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2016-08-29

Hofseth BioCare ASA: Equity issue of minimum NOK 165m as part of recapitalization plan under ongoing turnaround project - Alliance Seafoods becomes a key shareh

Update turnaround project

Reference is made to the ongoing turnaround project of Hofseth BioCare ASA
(the "Company", "Hofseth BioCare" or "HBC") which includes reconstruction of
the Midsund plant to further improve the production process, increase
production capacity and significantly reduce unit costs. The new private
placement will strengthen the Company's ability to leverage the ongoing
expansion at the Midsund facility, increasing yields and volumes of the
protein fractions, improving taste and smell of the protein supplement
ProGo(TM) and substantially lowering the production cost of all four product
fractions. The investment at the Midsund facility will also enable HBC to
produce a new version of the ProGo® protein peptides for humans.

The reconstruction process is expected to be completed in September 2016 and
the Company then plans to ramp up production volumes significantly. The
implementation of these measures is expected to provide the Company with a
competitive cost base on a per unit basis, enabling mass sales of excess
volumes to the feed and pet industry. As previously announced, the Company
has already entered into off-take agreements for substantial volumes.

The Company's strategy towards the human nutrition market remains intact and
the Company will in the coming months further intensify its efforts in this
respect.

At the same time, the Board of Directors has elected Mr. Tor Erik Andersen as
new CEO of Hofseth BioCare. Mr. Ødegård will take the position as CFO in the
Company. Roger Hofseth, Chairman of the Board comments: "Jon Olav Ødegård has
done an excellent job in leading this company through the
final R&D phase, very often in a difficult financial environment. Under his
leadership the Company has done extensive work on clinical studies etc, and
the Company has, on his watch, come further than anyone else on Marine
Ingredients for human consumption. The Company is now in a position to
intensify the commercial phase, and we thank Mr Ødegård for his hard work and
dedication so far
."

Equity issue

In order to strengthen the Company's financial platform and provide a solid
foundation for operations under the new business plan, the Company hereby
announces an equity issue of minimum NOK 165m (the "Equity Issue") at a
subscription price of NOK 1.50 per share (the "Subscription Price").

The minimum amount of NOK 165m is already subscribed, and more than 2/3 of the
shareholders have given a proxy to vote for the proposal at the upcoming EGM.
The Equity Issue consists of the following elements:

* Cash equity issue of minimum NOK 59m towards Alliance Seafoods Inc.
("Alliance Seafoods") and certain shareholders of which Alliance Seafoods
will subscribe for NOK 50m. The NOK 50m proceeds from Alliance Seafoods
will be made available to the Company in advance of the implementation of
the Equity Issue and will technically be converted into new shares.
* Buy-back of all outstanding convertible bonds (the "Bonds") by issuing new
shares worth approx. NOK 75.3m based on the Subscription Price (the
"Buy-back value"). The face value of the Bonds is NOK 90.5m and the
Buy-back value is calculated as the balance of the Bonds adjusted for the
discounted subscription price to the face value of the Bonds when issued
and the implied interest under the Bond Agreement until 31 August 2016
which gives a Buy-back value of approx. NOK 75.3m. The holders of the Bonds
include international financial investors as well as Hofseth International
AS whereas the latter owns 40/181 of the outstanding Bonds.
* Minimum NOK 30.7m will be subscribed for by certain creditors of HBC
including but not limited to the Hofseth International group of companies,
Roger Hofseth AS and key employees of the Company. This subscription amount
will be settled through conversion of debt.

If the Equity Issue is subscribed with just the minimum amount of NOK 165m,
the total number of outstanding shares in HBC will be 232,472,297. As such,
the dilution for existing shareholders not participating in the Equity Issue
will be approximately 47%.

After completion of the Equity Issue with subscription of the minimum amount,
the Company will have the following main shareholders:

* Hofseth International group of companies (Hofseth International AS, Hofseth
AS, Seafood Farmers of Norway AS and Hofseth Logistics AS) will have an
ownership interest in HBC of approximately 22.4%,
* Companies directly controlled by Roger Hofseth will have an ownership
interest in HBC of 13.4% including 3,850,000 shares indirectly controlled
by Roger Hofseth AS
* Bondholders excluding Hofseth International AS will have an ownership
interest in HBC of 16.8%
* Alliance Seafoods will have an ownership interest in HBC of approximately
14.3%

Hofseth BioCare will as soon practically possible call for an extraordinary
general meeting to resolve the Equity Issue. The Company is pleased to
announce that shareholders representing more than 2/3 of the outstanding
shares of HBC have already undertaken to vote in favour of the Equity Issue
and that the Company already has received pre-commitments for subscription of
NOK 165m in the Equity issue.

