, and shall be realised by means of sustainable operations and an unswerving focus on fish health. The Company s long-term objective is to bring production back up to a level commensurate with the capacity of its existing infrastructure. Production growth will take place at a rate which is considered reasonable with respect to both good fish health and biological safety, and the fact that Pan Fish, as a leading player in the global market, must help to maintain a healthy market balance. The other key element of the Company s strategy is that Pan Fish shall produce and supply a product that satisfies the stringent standards with respect to quality, food safety and traceability which are set by the world s leading purchases of salmon products. These absolute requirements apply to both round fish and the final processed product. Pan Fish shall continue to develop long-term partnerships with large-scale professional purchasers of salmon by always offering the quality demanded and the delivery accuracy expected saw the start of a very difficult period for Pan Fish. An extremely high gearing ratio combined with falling salmon prices meant that the Company was unable to meet its obligations and it became necessary to raise new share capital. The Company received an influx of new capital as a result of refinancing packages implemented in January and October 2003, with a further refinancing package being implemented in August In parallel with the Company s efforts to strengthen its financial position, it has also restructured its operations. A new board of directors was elected by a general meeting held 10 January 2003, and Atle Eide joined the Company as CEO on 12 May that year. The board immediately initiated a process to develop a new business plan for the group with the long-term objective of building production back up to a level commensurate with the value of the Company s fixed assets and licences. Pan Fish has organised its operations around the four aquaculture regions: Norway, Scotland, Canada and the Faeroes. These are autonomous, integrated units with their own managements, while major economies of scale within the regions are exploited in such areas as procurement, competence-building and key account management. This division along regional lines means that the various geographic units can be individually monitored and their operations optimised. The aim is for each region to cover the entire value chain from smolt to customer. Key figures The table below shows the key figures from Pan Fish s consolidated profit and loss account for the years as well as for the first quarter 2004 and The quarterly figures are unaudited. 8

10 NOK million 1Q 2005 IFRS 1) (unaudited) 1Q 2004 IFRS 1) 2004 NGAAP 2003 NGAAP 2002 NGAAP Gross operating revenues Depreciation Profit/loss for ongoing businesses Total financial expenses Profit/loss before tax Tax Profit/loss for discontinued businesses Group profit/loss NOK million IFRS (unaudited) IFRS NGAAP NGAAP NGAAP Assets Licences Deferred tax assets Goodwill Property, plant & equipment Shares, other assets, etc Total fixed assets Inventory Receivables Bank deposits, cash, etc Total current assets Total assets Equity and liabilities Equity Share capital Other equity Minority interests Total equity Liabilities Subordinated debt Convertible debt Other long-term liabilities Short-term liabilities Total liabilities Total equity and liabilities Background for the refinancing package Pan Fish has undergone extensive restructuring over the past two years. Ambitious targets have been set at all levels in the organisation to support the long-term objective of becoming the lowest-cost producer of quality salmon in all regions. A precondition of this strategy is to rebuild production to a level commensurate with the book value of the Company s licences and assets. On 18 April the Company announced that further refinancing would be required to strengthen Pan Fish s equity and provide additional funds with which to finance the planned expansion of its output. 9

11 At its meeting of 9 May, the Company s AGM passed the resolutions necessary to implement the refinancing package. Transaction details in respect of the Public Share Issue Amount of the Offering: NOK 200,000,000 from the issue of 200,000,000 new shares, each having a face value of NOK 0,75. Subscription price: NOK 1.0 per share Subscription period: From 13 May 2005 until CET on 27 May 2005 Allocation date: Notification of allocation will be posted approx. 1 June 2005 Payment falls due: All subscribers to shares in the Public Share Issue must, at the time the subscription is lodged, provide Nordea Issuer Service with a oneoff authorisation to debit a specified bank account in an amount corresponding to the number of shares that the subscriber has been allocated. The subscriber is responsible for ensuring that there are sufficient funds in the account to cover the amount due and must, therefore, have in the account an amount in NOK corresponding to the number of shares subscribed to from 1 June until such time as debiting has taken place. It is expected that the bank account will be debited on or around 2 June Market conditions One of the most prominent features of the world s salmon markets in recent years has been a relatively high growth in output, while demand has remained moderate. A period of extremely low salmon prices commenced in After reaching rock bottom during the summer of 2003, prices have risen again. In 2005 prices have been at around the average for the past eight years. These fluctuations in prices show that salmon is a raw material that is subject to the normal cyclical changes that affect other raw material production. Given the fragmented nature of today s salmon industry, it may be assumed that such fluctuations will continue in the foreseeable future. Norway is the world s largest producer of Atlantic salmon. With a total production of 537,000 tonnes round weight, Norway accounted for approx. 