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Salmon Evolution Holding ASA ("Salmon Evolution" or the "Company", OSE: SALME) - a leading land-based salmon farming company with its first production facility under construction at Indre Harøy in western Norway - refers to the stock exchange notice released on February 26, 2021 regarding the signing of a Joint Venture Term Sheet with Dongwon Industries Co., Ltd. ("Dongwon"). The term sheet stated the parties' intention to partner in K Smart Farming Co., Ltd. ("K Smart"), to form a 49/51 joint venture that will develop, construct, and operate a land-based salmon farming facility with a production capacity of 20.000 tonnes live weight ("LWE") of harvestable Atlantic salmon per year in South Korea, using Salmon Evolution's Hybrid Flow Through System ("HFS") technology.
- Design and engineering
- Site evaluation and permitting
- Acquisition of an existing and operating smolt facility in Jeongseon of which closing has already taken place
- General corporate purposes
- 20,000 tons LWE production facility in South Korea using Salmon Evolution's HFS technology, developed in two phases of 10,000 tonnes LWE each.
- Ownership through joint venture structure with seafood giant Dongwon where Salmon Evolution will hold 49% ownership.
- Salmon Evolution's minority position is well protected though a comprehensive set of corporate governance principles that ensures transparency and creates mutual influence and balance in the partnership structure.
- Project cost for phase 1 is estimated to about NOK 1.6bn.
- Funding structure of 25% equity and 75% debt, where Dongwon will facilitate debt financing in K Smart at attractive cost levels.
- Equity contribution from Salmon Evolution is estimated to NOK 200 mill for the whole project including phase 2 which is planned financed by operating cash flow and debt.
- Joint effort to maximize the values of K Smart including cooperation to establish branding and marketing of premium, land-based Atlantic salmon from K Smart and Salmon Evolution in the Korean market.
Mr Håkon André Berg, CEO of Salmon Evolution comments:
"Following the JV announcement in late February, we are very pleased with being able to formalize our joint venture with Dongwon in an effective manner. After seeing the impressive magnitude of Dongwon's operations in South Korea first-hand and witnessing the Korean authorities' solid backing for the project on both a national and local level, we are confident that we have found the perfect partner for our international expansion into one of the most interesting salmon markets globally. The natural characteristics of the South Korean coastline and water temperature profile represent an ideal fit for our HFS technology and we see a huge economic and strategic potential in K Smart in the coming years."
Salmon Evolution is already well underway in the recruitment of key personnel for the project, which together with resources from the Company's existing organization will play a key role in K Smart and leveraging the experiences and knowledge developed through Salmon Evolution's existing project at Indre Harøy.