Agreement Provides Entry of the AgriMarine System™ into the World’s Largest Salmon Producing Nation
AgriMarine Holdings Inc. (the “Company” or “AgriMarine”), the leader in clean aquaculture technology, is pleased to announce that it has executed a letter agreement (the “Agreement”) with Akvatech AS (“Akvatech”), a Norwegian Private Equity Group, to advance the adoption of the Company’s closed containment fish rearing technology (the AgriMarine System™) in Norway, the world’s largest salmon producing nation, and in other countries.
The Agreement contemplates the execution of a series of definitive agreements (collectively, the “Transaction”), the commercial terms of which include:
a) A secured loan from Akvatech to the Company’s subsidiary AgriMarine Industries Inc. (“Industries”) in the amount of CAD $2.5 Million
b) Purchase of the Company’s IP rights and know-how within certain Northern European countries, including Norway
c) Technology and sales licenses to certain countries in Southern Europe, Middle East/Mediterranean region, and South America
d) Sale of two (2) 24m AgriMarine System™ marine tanks for use at a demonstration project in Norway
e) Development and patent protection of a 30m tank design with capacity of 5,500 cubic meters
Pursuant to the Transaction, Industries will enter into a Loan Agreement with Akvatech for a loan of $2.5 Million (the “Loan”). The Loan will have a maturity date of eighteen months from the date of execution. The Loan will be secured by a charge over all of Industries’ property and assets and guaranteed by the Company.
Purchase and Licensing of the AgriMarine System™
Pursuant to the Transaction, Industries will enter into an IP and Licensing Agreement, under which Akvatech shall purchase from Industries the right, title and interest in the AgriMarine System™ fish-rearing technology for use in Norway and certain Northern European countries for an aggregate purchase price of CAD$1.5 Million. The Company will grant Akvatech a license to use the AgriMarine System™ fish-rearing technology within certain South American, Middle Eastern, North African and Southern European countries, with future acquisition rights for additional considerations. AgriMarine retains full and exclusive rights in Canada, US and China. The Agreement includes a provision for royalty payments to be made to the Company, in perpetuity, from future sales of the AgriMarine System™ tanks in those territories in which the technology is licensed.
Sale of 24m Tanks for Demonstration Project
In connection with the Transaction, Akvatech will arrange for the sale of two (2) 24m AgriMarine System™ Version 2 marine tanks manufactured by Janicki Industries Inc. for use at a demonstration project in Norway. This marks the first sale of AgriMarine’s technology and establishes the Company as a supplier of closed containment technology.
The demonstration project is expected to be jointly financed by a consortium of industry players and salmon farmers, as well as Innovation Norway, the Norwegian Government’s innovation and development arm.
Development of 30m Tanks
The Agreement contains a provision for joint technology development whereby Akvatech will fund the continued design and development of a 30m tank based on AgriMarine’s Version 2 marine system design.
“This agreement with Akvatech not only validates our IP and signals the immediate sale of two AgriMarine tanks for use in Norway, and it also sets the stage for future tank sales and expansion throughout Europe”, said Sean Wilton, President and CEO of AgriMarine. “We are confident that the transaction will also bolster further support and interest from salmon producing companies in other territories such as Southeast Asia and Australia”. Mr. Wilton added, “We believe that we have the answer to sustainable salmon farming with substantial operational advantages in terms of reduced mortalities, improved feed conversion, and mitigation of sea lice infestations.”
Finders’ fees may be payable in connection with certain elements of the Transaction. The Company anticipates execution of the definitive agreements by December 7, 2012 or earlier, subject to certain terms and conditions. The Transaction remains subject to certain approvals, including the approval of the TSX Venture Exchange. There can be no assurance that the transactions contemplated under the Agreement will be completed as proposed.