Norway Royal Salmon ASA (NRS): Statement regarding mandatory offer from NTS ASA

1. Introduction

This statement is made by the board of directors (the “Board”) of Norway Royal Salmon ASA (“Norway Royal Salmon”) in accordance with Section 6-16 of the Norwegian Securities Trading Act in connection with the mandatory offer from NTS ASA (“NTS”) to acquire all the issued and outstanding shares in Norway Royal Salmon not already owned by NTS against a consideration of NOK 209 in cash per share (the “Offer”), made in an offer document dated 16 July 2021 (the “Offer Document”).

The Oslo Stock Exchange has, in its capacity as take-over authority of Norway pursuant to Section 6-16 (4) of the Norwegian Securities Trading Act, decided that the Board, without its chairman Helge Gåsø, shall submit the statement on behalf of Norway Royal Salmon.

2. Background

The overall objective of Norway Royal Salmon is to engage in the production, processing, trading and distribution of seafood, and participate in other companies associated with the seafood industry. Norway Royal Salmon is an attractively positioned fish farming group, which offers salmon to the market through its own sales organization. The group currently has 36,085 tonnes MAB (maximum allowed biomass) for salmon farming located in Troms and Finnmark in Norway, and 17,800 tonnes MAB for salmon farming and 5,300 MAB for trout farming on Iceland through the company Arctic Fish. Norway Royal Salmon also holds a minority interest in two associated Norwegian fish farming companies which together own 9 fish farming licenses. Norway Royal Salmon was established in 1992 and its shares have been listed on the Oslo Stock Exchange since 2011.

The Offer is being made by NTS on behalf of the parties NTS ASA, Midt-Norsk Havbruk AS and Gåsø Næringsutvikling AS (collectively referred to as the "Consolidated Parties"). Midt-Norsk Havbruk AS is a wholly owned subsidiary of NTS and is consequently considered as a close associate of NTS. Gåsø Næringsutvikling AS is a major shareholder in NTS and is controlled by Helge Gåsø, the chairman of the Board, and is therefore also considered as a close associate of NTS. Gåsø Næringsutvikling AS has also agreed to sell its shares in Norway Royal Salmon to NTS.

On 21 June 2021, NTS announced the completion of the previously announced purchase of shares in Norway Royal Salmon by Midt-Norsk Havbruk AS of 6,299,635 shares, equal to 14.45% of the total shares and votes in Norway Royal Salmon. Following the share purchase, NTS directly and indirectly owned a total of 13,440,729 shares in Norway Royal Salmon, equal to 30.84% of the total shares and votes. In addition, with the shareholding of Gåsø Næringutvikling AS of 1,624,607 shares, the total ownership held by the Consolidated Parties in Norway Royal Salmon amounted to 15,065,336 shares, equal to 34.57% of the total shares and votes. As a result, NTS/the Consolidated Parties passed the threshold for triggering a mandatory offer pursuant to Chapter 6 of the Norwegian Securities Trading Act.

In the announcement on 21 June 2021, NTS stated that the Consolidated Parties did not have the intention to make a mandatory offer and would complete a sell-down below the mandatory offer threshold of 1/3. However, on 16 July 2021, NTS announced its decision to make a mandatory offer to acquire all the outstanding shares in Norway Royal Salmon not already owned by the Consolidated Parties. The offer period was set from 19 July 2021 to and including 16 August 2021 at 16:30 hours CEST. According to the latest update on the acceptances received under the Offer (on 6 August 2021), the Consolidated Parties now own a total of 15,670,825 shares in Norway Royal Salmon, equal to 35.97% of the total number of shares and votes.

The Offer Document has been approved by the Oslo Stock Exchange in accordance with Section 6-14 of the Norwegian Securities Trading Act and shall have been submitted to all shareholders of Norway Royal Salmon with known residence, except for shareholders who reside in a jurisdiction where the Offer cannot legally be made.

According to the Offer Document, it is expected that Gåsø Næringsutvikling AS and Midt-Norsk Havbruk AS will not hold any shares in Norway Royal Salmon following the expiry of the offer period. According to the Offer Document, the shares held by Gåsø Næringsutvikling AS will be sold to NTS at a purchase price of NOK 209 per share and the shares in Norway Royal Salmon held by Midt-Norsk Havbruk AS is expected to be transferred to NTS.

Below is a short summary of the Offer based on the information in the Offer Document.

The price offered in the Offer is NOK 209 per share in cash.

The acceptance period for the Offer is from and including 19 July 2021 to and including 16 August 2021 at 16:30 hours CEST. NTS may extend the acceptance period, one or more times, so that the aggregate acceptance period amounts up to a total of six weeks (in which case it would expire on 30 August 2021).

According to the Offer Document, settlement is expected to take place as soon as reasonably possible and not later than two weeks (14 calendar days) after the end of the acceptance period. The latest date on which settlement of the Offer will be made is 30 August 2021 if the acceptance period is not extended, and 13 September 2021 if the acceptance period is extended by maximum two weeks.

The Board calls attention to the fact that the acceptance of the Offer by the shareholders will be irrevocable, and that the acceptance thus cannot be withdrawn once the receiving agent for the Offer has received the acceptance.

The Offer is not subject to any conditions.

The Offer will be financed through a debt arrangement with Nordea and DNB Bank ASA as lenders. NTS has in accordance with Section 6-10 (7) of the Norwegian Securities Trading Act provided a bank guarantee, issued by Nordea, covering NTS’s obligation to pay for the shares to be purchased pursuant to the Offer. The text of the bank guarantee is set out in Appendix D to the Offer Document.

