Salar BidCo AS, 17.12 2014 Summary ISIN NO 001 070816.7 Summary FRN Pharmaq Senior Secured Callable Bond Issue 2014/2019 NO 001 070816.7 Managers: 17.12 2014
2/13 Summaries are made up of disclosure requirements known as "Elements". These elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and Issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable". Section A Introduction and warnings Element Disclosure requirement Comments A.1 Warnings This summary should be read as an introduction to the Prospectus. Any decision to invest in the Bonds should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation in its Member State, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. A.2 Resale and final placement by financial intermediaries Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. Not applicable. The Prospectus will not be used in subsequent resales by financial intermediaries. Section B Issuer and garantors Element Disclosure requirement Comments B.1 Legal and commercial name of the Issuer The legal name of the Issuer is Salar BidCo AS, the commercial name is Salar BidCo. The legal names of the Guarantors are PHARMAQ AS and PHARMAQ Ltd, their commercial name is PHARMAQ. B.2 Domicile and legal form of the Issuer, the legislation under which the Issuer operates and its country of incorporation Salar BidCo AS is a Norwegian Limited Liability Company and regulated by the Norwegian Companies Act and supplementing Norwegian laws and regulations. The Company is registered in the Norwegian Companies Registry with registration number 911 663 627. The Issuer s registered business address is c/o Pharmaq AS, Skogmo Industriområde, 7863 Overhalla, Norway. PHARMAQ AS is a Norwegian Limited Liability Company and regulated by the Norwegian Companies Act and supplementing Norwegian laws and regulations. The Company is registered in the Norwegian Companies Registry with registration number 886 953 402. The company s registered
3/13 business address is PHARMAQ AS, Skogmo Industriområde, 7863 Overhalla, Norway. B.4b Known trends affecting the issuer and the industries in which it operates. B.5 A description of the group and the issuer s position within the group. PHARMAQ Ltd is a Limited Liability Company and regulated by the 2006 Companies Act and supplementing laws of England and Wales. The Company is registered in England and Wales with registration number 02024398. The company s registered business address is Pharmaq Ltd, Unit 15 Sandleheath, Industrial Estate, Fordingbridge, Hampshire SP6 1PA, United Kingdom. Not applicable - There are no known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Issuer's or Guarantors prospects for at least the current financial year. Salar BidCo is a holding company with 100% ownership of shares in PHARMAQ Holding AS. B.9 Profit forecast or estimate Not applicable - The Company and the Guarantors have not made any profit forecasts or estimates. B.10 Qualifications in the audit report Not applicable. There are no qualifications in the audit reports.
4/13 B.12 Selected historical financial information, statement regarding no material adverse change and significant changes in the financial or trading position. SALAR BIDCO AS: Salar BidCo issued in March 2014 a NOK 725 million Bond Issue with maturity in March 2019. Other than the above mentioned, there is no significant change in the financial or trading position of the Group which has occurred since the end of the last financial period for which either audited financial information or interim financial information have been published. And there has been no material adverse change in the prospects of the Issuer or Guarantors since the date of its last published audited financial statements. The Salar Bidco group was established 31. May 2013 following the acquisition of the Pharmaq group by funds ultimately advised by Permira. As a consequence, consolidated accounts for the Group have been prepared as from 1. June 2013.
5/13 Balance sheet 1H 2014 1H 2013 FY 2013 Unaudited Unaudited Audited Assets NOK million NOK million NOK million Non-current assets Property, plant & equipment 95 68 95 Intangible assets 739 721 732 Goodwill 1 002 998 1 008 Deferred tax assets 1 3 1 Financial assets 0 0 0 Total non-current assets 1 837 1 791 1 835 Current assets Inventory 205 321 226 Trade and other receivables 126 122 112 Other current assets 12 22 13 Cash and cash equivalents 115 79 151 Total current assets 459 544 501 Total assets 2 296 2 335 2 336 Equity and liabilities 1H 2014 1H 2013 FY 2013 Unaudited Unaudited Audited NOK million NOK million NOK million Equity attributable to owners of the parent Ordinary shares 3 3 3 Share premium 1 383 1 383 1 383 Other equity 0 0 Other reserves 6 14 Retained earnings -124-78 -103 Total equity attributable to owners of the parent 1 267 1 308 1 297 Non-controlling interest 0 0 0 Total equity 1 267 1 308 1 297 Non-current liabilities Loans and borrowings 704 620 662 Deferred income tax liabilities 184 235 203 Post-employment benefits 15 20 17 Total non-current liabilities 902 876 881 Current liabilities Trade payables 33 22 47 Current income tax 12 2 21 Other current liabilities 82 127 90 Total current liabilities 126 151 158 Total liabilities 1 028 1 027 1 039 Total Equity and liabilities 2 296 2 335 2 336
