Cod Farming Companies To Merge

Based on the agreed exchange ratio and assuming 100 per cent acceptance from the ACF shareholders, the COD shareholders and the ACF shareholders will own 51.1 per cent and 48.9 per cent, respectively, of the combined company.

The combined company will conduct a rights offering in the range between MNOK 54 and MNOK 90 at a subscription price of NOK 6.80 per share to repay interest bearing debt and to strengthen the company's working capital. The minimum amount of MNOK 54 has been underwritten by existing shareholders in COD and ACF. The underwriting is subject to completion of the transaction.

The parties expect that the transaction will be completed in August 2011 and that the rights issue will be completed in September 2011.

"Cod farming has been through a very difficult period, with challenges with respect to both production costs and low market prices. This has lead to a substantial down-scaling of the industry," says Harald Dahl, CEO in COD.

"While there in 2007/08 were 30 to 35 companies that released juveniles into sea, there are now only three to four companies left. Both companies have the last year gradually increased their control over production costs and the fish the companies released to sea in 2010 shows an improved growth rate compared to previous generations."

"In addition, the prices on cod have gradually improved the last year, from low 20 to over NOK 30 per kg. CODs strategy to develop a consumer packed product - STRM - has been successful. We have experienced a significant growth in the sales and received positive feedback with respect to the quality and packing of the product," concludes Mr Dahl.

"Both ACF and COD have completed substantial restructurings the last year. This has resulted in lower costs and reduced debt. The proceeds the combined company will receive through the rights offering shall be applied towards financing of new profitable growth. Substantial resources have been invested in the development of cod farming, both from the private and governmental side. This combination secures a further development in an exciting sector," says Marianne E Johnsen, chair of COD.

"ACF has the previous months made significant structural changes, including financial and organisational changes. The timing is right for a structural solution with COD that realises significant synergies to the benefit of the shareholders and the employees," says Ivar Kvangardsnes, CEO in ACF.

"A combination of the companies is a beneficial industrial solution supported by the boards of both of the companies and which they have been active to get in place. The fact that the minimum amount of MNOK 54 in the planned rights offering has been underwritten shows that the combination also is supported by the significant shareholders in both of the companies," says Helge Hellebust, chairman of ACF.