45 per cent of the total supply in The second largest producing country was Chile, followed by the UK and Canada. The EU is the largest market for Atlantic salmon, with a consumption of 588,000 tonnes round weight in For a long time the USA was the fasted growing market, but in 2004 the largest rise in consumer demand came in Japan and other markets. The steadily increasing focus on health and nutrition, combined with a significant unexploited market potential in the EU and USA, leads the Company to believe that the fish farming industry has a considerable potential for continued growth in the years to come. On 22 March 2005 the European Commission resolved to introduce a temporary punitive tariff on imports of salmon from Norway, with effect from 27 April Norwegian producers are subject to import duties ranging from 6.8 to 24.5 per cent. Pan Fish Norway is subject to a duty of 16.1 per cent. At the same time as the punitive tariff was introduced, the existing safeguard regulations, which applied to all third-party countries, were revoked. The punitive tariff will apply for a period of six months, with the possibility of an extension for up to nine months. Before the end of this period, the EU Council of Ministers will have to decide whether the punitive tariff scheme should be terminated, modified or continued in its present form. Risk To a large extent, Pan Fish s financial development depends on what happens to the price of farmed salmon, which has been and will continue to fluctuate strongly. The refinancing package described in this Prospectus will significantly strengthen the Company s financial position and thereby its ability to withstand negative developments of either a biological or financial nature. The Company s future 10

12 development and growth may, nevertheless, depend on having access to external capital in the form of loans and/or equity, eg as a result of the risk factors referred to in this Prospectus. In addition to market risk, salmon farming is subject to the same biological risk as that associated with intensive animal husbandry in general. Historically, the industry in all countries have suffered from outbreaks of disease that have led to financial losses. As the industry has matured, however, it has developed systems, routines and medication to tackle these biological and fish health-related challenges. Excluding situations of a catastrophic nature, biological risk is included in the budgeting process. In recent years the Company has also implemented specific measures to reduce the risk and incidence of disease at its facilities. Nevertheless, it must be pointed out that biological risk is an important risk area to focus on when investing in aquaculture-related companies. 11

13 1. The refinancing package and the Public Share Issue 1.1. Background and objectives Pan Fish announced on 18 April 2005 its intention to refinance its operations in order to strengthen the Company s equity and provide the funds needed to finance its planned increase in output. On 18 April 2005, the Company invited shareholders to attend its annual general meeting for the purpose, among other things, of procuring the necessary authorisations to proceed with the refinancing. The Company entered into a Refinancing Agreement with the Syndicate Banks on 6 May Under the terms of this agreement, DnB NOR and Nordea shall, by means of the Private Placement described below, convert NOK 500 million of the Company s debt to equity, provided that the Company simultaneously raises an additional NOK 200 million gross in share capital by means of the Public Share Issue described below. The subscription price with respect to the Private Placement shall correspond to the subscription price set by the Board with respect to the Public Share Issue. Since the subscription price may not be less than the face value of the share plus the costs incurred in connection with the Private Placement and the Public Share Issue, it has been decided to reduce the face value of the share from NOK 2.00 to NOK 0.75 by means of a capital write-down in order to have the flexibility necessary to set the subscription price. The Company s AGM of 9 May 2005 passed the resolutions that were required for the refinancing package to be implemented. After the implementation of the refinancing package, the Company s financial position will be significantly stronger, and it will have an equity ratio of per cent. It is the opinion of the Board that the Company s ability to withstand any negative development of a biological or financial nature will, as a result, be considerably enhanced. The refinancing package will, moreover, provide the Company with the funds needed to finance its planned increase in output in the coming years Share capital write-down Prior to the implementation of the refinancing package, the share capital write-down and the implementation of the Private Placement and the Public Share Issue, the Company s share capital stood at NOK 1,004,600,436, divided into 502,300,218 