Proximar Seafood has a JPY 8.8 billion debt financing offer from a syndicate of two major Japanese banks. The offer, received through its subsidiary Proximar Ltd. (Japan), means the company will secure full debt financing for its first land-based salmon farming facility in Oyama, Japan. “We are delighted to finally see the entire debt financing now coming in place for our stage 1 facility”, said Joachim Nielsen, CEO of Proximar.
The company’s preferred option
The offer consists of a Highly Confident Letter together with a Term Sheet. In Japan, this type of letter is typically issued after a substantial portion of due diligence has been completed and at a time when the execution risk is assumed to be minimal. In this case, the loan offer implies that Proximar will achieve its debt ratio ambition of ~45%.
“Proximar has evaluated multiple debt financing alternatives over the last two years and the offer represents the company’s preferred option for debt financing in line with our targeted debt ratio. To obtain a complete debt solution for both the construction and operating phases at attractive terms, marks a breakthrough for the company”, Nielsen claimed.
Loan to be disbursed this year
According to Proximar Seafood’s release, the fact that the financing has been provided in accordance with the Term Sheet received should be considered as “a strong statement of comfort from the banks”. The Highly Confident Letter and Term Sheet received by the land-based company have been approved internally at the two banks and the loan offer is structured as a syndicate fully covered by both. The loan is offered at an interest rate of less than 5% and covers both the remaining construction financing and the operational financing.
Proximar also reported that the offer is subject to the usual conditions, such as final credit committee approval, legal due diligence, and finalization of the loan documentation. However, disbursement of the first part of the loan is expected in March 2023, and the second part in the summer of 2023, at the time of the take-over of the post-smolt grow-out building.
Production and construction are on track
This is the second loan offer the company has received in just a month and a half. In early January, we learned that Proximar Seafood had received a JPY 4 billion loan offer also from a Japanese bank. The land-based salmon producer is satisfied with the way things are going. Also in January, in addition to the funding received, the first batch of Atlantic salmon fry was successfully transferred to the start feeding department. “Our schedule in terms of production is going as planned”, the CEO and co-founder, Joachim Nielsen, told in exclusive statements for WeAreAquaculture then.
There are currently three batches in production that are performing well and in line with expectations. In the future, the company expects new batches to arrive monthly, allowing for a continuous harvest from mid-2024 onwards. Meanwhile, construction work on the post-smolt grow-out building is progressing on schedule, and tanks and RAS-equipment are currently being installed. Proximar expects its entire facility to be completed in the third quarter of 2023.
About Proximar Seafood
Proximar Seafood is building the first large-scale Atlantic salmon farm in Japan at the foot of Mount Fuji, in Oyama. The land-based salmon farming company has already started production in October 2022. With an annual production capacity of 5,300 tons of head-on salmon (HOG), the first harvest is expected to be serving fresh salmon to Japanese consumers medio 2024. The company has an agreement to make Marubeni its exclusive distributor in the Asian country.