The obligation to make a repeated mandatory offer pursuant to Section 6-6 of the Norwegian Securities Trading Act does not apply if NTS, as a result of the Offer, becomes the owner of shares representing 40% or more, or 50% or more, of the voting rights in Norway Royal Salmon. If NTS does not obtain an aggregate holding of shares representing 50% or more of the voting rights in Norway Royal Salmon in connection with the Offer, NTS will, however, be required under Chapter 6 of the Norwegian Securities Trading Act to make a new mandatory offer if it subsequently acquires additional shares in Norway Royal Salmon and thereby reaches or passes the 40% or 50% threshold (as applicable).

If NTS, as a result of the completion of the Offer, or otherwise, acquires and becomes the owner of 90% or more of the total amount of shares in Norway Royal Salmon and an equivalent right of the voting rights which may be cast at the general meeting, then NTS will have the right to resolve (and the remaining shareholders in Norway Royal Salmon will have a right to require) a compulsory acquisition of the remaining shares in Norway Royal Salmon not owned by NTS (i.e. a squeeze-out). In such event, NTS may also on certain terms complete a compulsory acquisition of the shares that are not owned by NTS without first carrying out a mandatory offer pursuant to the preceding paragraph. The Board of Norway Royal Salmon notes that the Offer Document states that NTS intends to make such compulsory acquisition of shares in Norway Royal Salmon if NTS, as a result of the Offer, a subsequent mandatory offer or otherwise, acquires and holds 90% or more of the total issued shares representing 90% or more of the voting rights in Norway Royal Salmon.

3. The Offer's significance for Norway Royal Salmon

NTS has informed in the Offer Document that NTS does not intend to apply for a delisting. However, NTS has also stated in the Offer Document that following the completion of the Offer, and depending upon the number of shares acquired by NTS pursuant to the Offer, NTS reserves its rights to propose to the general meeting in Norway Royal Salmon to apply for a delisting of the shares.

Furthermore, NTS has informed in the Offer Document that its intention as an owner is to support the continued growth of Norway Royal Salmon within all its current business areas and that there are currently no plans to make changes to the organization of Norway Royal Salmon following the completion of the Offer.

The Board notes that with its current shareholding NTS is able to veto any decisions at the general meeting of Norway Royal Salmon requiring 2/3 majority of the votes and capital (such as amendments to Norway Royal Salmon’s articles (Nw: vedtekter), including changes in Norway Royal Salmon’s share capital). The Board further notes that in the event that NTS reaches an ownership of 50% of the share capital through the Offer or otherwise, NTS is able to decide upon matters at the general meeting requiring a majority of the votes (such as election of board members and members of the nomination committee and proposals to distribute dividend). Finally, the Board notes that in the event that NTS reaches an ownership of 2/3 of the share capital through the Offer or otherwise, NTS is able to decide upon matters at the general meeting requiring 2/3 majority of the votes and capital (such as any amendments to Norway Royal Salmon’s articles (Nw: vedtekter), including changes in share capital). Due to lack of presence by shareholders at general meetings, the real influence by shareholders has historically been higher than their formal ownership shares, so also at Norway Royal Salmon’s general meetings.

Furthermore, the Board will also refer to the fact that in the event that NTS ends up with a shareholding of more than 40% of the share capital in Norway Royal Salmon, such ownership share will trigger certain change of control-rights for Norway Royal Salmon’s lenders as set out in the respective loan agreements, which rights will, based on already initiated discussions with certain of the lenders, be dealt with if this situation should occur.

4. Consequences for the employees

NTS has stated in the Offer Document that the Offer is not expected to have legal, economic, tax-related or work-related consequences for the employees of Norway Royal Salmon. Further, NTS has stated that it has no plans to make changes to Norway Royal Salmon's workforce following the completion of the Offer.

5. Assessment and recommendation

The Board has reviewed the Offer Document and evaluated factors that the Board considers as material for the assessment of whether the Offer should be accepted by the shareholders of Norway Royal Salmon.

Having carefully reviewed the terms and conditions of the Offer, and in consideration of the evaluation provided by Arctic Securities AS as financial advisor to Norway Royal Salmon, the Board recommends that the shareholders with a long term view on their investment do not accept the Offer. The recommendation is based on available information and the circumstances mentioned above. The Board’s conclusion is supported by its view of Norway Royal Salmon's capability to generate competitive returns in the future, also taking into account the production of triploid salmon being phased out and the growth projects related to the company’s new smolt facility, the Arctic Offshore Farming concept and the successful operations on Iceland through Arctic Fish.

The recommendation is unanimous.

However, should it become probable that NTS will be able to acquire a controlling ownership in Norway Royal Salmon (>50%), shareholders not having accepted the relevant Offer should be alert to the possibility of this having adverse effects on liquidity and share pricing by removing the strategic value of the company for other potential interested parties, which may make the acceptance of the Offer more attractive.

In light of the process initiated by the Board to explore strategic options for Norway Royal Salmon, the Board recommend that shareholders, in any event, refrain from accepting the Offer until the very end of the acceptance period (16 August 2021).

The Board retains the right to amend, qualify or withdraw its statement with respect to the Offer.

The members of the Board who have participated in the giving of this statement and the CEO of Norway Royal Salmon do not intend to sell their shares under the Offer.

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9 August 2021

The Board of Directors of Norway Royal Salmon ASA