shares, each with a face value of NOK The Company s AGM of 9 May 2005 resolved to write down the Company s share capital by NOK 527,415,288.90, from NOK 1,004,600,436 to NOK 477,185,207.10, by reducing the face value of Pan Fish s shares from NOK 2.00 to NOK The amount of the write-down shall be used to cover losses which cannot be covered by other means. Pursuant to section 12-1 of the PLCA, the share capital write-down may be accomplished without notice to creditors. The Company s AGM of 9 May 2005 resolved to write down the Company s share capital by an additional NOK 100,460,043.60, from NOK 477,185, to NOK 376,725,163.50, by reducing the face value of Pan Fish s shares from NOK 0.95 to NOK NOK 22,797, of the amount written down shall be used to cover losses which cannot be covered by other means, while the remaining NOK 77,662, shall be transferred to other equity. If the Public Share Issue is implemented, this write-down may also be accomplished without notice to creditors because new capital will be subscribed at the same time as the capital write-down is registered, such that the Company s tied capital will remain at the same level as prior to the share capital write-down. The share capital write-down is conditional upon the implementation of the Public Share Issue as described in section 1.3 of this Prospectus. The PLCA stipulates that the subscription price for a share issue may not be set at less than the share s face value. Costs incurred in connection with the Private Placement and the Public Share Issue must 12

14 also be taken into consideration because the Company does not currently have a share premium fund. The decision to write down the face value of the Company s shares from NOK 2.00 to NOK 0.75 was therefore taken in order to have greater flexibility in determining the subscription price of the Private Placement and the Public Share Issue The Private Placement Share capital increase Under the terms of the Refinancing Agreement, the Banks have agreed to convert NOK 500 million of the Company s debt to share capital. The debt conversion is conditional on the Company raising NOK 200 million gross by means of the Public Share Issue. The Company's AGM of 9 May 2005 resolved to raise the company s share capital by not less than NOK 150,000,000 and not more than NOK 375,000,000 through the issue of not less than 200,000,000 and not more than 500,000,000 shares, each with a face value of NOK The final number of shares issued is determined when the Board has set the subscription price, and shall correspond to the number of shares arrived at by dividing NOK 500,000,000 by the subscription price. Pursuant to Section 10-1 (2) no. 1 of the PLCA, the Board is authorised to determine the amount by which the share capital shall be increased when the subscription price has been set. Shareholder preference rights pursuant to Section 10-4 of the PLCA have been waived. The shares will be subscribed by Nordea and DnB NOR at the same ratio as their respective share of the Syndicated Loan. The subscription price shall be not less than NOK 1.00 and not more than NOK 2.50, and shall correspond to the subscription price set by the Board with respect to the Public Share Issue referred to in section 1.3 below. Pursuant to Section 10-1 (2) no. 3 of the PLCA, the Board is authorised to set the subscription price within these limits. The premium, less deductions for costs associated with the share issue, shall be transferred to the share premium fund. The subscription amount shall be offset against a corresponding portion of the Company s debt to Nordea and DnB NOR at the same ratio as their respective share of the Syndicated Loan, cf. Section 1-2 (1) no. 1 of the PLCA. The shares will be subscribed the day after the close of the subscription period for the Public Share Issue, assuming that this is fully subscribed. Subscription is conditional on the Company raising NOK 200 million gross through the Public Share Issue, and settlement will be conditional on, and will be completed only when, the Company s auditor has confirmed to the Banks that this amount has been paid into the Company s share issue account. The new shares entitle the holder to dividend payments allocated after the new shares have been issued. In all other respects, the new shares entitle the holder to rights in the Company from the date on which the share capital increase was registered. At its meeting of 11 May 2005, the Board decided to set the subscription price with respect to the Public Share Issue, and thereby also the Private Placement, at NOK 1.00 per share. It follows, therefore, that 500,000,000 new shares will be issued in connection with the Private Placement. The Company s share capital and outstanding shares following the Private Placement are indicated in section below The Banks obligation to make a mandatory offer to all other shareholders in connection with the refinancing package Since the Banks are implementing the refinancing package to avoid or limit losses in respect of loans made by them, it follows from Section 4-3 of the STA that the Banks acquisition of shares as a result of the refinancing package does not trigger an obligation on the part of any of the Banks to make a mandatory offer to all other shareholders. This matter has also been cleared with the Oslo Stock Exchange. However, the Oslo Stock Exchange made it a condition of the first refinancing of the 13

