Iceland Seafood International (ISI) has agreed to sell 100% of the share capital of IS UK to Espersen A/S, a Danish value-added producer with factory operations in Europe and Asia and a significant part of its sales into the UK retail market.
Espersen has finalized its due diligence process, transaction documents are being completed. Completion of the transaction will take place in September when certain conditions in the transaction documents have been fulfilled. At completion of the transaction, Espersen A/S will own 100% of IS UK.
In addition, the property, equipment, and machinery will be sold from IS UK to Iceland Seafood Barraclough (a 100% owned subsidiary of ISI) at completion and then leased back to IS UK. In the case of the property a leasing agreement has been agreed, where the lessee has a purchase option at end of the leasing period. In the case of equipment and machinery an equipment hire purchase agreement has been agreed, where the lessee will get ownership of the assets at the end of the leasing period. Asset valuation in ISI balance sheet at 30.6.2023 reflects the valuation of these agreements, resulting in total impairment of fixed assets of £7.1m which is included in the loss from discontinued operations.
At completion, ISI will convert intercompany loans into equity and inject further equity to net out negative equity balance and compensate for operating losses to the end of the year, as agreed between parties. After the equity injection, the book value of equity at completion will amount to £0.3m. According to the agreement the sales price for the 100% share is £1,000 meaning that the sales loss of the shares will be £0.3m.
The negative impact on ISI P&L and equity during 2023 until the sale completes is estimated £15.0m. In addition to the negative operational results in the first 8 months of the year, this amount includes the impairment of fixed assets of £7.1m, £1.32m of inventory write-offs and sales loss of share capital of £0.3m.
For further information see ISI Q2 announcement and investor presentation released at the same time