PHARMAQ AS: 6/13
7/13 Cash flow 1H 2014 1H 2013 2013 2012 Unadited Unadited Audited Audited NOK 000 NOK 000 NOK 000 NOK 000 Net cash from operational activities 49 098-47 300 162 942 66 310 Net cash from investment activities -18 482-11 112-71 329-16 378 Net cash from financing activities -102 821 6 348-50 156-2 532 Net change in cash and cash equivalents -72 205-52 064 41 457 47 400 Cash and cash equivalents at end of period 35 741 14 424 107 945 66 489 PHARMAQ Ltd: Profit and Loss Account: 1H 2013 1H 2014 2013 2012 Unadited Unadited Audited Audited 000 000 000 000 Turnover 4 130 2 224 9 704 13 675 Cost of sales -3 477-1 664-7 910-12 270 Gross profit 653 560 1 794 1 405 Distribution costs -46-22 -92-113 Administrative expenses -459-467 -837-808 Operating profit 148 71 865 484 Profit on ordinary activities before investment 148 71 865 484 Other interest receivable and similar income 28-2 28 18 Profit on ordinary activities before taxation 176 69 893 502 Tax on profit or loss on ordinary activities -44-17 -244-113 Profit for the period 132 52 649 389 Balance Sheet: 1H 2013 1H 2014 2013 2012 Unadited Unadited Audited Audited 000 000 000 000 Fixed assets Intangible fixed assets 113 91 104 120 Tangible fixed assets 145 125 138 150 258 216 242 270 Current assets Stocks 1 609 1 604 676 654 Debtors 1 864 1 648 3 079 4 899 Cash at bank and in hand 632 815 1 125 1 217 4 105 4 067 4 880 6 770 Creditors: Amounts falling due within one -1 523-925 -1 816-4 376 Net current assets 2 582 3 142 3 064 2 394 Total assets less current liabilities 2 840 3 358 3 306 2 664 Provisions for liabilities -20-13 -13-20 Net assets 2 820 3 345 3 293 2 644 Capital and reserves Capital redemption reserve 35 35 35 35 Profit and loss account 2 785 3 310 3 258 2 609 2 820 3 345 3 293 2 644 B.13 Recent events particular to the issuer which are to a material extent relevant to the evaluation of the issuer s solvency. Not applicable - There have not been any recent events particular to the Group which are to a material extent relevant to the evaluation of the Group's
8/13 B.14 Description of dependencies upon other entities within the group B.15 A description of the issuer s principal activities. solvency. The administration of the Salar Bidco is handled through a separate service agreement with the second level subsidiary Pharmaq AS for functions and personnel needed. Salar BidCo receive group contribution from its subsidiary PHARMAQ Holding AS, and therefor the Company is dependent on other entities in the Group. Salar BidCo is a holding company with 100% ownership of shares in PHARMAQ Holding AS. The Company has no employees. PHARMAQ AS is a Norwegian limited company with administration, R&D (including Product Development, Regulatory Affairs, Clinical R&D and IPR), and Sales & Marketing functions in Oslo. A separate viral antigen production facility is also located in Oslo. The head office, vaccine production facility and quality assurance / quality control divisions are based in Overhalla, Nord-Trøndelag, Norway. In total, the Group have 180 employees including 140 in Norway and for Pharmaq AS. PHARMAQ has subsidiaries in Chile, UK, Vietnam, Turkey, Costa Rica and Panama with a network of distributors and sales agents in Asia, Europe, North and South America. PHARMAQ Ltd is Located in Fordingbridge, PHARMAQ s UK subsidiary employs 11 including 4 responsible for assisting sales in the UK & Ireland, and the Mediterranean countries. The sales force (2 employees) for the UK & Ireland is based in Scotland. PHARMAQ Ltd also has a GMP approved logistics, packaging, labelling and other general dispensing facility at Fordingbridge. PHARMAQ is a Norwegian pharmaceutical company which focuses on aquaculture. It develops, manufactures and markets vaccines and therapeutic products for the prevention and treatment of diseases in farmed fish. It is the originator of and a substantial manufacturer of aquatic vaccines for farmed fish with a global market share for farmed salmonids of 66% and constituting approximately 75% of revenues and positioned as one of the major global market suppliers (This is based on the Company assessment based on available public and industry information). Products also include therapeutic medicines for parasites accounting for approximately 22% of revenues. PHARMAQ has a strong track record of product innovation, resulting from a firm commitment to a differentiated approach to R&D. PHARMAQ Analytiq, a fish disease analysis company, is a part of the PHARMAQ group. PHARMAQ is the only global pharmaceutical company having its primary focus on the aquaculture industry. B.16 Description of ownership of the company. The Company is wholly owned by Salar MidCo AS, in its turn wholly owned by Salar Topco AS. Salar BidCo is a holding company with 100% ownership of shares in PHARMAQ Holding AS. PHARMAQ Holding AS has 100% ownership of PHARMAQ AS which in its turn