15 Company, in January 2003, that any bank or banks which acquired a shareholding in excess of 40% must either (i) have reduced their shareholding to under 40% within a period of 3 years from the date on which the obligation to make a mandatory offer to all other shareholders would have come into effect, or (ii) have made a mandatory offer to all other shareholders within a period of three years from the expiry of the deadline, which is in January If the three-year time limit should prove to be inadequate in respect of a reduction in shareholdings, the bank(s) concerned may apply to the Oslo Stock Exchange for an extension of the deadline. Any such application must be in the hands of the Oslo Stock Exchange at the latest four months before the expiry of the original three-year deadline. The Oslo Stock Exchange has underlined that the same deadline applies to the shares that are being acquired at this time. Only Nordea has exceeded the 40% limit. Nordea therefore applied to the Oslo Stock Exchange for an extension to the deadline for reducing its shareholding to under 40%. In its reply dated 4 May 2005, the Oslo Stock Exchange granted Nordea s request and extended the deadline for reducing Nordea s shareholding by three years from the date of the original deadline, ie until January The extension has been given on the same conditions as the previous directive. The Oslo Stock Exchange has previously also confirmed that any subsequent acquisitions of shares undertaken for the purpose of limiting losses in respect of loans made will be covered by the exemption from the obligation to make a mandatory offer to all shareholders under Section 4-3 of the STA Lock-up The Syndicate Banks have pledged, with effect from the date on which the Refinancing Agreement was signed, not to dispose of any of their shares in Pan Fish (neither shares owned at that date nor shares acquired as a result of the current refinancing package), nor to enter into any option agreements, forward contracts or similar agreements for the purpose of disposing of said shares, before the date on which the shares issued in connection with the Public Share Issue have been registered in the individual investor s VPS account. Furthermore, Nordea and DnB NOR have agreed not to sell in the stock market any of the shares they currently hold in Pan Fish or any of the shares they acquire through the Private Placement for a period of six months following registration of the Private Placement in the Register of Business Enterprises without the prior consent of the Lead Managers. The embargo applies only to sales in the stock market Shareholder agreement between Nordea and DnB NOR In connection with the refinancing of Pan Fish undertaken in January 2003, Nordea and DnB NOR entered into a shareholders agreement with respect to the Pan Fish shares which the two banks acquired. In connection with the refinancing undertaken in October 2003 and June-September 2004, the parties agreed that the shareholders agreement should also cover the shares which the parties acquired at that time. The shareholders agreement covers a total of 360,815,947 shares. Under the terms of the shareholders agreement, the two banks shall consult each other prior to any future election of board members, but the agreement states that the parties are free to vote in the way they so wish at future general meetings of shareholders. The only other clause of relevance at this time is that stipulating that the parties shall consult each other before any sale of shares. The agreement is automatically terminated when (i) the two banks combined shareholdings in the Company amount to less than 33%, or (ii) more than three years have passed since the original agreement was entered into. The agreement was originally entered into on 9 January 2003, while the supplementary agreements were entered into on 9 October 2003 and 18 August

16 1.4. The Public Share Issue Public Share Issue Under the terms of the Refinancing Agreement the Banks have made their conversion of debt to equity as described in section 1.3 conditional on the Company raising NOK 200 million gross by means of the Public Share Issue. The Company's AGM of 9 May 2005 therefore resolved to raise the Company s share capital by not less than NOK 60,000,000 and not more than NOK 150,000,000 through the issue of not less than 80,000,000 and not more than 200,000,000 shares, each having a face value of NOK The final number of shares issued is determined when the Board has set the subscription price as described in section below, and shall correspond to the number of shares arrived at by dividing NOK 200,000,000 by the subscription price. The Public Share Issue is conditional on the Company raising NOK 200 million gross in additional share capital. Pursuant to Section 10-1 (2) no. 1, the Board is authorised to decide the amount by which the share capital shall be increased when the subscription price has been set. The shares shall be subscribed to by means of the Public Share Issue, and shareholders preference rights pursuant to Section 10-4 of the PLCA have been waived. The Board is authorised to determine the criteria for awarding the shares. However, existing shareholders as at 9 May 2005, with the exception of the Banks, shall be given priority in the event that the Public Share Issue is oversubscribed. The subscription price shall be not less than NOK 1.00 and not more than NOK Pursuant to Section 10-1 (2) no. 3 of the PLCA, the Board is authorised to determine the final subscription price. The premium, less deductions for expenses