Bergen, Norway-based Proximar Seafood has secured JPY 8.8 billion (USD 66 million, EUR 61 million) in financing via a loan offer from a syndicate that includes two Japanese banks for the land-based salmon farm it's building near Tokyo, Japan.
The offer consisted of a highly confident letter along with a term sheet – which the company said should be “considered a strong statement of comfort from the banks” on providing the financing the company needs for its salmon recirculating aquaculture system (RAS) facility, currently under construction in in Shizuoka Prefecture. The names of the banks were not released by Proximar. Proximar signed a contract with RAS specialist AquaMaof in early 2020 for a design and build of a facility with a 5,300 MT annual production capacity of gutted salmon in its first phase.
“The offer is subject to customary conditions such as final credit committee approval, legal due diligence, and completion of loan documentation,” Proximar said. “Disbursement of the first part of the loan is scheduled for March 2023 and the second during summer 2023, at the time of takeover of the post-smolt grow-out building.”
Proximar began construction at the facility in early 2021, and has since completed work on its hatchery facility. The company said the construction work on the post-smolt facility is underway and is on schedule. It expects the full facility will be finished in Q3 2023, in line with earlier predictions.
"We are delighted to finally see the entire debt financing now coming in place for our stage-one facility,” Proximar CEO Joachim Nielsen said in a release. “Proximar has evaluated multiple debt financing alternatives over the last two years and the offer represents the company's preferred option for debt financing, in line with our targeted debt ratio. To obtain a complete debt solution for both the construction and operating phases at attractive terms marks a breakthrough for the company.”
The company also announced it has initiated salmon production at the facility with the transfer of the first batches of eggs into the facility in early 2023.
"The successful transfer of our first juveniles to start feeding is an important milestone for us and according to our production plan,” Proximar Hatchery and Nursery Manager Charlotte Okstad said. “I am excited to see the progress and development in the next coming months."
The company said in its latest release that construction and production remain “on track" with previous forecasts.
In October 2022, Proximar's shareholders approved a resolution to issue a convertible bond worth between NOK 150 million and NOK 250 million (then USD 14.2 million and USD 23.8 million, EUR 14.4 million and EUR 24.1 million) to enable the company to begin its production phase and partly secure other funding needs for the project.
And in January 2023, Proximar announced it had obtained a JPY 4 billion (USD 30.2 million, EUR 28.2 million) loan offer from a Japanese bank, while declining to name the bank.. The loan will be available for drawdown by the end of 2024, following the company's first planned harvest mid-2024, according to Nielson, who said it will permit further subordinated lending to reach Proximar's debt target.
"Securing debt financing is a key priority for Proximar," he said. "This offer is a steppingstone in our post-construction financing plan. With the received offer, construction loan discussions are now also expected to progress more efficiently."
Proximar previously secured an outstanding loan from JA Mitsui Leasing of JPY 3.25 billion (USD 24.2 million, EUR 22.5 million), which is due to be refinanced by March 2024.
"Based on the ongoing dialogues with banks and financial institutions, the company is optimistic on concluding on a debt structure aligned with the previous guidance of approximately 45 percent debt level (approximately NOK 630 million [USD 62.3 million, EUR 58.1 million]), based on the total project cost. Proximar will evaluate the received offer and the alternatives and provide further update."
Proximar's former CFO, Pål K. Grimsrud, resigned from his position in January 2023 in order to pursue opportunities outside of the company.
Proximar said it has begun the process of recruiting a successor for the position.
Photo courtesy of Proximar
