Sunday, August 14, 2022

NZ King Salmon clears the decks

 

NZ King Salmon will move towards cooler waters and seek $60 million with a pro rata rights offer to pay down debt and strengthen the balance sheet.

Sustained warmer waters exacerbated fish mortality, which cost the company $20m in the financial year to January 31.

Operating earnings before interest, tax, depreciation and amortisation (Ebitda) fell by 40% to $6m and net loss after tax was a massive $73m.

Revenue was up $18m to $174m and rose 20% in sales volumes when FY21 frozen whole-fish stocks were sold that had built up because of the covid-19 effects on food services markets.

The issues pushed up net debt by $44m and have created the need for the recapitalisation proposal.

Property, plant and equipment assets have been written down, along with some goodwill, and net assets in the balance sheet have fallen by a large 42% to $111m.

NZ King Salmon will change its production model to minimise summer mortality by increasing the production focus on the cooler Tory Channel site during the summer months.

Records show that water temperatures last summer at Tory stayed in the range of 14 to 16 degrees, compared with 18 degrees-plus in Pelorus Sound.

Three farms in that sound will be fallowed and may be used in future as nurseries for the proposed open ocean site in Cook Strait the company is calling Blue Endeavour.

The mortality biomass for the company as a whole was 28% in FY22, versus 12% to 22% in the five years previously.

But the Queen Charlotte Sound site recorded 57%, versus a previous maximum of 34%.

“Our efforts to identify and counter the factors that aggravate the climate effect on our King salmon have been intensified,” chief executive Grant Rosewarne said.

The renounceable rights offer is 2.85 shares for one at an issue price of 15c a share.

The share price dropped from 86c before the results announcement and rights offer to 51c currently and is down 78% or 66c over the past 12 months.

The theoretical ex-rights issue share price is 55c and the offer closes on May 6.

If fully subscribed total NZ King Salmon issued securities would go up from 140m to 540m.

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