Marlborough-based King Salmon has made a large full year loss, and is raising more than $60 million to improve its balance sheet and address ongoing challenges.
New Zealand King Salmon farm Photo: Supplied / New Zealand King Salmon
The company was placed in a trading halt earlier today ahead of the release of its full year result. The trading halt has now been lifted.
The fish farmer made a net loss of $73m for the year ended January, compared with a $7m loss a year earlier, reflecting increased fish deaths, higher freight costs and the ongoing pandemic, as well as a $39m writedown of goodwill and $20m of plant, equipment and other intangibles.
The company said it was responding to those challenges with an underwritten $60.1m rights offer, which gave shareholders the option to buy 2.85 new shares for every one share they hold at a price of 15 cents a share.
The offer price represented a near 83 percent discount to the last traded price of 86 cents, prior to the trading halt put in place this morning.
Oregon Group had pre-committed to take up $23.8m of its rights, while the directors were committed to take up $2.5m of shares, with the balance of shares fully underwritten by Jarden Partners.
King Salmon chief executive Grant Rosewarne said the proceeds of the rights offer would be used to strengthen the balance sheet and provide liquidity for medium-term operating requirements, including changes designed to combat rising fish deaths from a warming climate.
"Unusually elevated seawater temperatures were a major factor behind high mortality rates, with the marine heatwave during summer associated with a La Niña event," Rosewarne said.
"Ongoing supply chain disruptions, soaring freight charges and mortalities continue to impact our business. Our hospitality customers also continue to be affected by lockdowns and social disruptions."
He said measures to address fish deaths would result in a decline in fish production this year and next, with increases expected the following year.
"This reduction in output will be partially offset by a rigorous review of overheads and a downsizing of the company," he said adding that the company expected the changes to have an impact on this year's earnings.
Rosewarne said the company remained focused on developing a new farm in the deeper and cooler waters of Cook Strait, with its resource management application to be completed by the end of the month.
