Iceland Seafood International (ISI) has agreed to sell 100% of the share capital of Iceland Seafood UK (IS UK) to Danish value-added producer Espersen A/S.
Espersen has factory operations in Europe and Asia and a significant part of its sales into the UK retail market.
On 30 August 2023, ISI confirmed that Espersen had finalised its due diligence process and that transaction documents are being completed. Completion of the transaction will take place in September when certain conditions in the transaction documents have been fulfilled.
On 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. With regards to 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 the ISI balance sheet on 30 June 2023 reflects the valuation of these agreements, resulting in total impairment of fixed assets of GBP 7.1 million which is included in the loss from discontinued operations.
On 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 GBP 300,000.
According to the agreement, the sales price for the 100% share is GBP 1,000 meaning that the sales loss of the shares will be GBP 300,000.
The negative impact on ISI P&L and equity during 2023 until the sale completes is estimated at GBP 15 million. In addition to the negative operational results in the first eight months of the year, this amount includes the impairment of fixed assets of GBP 7.1 million, GBP 1.32 million of inventory write-offs and sales loss of share capital of GBP 300,000.
