Norway Royal Salmon ASA (NRS): Law suit against NTS ASA with claim for compensation as a result of breach of contract

Summary

The independent board of directors of Norway Royal Salmon ASA ("NRS") has discussed the situation after NTS ASA's ("NTS") vote against the proposed share issue at the extraordinary general meeting on 7 April, which  resulted in the share issue not being approved.

The share purchase agreement between NRS and NTS contains a clear and express provision requiring NTS to be represented at the general meeting with all its shares in NRS and vote in favour of the share issue. NTS has breached this obligation by voting against the share issue. Accordingly, NRS is not able to complete the share issue, and the SalmoNor acquisition cannot be completed in accordance with the agreement. This will result in a significant economic loss for NRS and its shareholders.

NRS has throughout the process sought to maintain a constructive dialogue with NTS, and has been open to discuss alternative solutions. For the independent board, it has however been a clear condition for any such alternative solution that the values of NRS and its shareholders are protected. The SalmoNor transaction is, for NRS, a transaction with its main shareholder, and it has therefore been particularly important for the independent board to ensure that the interests of all shareholders of NRS are being protected. There have been no proposals from NTS which have protected that shareholder values in NRS.

The independent board has an obligation to protect the values of the company and the shareholders, and cannot accept that a significant loss is imposed on NRS as a result of NTS breaching a contractual voting undertaking and using its voting power to free itself of the obligation to sell SalmoNor AS in accordance with the agreement which as been entered into. The independent board has therefore found it necessary to decide to file a law suit against NTS claiming damages for breach of contract.

Background

In accordance with the share purchase agreement dated 11 January 2022, NTS had an obligation to vote in favour of the share issue. At the general meeting, and also in a separate stock notification on 7 April, NTS has justified its breach of this voting undertaking by arguing that the freedom of action of the board of directors of NTS is limited by section 6-17 of the Norwegian Securities Trading Act. The independent board of NRS does not agree with this. In the share purchase agreement dated 11 January, NTS undertook a legally binding obligation to sell the shares in SalmoNor AS and vote in favour of the share issue. At this time, no offer had been made for NTS. The fact that an offer for NTS was made after the entry into the agreement, does not prevent NTS from complying with its obligations under already existing agreements, and does not give NTS any right to withdraw from its obligations. The independent board therefore considers that the vote of NTS at the general meeting on 7 April was a breach of the share purchase agreement.

The independent board has noted that the NTS have now convened a general meeting to consider whether to waive the restrictions under section 6-17 of the Norwegian Securities Trading Act. NTS has had the ability to call such a meeting at any time since the first bid for NTS was announced on 17 January 2022, since NTS already at that time, based on the interpretation of section 6-17 they are now putting forward, found themselves in a situation where they could not comply with their obligations under the SalmoNor-agreement. NTS has never communicated to NRS that such a general meeting could be an alternative. Instead, NTS has chosen to wait with a notice of such a general meeting until after the share issue has lapsed as a result of NTS's vote at the general meeting on 7 April.

Since more than 50% of the shareholders of NTS has undertaken to accept the offer from Salmar ASA ("Salmar"), which is conditional upon neither the share issue nor the sale of SalmoNor being completed, it does not in any event appear realistic that the general meeting of NTS will support a share issue in NRS. In any event, it is not acceptable that the question of whether NTS should comply with a legally binding agreement is made subject to a vote at NTS' general meeting.

The share issue in NRS announced on 30 March has lapsed as a result of the resolution of the general meeting yesterday. Whether the SalmoNor transaction can still be completed is uncertain. A failure to compete the SalmoNor transaction will lead to a significant economic loss for NRS. Even if it should prove possible to complete the transaction at a later time, a delay until after the completion of Salmar's bud for NTS, will have material negative consequences for NRS and its shareholders. From an operational perspective, a significant delay in completing the transaction will be very unfortunate. A delay will also create significant market risk relating to the share issue which will need to be carried out, and will lead to the minority shareholders losing the possibility of a pass-through mandatory offer upon a change of control in NTS.

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For further information, please contact:

Klaus Hatlebrekke, Interim CEO: +47 975 16 757

CFO Ola Loe, +47 911 79 411

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Norway Royal Salmon in brief

The Norway Royal Salmon (NRS) group owns 36 085 tonnes MAB for salmon farming located in Troms and Finnmark, and 21 800 tonnes MAB for salmon farming and 5 300 MAB for trout farming on Iceland through the company Arctic Fish. In addition, the group has minority interest in two associated Norwegian fish farming companies which together own 9 fish farming licenses. NRS is an attractively positioned fish farming group, which offers salmon to the market through its own sales organisation. For further details, please visit www.norwayroyalsalmon.com.

This information is subject to the disclose requirements pursuant to section 5-12 of the Norwegian Securities Trading Act

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