Arafura in voluntary administration

ASX-listed pearl farming and managed investments company, Arafura Pearls Holdings has been placed into voluntary administration by its directors after failing to secure a standstill agreement with its lenders.

This move follows an overhaul of the company's board and a recent investigation into irregularities with its accounts.

The Perth-based company is an integrated pearl farming group with key hatchery, nursery and production facilities at Elizabeth Bay in north-east Arnhem Land, Northern Territory, and at Croker Island near Darwin.

The Company is also the responsible entity for six managed investment schemes relating to the pearl farming business.

Mr Stephen Duncan and Mr Chris Powell, Adelaide-based partners with KordaMentha, were appointed joint administrators of the company just before Easter.

Mr Duncan said the Company's pearl farming business had creditors owed around $6 million while investments in the various Managed Investment Schemes totalled around $35 million, with some 600 members.

"The business will continue to operate on a limited basis under the control of the administrators and we will work closely with the directors and management of Arafura Pearls Holdings to determine the future direction of the Company," he said.

"In the meantime, we will be introducing a cost-reduction strategy. It is too early to estimate any outcome while we undertake a full appraisal of the operations and investigate the various options, including restructuring and refinancing the business," Mr Duncan added.

The Company has to date outlaid some $80 million developing its projects, with growth in recent years has included the acquisition of neighbouring pearl farms and its access to quota more than quadrupling in the past six years.

Arafura Pearls employs around 70 people each year in its corporate and pearl farming activities.