Norway Royal Salmon ASA (NRS): Statement from the independent board of directors regarding the ongoing process to acquire SalmoNor AS

Reference is made to the demand from NTS ASA ("NTS") for the convening of an extraordinary general meeting of Norway Royal Salmon ASA ("NRS") as described in the stock exchange release dated 28 March 2022. In light of this stock exchange release, NRS considers that it is appropriate to comment on the facts relating to the process to acquire SalmoNor AS ("SalmoNor") and to summarize the board's assessments.

Summary:

On 11 January 2022, a legal binding agreement (the "Share Purchase Agreement") was entered into whereby NRS' wholly owned subsidiary NRS Farming AS undertook to purchase, and NTS undertook to sell, all the shares in SalmoNor (the «Transaction»). Both parties saw significant advantages in the combination, including with respect to growth, competence and employment.

Since the Transaction was a process between related parties, the Share Purchase Agreement was negotiated between an independent board in NRS, which had as a main objective to secure an agreement on terms which would be attractive for the shareholder values in NRS, with a special focus on securing the interests of the minority shareholders.

After the signing of the Share Purchase Agreement in January 2022, i) the share price of NRS has developed positively, ii) salmon prices (both current and future) have increased and iii) comparable companies on Oslo Børs have increased in value. Accordingly, the current independent board considers that the acquisition of SalmoNor appears even more attractive today, and it is therefore important for the shareholders' values in NRS to complete the acquisition pursuant to the legal binding agreement that exists between the parties.

It follows from the stock exchange release from NTS that the demand to defer the SalmoNor transaction until further notice, is to facilitate the completion of the offer made by Salmar ASA ("Salmar") for NTS launched after the Share Purchase Agreement had been entered into. The independent board of NRS considers such deferral to be in conflict with NRS' interests. Consequently, the demands from NTS is a petition to the NRS board to adopt resolutions that harm the shareholder values in NRS, hereunder the values and interests of the company's minority shareholders.

The board of NRS has a duty to make the decisions which are best for the shareholder values of NRS. In the current situation, this is, in the board's clear view, to continue the process towards an implementation of the SalmoNor transaction within the existing timeline.

Additional comments and response

From the beginning of the process concerning the combination of NRS and SalmoNor, NRS has been of the opinion that the board members representing NTS are not qualified to participate in the consideration of the Transaction. NTS is the counterparty in the transaction and NTS' representatives therefore have a special interest in the matter. It would appear very improper if the NTS representatives at the same time were to participate in the board proceedings in NRS and have access to NRS' internal documents related to this matter.

The agreement regarding the acquisition of SalmoNor is conditional upon NRS completing a cash equity issue of approximately NOK 2 billion to finance the cash consideration to be paid by NRS to NTS. Pursuant to the agreement, NRS is obligated to do its utmost to complete the cash equity issue. NTS on the other hand, has pursuant to the Share Purchase Agreement of 11 January undertaken an unconditional, legal obligation to vote in favour of the cash equity issue on a general meeting in NRS. This is an obligation that was undertaken by NTS prior to the launch of SalMar's offer, and NTS is accordingly not affected by the restrictions set out in the Securities Trading Act section 6-17.

After the entering into of the share purchase agreement concerning SalmoNor, a new board has been elected in NTS. An offer has further been launched by SalMar for the acquisition of all shares in NTS, and the board of NTS has recommended such offer. It is a condition under the offer from SalMar that the SalmoNor transaction is not completed. NRS has not been informed of the reasoning for such condition, but it is possible that one of the reasons is to avoid a pass through mandatory offer obligation, which will lead to SalMar being required to make an offer on NRS at a price level that reflects the implicit pricing in SalMar's offer on NTS. It is NRS's assessment that the offer from SalMar reflects a significantly higher pricing of NRS than what is reflected in the share value of NRS today. Regardless of SalMar's motivation, such condition puts NRS and especially the minority shareholders in a very unfortunate situation.

Given the condition, the offer from SalMar has provided the owners of NTS, especially the ones who have already pre-accepted the offer, with a strong incentive to try to stop the SalmoNor transaction. Last week, NTS submitted a proposal to NRS to defer the deadline for the implementation of the SalmoNor transaction until 15 December 2022.

The independent board of NRS has continuously considered it to be in the best interest of NRS to complete the acquisition of SalmoNor. This was the assessment when the agreement was entered into in January, and the subsequent development in the market has made the agreement even more attractive for NRS. As announced in a stock exchange release dated 17 March 2022, the independent board at that time, engaged ABG Sundal Collier ASA as financial advisor to assist with the financing process related to the acquisition of SalmoNor. Simultaneously, an extraordinary general meeting was convened to be held on 7 April 2022 in order to consider the proposed resolution of a share issue.

At the extraordinary general meeting in NRS, held on 17 March 2022, a new board was elected in NRS. The new board was elected after demand from NTS, and NTS voted in favour of the new board.

The new board has thoroughly assessed the independency of the board members Roald Dolmen and Lillian Bondø, who both represent significant ownership interests in NTS, and has concluded that both Dolmen and Bondø are disqualified from participating in the consideration of the SalmoNor process, including the contemplated cash equity issue. In addition to Dolmen and Bondø both having a significant economic interest in NRS' counterparty in the transaction, they have, because of the conditions for SalMar's offer, a strong economic incentive to try to stop the cash equity issue. In light of this, NRS is surprised that NTS chooses to argue that Dolmen and Bondø should not be disqualified.

The new independent board of NRS has, in the same way as the previous independent board, concluded that it is in the best interest of NRS to complete the SalmoNor transaction and the contemplated cash equity issue. The process towards potential investors has shown that there is significant interest to participate in the cash equity issue, and NRS is of the opinion that a successful book building may be completed prior to the general meeting. A deferral of the cash equity issue will lead to significant uncertainties, both in terms of general market uncertainties and uncertainty related to the development of salmon prices. Furthermore, NRS has no information on how SalMar will deal with the SalmoNor transaction after a completion of its offer for NTS. A deferral of the transaction will also be unfortunate from an operational perspective, as it is of importance for NRS to commence the integration of SalmoNor into its business.

On this basis, the independent board is of the opinion that a potential deferral of the process will involve a risk of significant loss of shareholder values in NRS. The board considers it to be its fiducial duty to look after the interests of all shareholders of NRS, and not only the principal shareholder. If NTS uses its ownership position to ensure that an instruction not to complete the SalmoNor transaction is adopted, the  independent board and the management are of the opinion that this will represent a breach of the Share Purchase Agreement, which will imply that the interest of the NTS shareholders to complete the SalMar offer is prioritized at the expense of the interests of NRS and the minority shareholders in NRS.

NTS' demand for an investigation, with accompanying insinuations of liability for the board and the management of NRS, appears to be an attempt to put pressure on NRS to comply with NTS' desire to stop the SalmoNor transaction in order to arrange for completion of the offer from SalMar. The board of NRS will continue to act based on the assessment of what best serves the interests of the shareholders of NRS.

On this basis, NRS will continue the preparations for an issue of new shares as previously announced.

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For further information, please contact:

Klaus Hatlebrekke, Interim CEO: +47 975 16 757

Ola Loe, CFO: + 47 911 79 411