King Salmon Announces $73 Million Loss; hopes to raise $60 million to meet the challenges
Marlborough-based King Salmon has posted a significant full-year loss and is raising more than $60m to improve its balance sheet and meet current challenges.
The company was put on hiatus earlier in the day ahead of the release of its annual results. The trade stoppage is now lifted.
The fish farmer posted a net loss of $73 million for the year ended January, compared with a loss of $7 million a year earlier, reflecting an increase in fish deaths, higher transport costs and the pandemic in progress, as well as a goodwill impairment of $39 million and $20 million. m of plant, equipment and other intangible assets.
The company said it was responding to those challenges with a $60.1 million underwritten rights offering, which gave shareholders the option to buy 2.85 new shares for every share they held at a price of 15 cents per share.
The offer price represented a discount of almost 83% from the last traded price of 86 cents, before the trading halt put in place this morning.
Oregon Group had pre-committed to take $23.8 million of its rights, while the directors had committed to take $2.5 million of stock, with the balance of stock fully underwritten by Jarden Partners. .
King Salmon chief executive Grant Rosewarne said proceeds from the rights offering would be used to strengthen the balance sheet and provide cash for medium-term operating needs, including changes to combat the increase in fish mortality due to global warming.
“Abnormally high seawater temperatures have been a major factor driving the high mortality rates, with the marine heat wave during the summer being associated with a La Niña event,” Rosewarne said.
“Continued supply chain disruptions, skyrocketing transport costs and fatalities continue to impact our business. Our hospitality customers also continue to be impacted by lockdowns and social disruptions. “
He said measures to tackle fish kills would lead to lower fish production this year and next, with increases expected the following year.
“This reduction in production will be partially offset by a rigorous review of overhead costs and a reduction in the company’s workforce,” he said, adding that the company expected the changes to have an impact. on this year’s profits.
Rosewarne said the company remains focused on developing a new farm in the deeper, cooler waters of the Cook Strait, with its resource management application to be completed by the end of the month.