9/13 own 100% of PHARMAQ Ltd. B.17 Credit ratings Not applicable. Neither the Company nor the Guarantors have ordered any credit ratings. B.18 The nature and scope of the guarantee An unconditional on-demand guarantee on a joint and several basis from the Guarantors securing the Issuer s obligations under the Bond Agreement and any other Finance Document, including interest, costs and expenses. Section C The Bonds Element Disclosure requirement Comments C.1 Type and class of securities being offered / security identification numbers Senior Secured Callable Open Bond issue with floating rate ISIN NO 001 070816.7 C.2 Currency NOK C.5 Restrictions on free transferability Not applicable. There are no restrictions on the free transferability of the Bonds. C.8 A description of the rights including ranking and limitations to those rights attached to the Bonds. Status of the Bonds The Bonds shall constitute senior debt obligations of the Issuer and will be: (a) secured by the Security Interests on the same priority as the other Secured Parties, but will receive proceeds from an enforcement or a distressed disposal of any Security Interest only after any obligations secured on a super priority basis have been repaid in full (including obligations of the Group Companies under the Revolving Credit Facility and any Permitted Hedging Obligations); (b) pari passu in right of payment with all existing and future indebtedness of the Issuer that is not subordinated in right of payment to the Bonds, including indebtedness of the Issuer under the Revolving Credit Facility; (c) senior in right of payment to all existing and future indebtedness of the Issuer that is subordinated in right of payment to the Bonds; and (d) subordinated to any existing and future indebtedness of the Issuer that is mandatorily preferred by law. Nature of Security Interests and Security Documents (a) The Security Interests shall, inter alia, secure all the Senior Bond Liabilities. (b) The Security Interests shall, if required by the Issuer, be shared between the Bond Trustee (on behalf of the Bondholders) and any other Secured Parties in accordance with and subject to the terms of the Bond Agreement and the Intercreditor Agreement. (c) The Security Documents shall, to the extent permitted under applicable law, be entered into between the relevant grantor of security and the Bond Trustee (on behalf of the Bondholders and (if applicable) any other Secured Party) and the Bond Trustee will, to the extent permitted under applicable law, act as security agent on behalf of all the Secured Parties. Limitations on the Security Interest and additional
10/13 C.9 Information on the interest rate, interest payment dates, installments and representative of the bondholders Security and guarantees (a) The Guarantee and the Security Interests and the Security Documents (and any other guarantee and/or Lien granted for or in respect of the Senior Bond Liabilities) will be subject to mandatory provisions of applicable law which limits the legal capacity or ability of an obligor to provide security and/or guarantees, including (without limitation) the provisions of sections 8-7 and 8-10 of the Norwegian Companies Act of 13 June 1997 No. 44 (aksjeloven) (as from time to time amended) which regulate unlawful financial assistance from a Norwegian private limited liability company. (b) For the avoidance of doubt, no Norwegian obligor shall be required to provide any financial assistance requiring compliance with the procedures and the requirements set out in section 8-10 of the Norwegian Companies Act of 13 June 1997 no. 44 (aksjeloven). (c) The Guarantee and the Security Interests and any (and any other guarantee and/or Lien granted for or in respect of the Senior Bond Liabilities) will be subject to the "Security Principles" set out in Schedule 13 of the Revolving Credit Facility Agreement. The Bonds are issued with floating rate, 3 months NIBOR pluss 4.50 percentage points per annum. Interest payments shall be made in arrears on the Interest Payment Dates each year, 28 February, 28 May, 28 August and 28 November each year and the Final Maturity Date, 28 March 2019. The relevant interest amount payable shall be calculated based on a period from, and including, the relevant Issue Date or an Interest Payment Date (as the case may be) to, but excluding, the subsequent Interest Payment Date. The Bonds shall mature in full on the Final Maturity Date, and shall be repaid at par (100%) by the Issuer. Investors wishing to invest in the Bonds after the Issue Date must pay the market price for the Bonds in the secondary market at the time of purchase. Depending on the development in the bond market in general and the development of the Issuer, the price of the Bonds may have increased (above par) or decreased (below par). As the Bonds have a floating reference rate, it is the market's expectations of risk premium, i.e. margin that affects the price. If the price has increased, the yield for the purchaser in the secondary market, given that the reference rate does not change, will be lower than the interest rate of the Bonds and vice versa. At par and an assumption that the reference rate is 1.71% from the issue date to maturity date, the yield will be 6.21%. C.10 In case the Bonds have a derivative component in the interest payment, a description of potential impacts on the Bonds value is affected by the value of the underlying instrument. The Bond Trustee is Nordic Trustee ASA. Not applicable.