associated with the share issue, shall be transferred to the share premium fund. The subscription period will run from 13 May 2005 until CET on 27 May The new shares entitle the holder to dividend payments allocated after the new shares were issued. In all other respects the new shares entitle the holder to rights in the Company from the date on which the share capital increase was registered. At its meeting of 11 May 2005, the Board decided to set the subscription price with respect to the Public Share Issue at NOK 1.0. It follows, therefore, that 200,000,000 shares will be issued in connection with the Public Share Issue. Following the Public Share Issue and the Private Placement, the Company will have a share capital of NOK 901,725,163.50, divided into 1,202,300,218 shares, each having a face value of NOK No full subscription guarantee Full subscription to the Public Share Issue is not guaranteed, either in whole or in part Subscription price The Company s AGM of 9 May 2005 authorised the Board to set the subscription price within an interval ranging from NOK 1.00 to NOK At its meeting of 11 May 2005, the Board decided to set the subscription price at NOK 1.0 per share. The subscription price has been determined on the basis of the overall objective of raising NOK 200 million gross, and the fact that the Public Share Issue is crucial to the Company s future development and growth. In setting the subscription price the Board has, therefore, take into consideration the overall terms, given the current state of the stock market, that must apply to obtain a significant volume of subscriptions. 15

17 1.4.4 Minimum subscription The minimum number of shares which may be subscribed to in the Public Share Issue is 5,000 (shares), which corresponds to a round lot of Pan Fish shares. The minimum subscription amount is NOK 5, Subscription period The subscription period commences on 13 May 2005 and closes at Central European Time on 27 May To be valid a correctly completed subscription form must be lodged with one of the subscription offices before the expiry of the subscription period. Subscription may also take place online. Subscriptions are binding from the moment the subscription form has been received at the subscription office or filed online, and may not thereafter be revoked Subscription offices Shares in respect of the Public Share Issue may be subscribed to at the following offices: First Securities ASA Fjordalléen 16, Aker Brygge NO-0115 Oslo Tel.: Fax: DnB NOR Markets Stranden 21, Aker Brygge NO-0021 Oslo Tel.: Fax: You may also subscribe online at or Allocation Notification of allocation will be posted on or around 1 June Shareholders preference rights pursuant to Section 10-4 of the PLCA have been waived. However, the Company s shareholders, including the Banks, will have the opportunity to subscribe to shares in the same way as other investors. In the event that the Public Share Issue is oversubscribed, shareholders as at 9 May 2005, with the exception of the Banks, will be given priority, such that these, through the share issue, have the opportunity to retain their relative shareholding in the Company. With regard to allocation, consideration will otherwise be given to the size of the subscription and the need to maintain an effective shareholder structure Payment of allocated shares All subscribers to shares in the Public Share Issue must, at the time the subscription is lodged, provide Nordea Issuer Service with a one-off authorisation to debit a specified bank account in an amount corresponding to the number of shares that the subscriber has been allocated. The subscriber is responsible for ensuring that there are sufficient funds in the account to cover the amount due and must, therefore, have in the account an amount in NOK corresponding to the number of shares subscribed to from 1 June until such time as debiting has taken place. It is expected that the bank account will be debited on or around 2 June In the event of late or non-payment, penalty interest will accrue in accordance with the Interest on Overdue Payments Act. This currently amounts to 8.75% per annum. Moreover, the Company and the Lead Managers reserve the right to cancel the subscription and/or sell the allocated shares at the subscriber s cost and risk in accordance with Section 10-12, cf. Section 2-13 of the PLCA, and demand that any loss, with the addition of penalty interest and expenses, be met by the subscriber The new shares Subscribed shares will be entitled to dividend payments allocated after the issue of the new shares, and will otherwise have equal status to the old shares from the date on which the share capital increase is registered in the Norwegian Registry of Business Enterprises. Stock market listing of the new shares will take place only after the share capital increase has been registered as fully paid up in the Registry of Business Enterprises and the shares registered in the individual investor s VPS account. 16