The cash equity issue deviates from the rules on equal treatment and existing
shareholders preferential right as set out in the Securities Trading Act
section 5-14 and the Public Limited Liability Companies Act sections 10-4 as
the subscription offer was not directed towards all existing shareholders.

The Board finds it necessary to restructure the majority of HBC's debt through
conversion to equity in combination with a significant capital injection, to
establish a sustainable debt to equity level for the Company's operations.
The Board considers that the equity raised through the Equity Issue is raised
at favourable terms as the subscription price is approximately the same as
the current market price of the Company's shares. More importantly, the Board
considers the Equity Issue strategically important for HBC and its
shareholders as a key supplier (Hofseth International) and key customer
(Alliance Seafoods) will benefit from a further positive development of the
Company through their significant ownership in HBC. The Board has considered
other sources of financing, but has deemed such sources as less beneficial
than the raising of equity through the Equity Issue.

The Board will propose a subsequent offering up to NOK 20m to limit the
dilutive effect of the Equity Issue.

For more information about the Equity Issue and the financial situation of
HBC, please refer to the Company's second quarter 2016 report issued today.

About Alliance Seafoods Inc.:

Alliance Seafoods is a fully owned subsidiary of Yokohama Reito Co., Ltd
("Yokorei"), a Japanese conglomerate listed on the Tokyo Stock Exchange.
Yokorei is a leading player in the frozen storage market in Japan. In
addition, through Alliance Seafoods and other subsidiaries, Yokorei is
involved in sales and distribution of fish and meat with a particular focus
on the Asian market. Yokorei's consolidated turnover for 2015 was
approximately USD 1.5 billion.

HBC and Alliance Seafoods have already had a business relationship for more
than a year, and Alliance Seafoods is a key partner for HBC in the Asian
market.

On 17 June 2016 Yokorei announced the acquisition of Fjordlaks Aqua, a leading
trout farming company in Norway. The acquisition of Fjordlaks Aqua is made
through a joint venture owned together with Hofseth International, which is a
major shareholder of HBC. Hofseth International is also HBC's key supplier of
raw material and the Fjordlaks Aqua transaction is expected to significantly
increase Hofseth International's processing activity and thereby also
significantly increase HBC's access to a stable source of raw material.
Equally important, the Fjordlaks Aqua transaction will contribute to a
further strengthening of the relationship between the Hofseth group of
companies and Yokorei / Alliance Seafood, ultimately benefitting HBC.

"We expect Hofseth BioCare to supply high quality products to our market with
its advanced technology which enables maximum utilisation of limited
biological resources. We are absolutely delighted to strengthen our
relationship with Hofseth BioCare and the Hofseth group and contribute in
building a vertically integrated business model from farming, processing and
lastly sustainable use of bi-products,
" says Fumio Iwabuchi, CEO of Alliance Seafoods.

Jon Olav Ødegård, CEO of Hofseth BioCare comments: "We are extremely pleased
to have Alliance Seafoods on board as a significant
shareholder. We are already seeing that the relationship is starting to bear
fruits and look forward to closely co-operate with Alliance Seafoods in order
to further penetrate the Asian market for high quality nutrition products."

For further information, please contact:

Jon Olav Ødegård, CEO of Hofseth BioCare ASA
Mob: +47 936 32 966
E-mail: joo@hofsethbiocare.no

Tor Erik Andersen, COO of Hofseth BioCare ASA
Mob: +47 911 79 854
E-mail:tea@hofsethbiocare.no

About Hofseth BioCare ASA:

HBC is a Norwegian biotech company that offers high-value ingredients and
finished products for humans and pets. The company is founded on the core
values of sustainability, traceability and optimal utilization of natural
resources. Through an innovative hydrolysis technology, HBC is able to
preserve the quality of salmon oil, proteins and calcium, prepared of fresh
salmon off-cuts. HBC's objective is to contribute to the efficient use of
marine resources and deliver quality products for ingredients and finished
consumer products in the nutrition market.

Hofseth BioCare's headquarters are located in Ålesund, Norway with branches in
Oslo, Chicago, Mumbai and Tokyo. HBC is listed on Oslo Stock Exchange Axess
list with ticker "HBC". More information about Hofseth BioCare
atwww.hofsethbiocare.comandwww.facebook.com/hofsethbiocare

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

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This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Hofseth Biocare ASA via Globenewswire

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