For many years, SpareBank 1 Midt-Norge (SMN) has been an active participant in the aquaculture industry in Central Norway. One of its commitments has been with the Midnor Group, where the bank's involvement totals about NOK 500 million.
Like the rest of the aquaculture industry in Norway, the Midnor Group has for a long period been strongly affected by the general macro-economic conditions for the industry, including a strong Norwegian currency in relation to important competitor countries, high Norwegian interest rates, and a generally low price level for salmon. The result has been that a number of large Norwegian aquaculture players, including the Midnor Group, face significant financial challenges which must be solved by the banks and the owners in partnership.
SMN is a long-term player in the aquaculture industry. In the crisis early in the 1990s, the bank adopted a strategy of this nature, and at that time it made a proactive contribution to the restructuring which was needed. This resulted in a good financial outcome for the bank during this period. The bank is now using the same strategy as the basis for its current work. As the largest lender to the Midnor Group, the bank is working with the principal owner with the objective of establishing financial robustness for the company. In this programme, industrial solutions of interest are also being considered. In the opinion of SMN, it is now important to implement measures that promote the consolidation necessary in the aquaculture industry.
SMN has appointed First Securities AS as its financial advisor to provide assistance in securing the bank's position in the best possible way.
It is important to emphasize that, according to the bank's assessment, the Midnor Group is a very well run company. The company's challenges at present are primarily associated with a liquidity requirement due to low salmon prices, as well as a restructuring of the balance sheet to create a stronger financial foundation given continuing low prices for salmon. In cooperation with the company's advisors, the bank will therefore take the time necessary to find a good financial and industrial solution for the company. SMN is working on the basis that a solution will be in place during the second half-year of 2003.
It is at present too early to provide a specific assessment of the bank's possible risk of loss in its banking commitment. The bank's objective is to minimize any losses. SMN is operating on the basis that there is substantial value in the company's 26 licences, fixed equipment and infrastructure as well as salmon and trout in the company's net pens.
Any questions may be addressed to Finn Haugan (+47 900 41 002), Managing Director, or Rune Malvik, General Manager (+47 91140126)