18 Transfer of the subscribed shares will take place only after they have been paid for and registered in the investor s VPS account. Subscribed shares are expected to be registered in the VPS at the earliest on 8 June Expenses Expenses associated with the refinancing package and the Public Share Issue will be met by the Company, and are expected to total approx. NOK million, or around 5-7% of the total receipts described in Section 1.3 and 1.4. Expenses are distributed as follows: Company Address Service Amount (NOK thousand) DnB NOR Markets Oslo Lead Manager 3,250/5,250 First Securities ASA Oslo Lead Manager 3,250/5,250 Advokatfirmaet Kluge Stavanger Company s legal representative 200 Wiersholm Mellbye Bech Advokatfirma AS Oslo Legal DD adviser 450 Thommessen Krefting Greve Lund AS Oslo Bank syndicate s legal adviser 500 Ernst & Young Bergen Company s auditor 182 PriveWaterhouseCoopersDA Oslo Financial DD adviser 460 Total 8,292/12,292 The Lead Managers fees range from 2-4% of the gross receipts from the Public Share Issue, in addition to a lump sum. Expenses associated with legal and audit-related assistance are based on estimates for hours invoiced. Other directly attributable costs, including printing, distribution and advertising costs, VPS fees, prospectus fee payable to the Oslo Stock Exchange, etc, will come to an estimated NOK 1,650,000. Expenses are presented exclusive of VAT Lead Managers The Lead Managers in respect of the Public Share Issue are DnB NOR Markets and First Securities ASA Account manager, issuer and securities no. The Company s shares are listed on the Oslo Stock Exchange under ticker code PAN. For trading purposes, a round lot in Pan Fish comprises 5,000 shares. The Company s shares are registered in the VPS. The Company s securities number is ISIN NO The Company s account manager is Nordea, Issuer Services Miscellaneous The Company s address is: Pan Fish ASA Maskinveien Stavanger Norway Tel.: Fax: All documents to which this Prospectus refers are available upon request from the Company s registered office. The Company s organisation no. is NO The Company is a public limited company (ASA) and is subject to Norwegian law. 17

19 2. Pan Fish 2.1. Business idea, goals and strategy Description Pan Fish is one of the world s leading marine aquaculture concerns. Its unswerving focus is to become the world s most cost-effective producer of salmon. In addition to producing high quality salmon, Pan Fish processes its own raw materials at two modern secondary processing plants in Denmark and France. Pan Fish has undergone an extensive financial and operational restructuring process, as well as a complete strategic overhaul. The group s main shareholders are Nordea Bank and DnB NOR, two banks which have stood by the Company through an extremely demanding process. Pan Fish has retained its stock market listing, and minority shareholders have been treated equally in connection with all share issues. Pan Fish will participate actively in the continuing restructuring of the fish farming industry to the extent that such participation is deemed to be a strategy that is value-adding for the Company s shareholders. Pan Fish produces Atlantic salmon in Norway, the UK (Scotland), Canada and the Faeroe Islands. In 2004 Pan Fish s total volume of harvested fish amounted to 66,379 tonnes round weight, which corresponds to approx. 5.5% of the estimated total global output of 1.2 million tonnes round weight Goals and strategy The cornerstone of Pan Fish s strategy is its vision of being the lowest-cost supplier of quality salmon to the global market. Achieving cost leadership is a goal that has the wholehearted backing of the entire organisation. It will be realised by means of sustainable operations and an unswerving focus on fish health. All aspects of the farming process have been highlighted, with particular attention being paid to smolt and the day-to-day operating routines at the individual farming facility. An important factor in these efforts is the development and implementation of efficient systems to identify and correct any variances at as early a point as possible in the production cycle. This is also underlined in staff training programmes. The Company s long-term objective is to bring production back up to a level commensurate with the capacity of its existing infrastructure. Production growth will take place at a rate which is considered reasonable with respect to both good fish health and biological safety, and the fact that Pan Fish, as a leading player in the global market, must help to maintain a healthy market balance. The other cornerstone of the Company s strategy is that Pan Fish shall produce and supply a product that satisfies the stringent standards with respect to quality, food safety and traceability which are set by the world s leading purchases of salmon products. These absolute requirements apply to both round fish and the final processed product. Pan Fish shall continue to develop long-term partnerships with large-scale professional purchasers of salmon by always offering the quality demanded and the delivery accuracy expected New Pan Fish Pan Fish has survived through troubled times, and has undergone an extensive operational and strategic turnaround. The Company now has a tighter and more appropriate corporate structure, which is adapted to its goal of offering customers the highest quality salmon at the lowest price. By reaching its goal of becoming the most efficient producer of quality salmon, the Company wishes to offer the best value to its customers, and thereby also to its shareholders. Cost-effectiveness is an absolute requirement for all food production in the 21st century. However, a focus on efficiency does not mean that the Company can compromise its integrity and the high standards it sets for the fish it produces. The seafood industry is one of the most competitive industries in the world, and the key to success lies in providing consistently high quality, delivery accuracy and 18