11/13 C.11 An indication whether the Bonds will be listed on a regulated market. An application for listing of the Bonds will be sent Oslo Børs. Section D Risks Element Disclosure requirement Comments D.2 Key information on the key risks that are specific to the issuer. Our business depends on the demand for and the production volume of salmonids and other relevant fish species. Aquaculture operations may be considered harmful to the environment or animal welfare, potentially impacting the image and reputation of our business. Changes in water temperature, drastic weather conditions, major climatic trends, or incidents involving environmental damage or pollution may disrupt our operations and supplies as well as demand for salmonid vaccines in particular. We may be adversely affected by the performance of the global economy and in particular by the current credit environment. We may not be successful in implementing our business strategies, including as a result of factors outside our control. We are subject to risks associated with our international operations and our expansion in emerging markets, which may negatively affect our operations. The demand for vaccines, particularly for salmonids, is seasonal and requires access to working capital facilities; and any adverse developments that affect our business during our peak season would have a disproportionate effect on our results of operations and cash flows. We are exposed to foreign exchange rate risk. The failure of our information technology infrastructure or software could adversely affect our operations. The departure of members of our management team or other key personnel or our inability to attract and recruit qualified management or other key personnel, could have an adverse effect on our business. We may incur liabilities that are not covered by insurance and we may be unable to obtain adequate insurance for certain of our operations or insurance for product recall and product contamination. Our business operations may subject our employees to health and safety risks, and therefore we may be subject to claims or penalties relating to the working conditions of our employees. Failure to protect our intellectual property could materially affect our business. The interests of our ultimate principal shareholders may be inconsistent with the holders of the Bonds. Our substantial leverage and debt service obligations could adversely affect our business and prevent us from fulfilling our obligations with respect to the Bonds. We will be subject to restrictive debt covenants that may limit our ability to finance our future operations and capital needs and to pursue business opportunities and activities.
12/13 D.3 Key information on the key risks that are specific to the Bonds. We will require a significant amount of cash to meet our obligations under our indebtedness and to sustain our operations, which we may not be able to generate or raise. Bankruptcy and insolvency proceedings may prove difficult depending on which jurisdiction proceedings are opened in, and our liabilities in respect of the Bonds may rank junior to certain of our debts The trading price of the Bonds may be substantially volatile There may be no liquid market for the Bonds The value of the collateral securing the Bonds may not be sufficient to satisfy the Issuer s obligations under the Bonds The Issuer may not have sufficient funds to make the required redemption of Bonds upon a Change of Control Event The price of the Bonds are subject to risks of interest rate and currency fluctuation The Bonds may be subject to optional redemption, which may have a material adverse effect on the value of the Bonds, and in such circumstances an investor may not be able to reinvest the redemption proceeds at an equivalent rate of interest Security and perfection over certain collateral will not be in place by the issue date of the Bonds Failures or inadequacies in perfecting security may arise The enforcement of rights as a Bondholder across multiple jurisdictions may prove difficult. Furthermore, in the event any Bondholder s rights as a Bondholder have been infringed, it may be difficult to enforce judgments against the Issuer Section E Offer Element Disclosure requirement Comments E.2b Use of proceeds. a) The proceeds of the Initial Bonds shall be applied towards: (i) refinancing of the Existing Debt; (ii) payment of fees, costs and expenses related to the Transaction (including (without limitation) fees and legal cost of the Manager and the Bond Trustee); and (iii) financing of the general corporate purposes of the Group. b) The proceeds of any Additional Bonds shall be applied as determined by the Issuer. E.3 Terms and conditions of the offer Not Applicable The Bonds have not been subject to a public offer, it is already issued and settled. E.4 Material interests in the offer The involved persons in Salar BidCo AS have no interest, nor conflicting interests that is material to the Issue. Salar BidCo AS has mandated Nordea Markets and Pareto Securities AS as Managers for the issuance of the Loan. The Managers have acted as advisor to Salar BidCo AS in relation to the pricing of the Loan. The Managers and/or any of their affiliated
13/13 E.7 Estimated expenses charged to the investor companies and/or officers, directors and employees may be a market maker or hold a position in any instrument or related instrument discussed in this Securities Note, and may perform or seek to perform financial advisory or banking services related to such instruments. The Managers corporate finance department may act as manager or co-manager for this Borrower in private and/or public placement and/or resale not publicly available or commonly known. Not Applicable The investor of the Bonds were not charged any expenses due to the issuance of the Bonds