An interested party has submitted a proposal for financially troubled Catalano Seafood, as administrators from McGrathNicol tally its multi-million-dollar debts to creditors.
An interested party has submitted a proposal for financially troubled Catalano Seafood as administrators from McGrathNicol tally its multi-million-dollar debts to creditors.
It comes after a sale or recapitalisation campaign launched by administrators attracted a pool of 24 interested parties, but a deed of company arrangement proposed by Avior Asset Management Pty Ltd has proved superior, according to administrators.
The Bassendean-based family business with a retail shop in Hillarys has been plagued by financial difficulties in the years before and after its listing on the ASX in 2022.
After its shares were suspended in October for failing to meet its periodic reporting requirements, the seafood retail and wholesale business voluntarily appointed administrators Linda Smith and Rob Brauer from McGrathNicol.
The administrators first report reveals Catalano allegedly owes its secured creditor NAB $1.2 million and has debts totalling up to $3.1 million owed to unsecured creditors, according to the report.
The well-known Perth seafood brand reported a loss of $5.2 million from gross revenue of $14.4 million in FY22 and a $2.9 million loss from gross revenue of $15.5 million in FY23.
According to the report, several of Catalano's directors advised that the company's financial hardship could be attributed to insufficient capital investment to support expansion plans and committed capital being withdrawn.
The administrators said they generally agreed with that assessment but pointed out that the expansion plan being pursed hinged off the expectation that sufficient capital would be secured in the future.
They also highlighted Catalano's inability to secure replacement funds after funding agreements fell through.
The report also said the substantial and ongoing operating losses that were proposed to be rectified by efficiency improvements to be delivered through the full implementation of Catalano’s expansion plan, which was ultimately unfunded.
According to the administrator’s preliminary investigation, Catalano appeared to have been insolvent from at least July 31 2023.
From June 2023, Catalano’s liability exceeded its current assets, and the company was demonstrating early signs of delaying supplier payment.
By the next month, about 59 per cent of Catalano’s trade creditors were being stretched beyond payment terms and 30 per cent of those were in excess of over 30 days beyond their due dates.
The administrators said this position grew significantly worse after September and during the final months to their appointment, and that evidence suggested Catalano was only paying critical supplier debts.
The board of directors appeared to have attempted to secure other funding options prior to voluntarily appointing administrators in October.
Upon the appointment of administrators, the board launched a public campaign to sell or recapitalise Catalano through a deed of company arrangement.
The campaign attracted 24 expressions of interest, but a DOCA proposal lobbed by Avior Asset Management Pty Ltd has proved superior in comparison to the other proposals, according to administrators.
Under the DOCA received on Tuesday, Avoir proposed to pay $1.7 million to Catalano, repayment of its secured debts to NAB and Capital Finance as well as those to employees and other creditors.
The proposal also provisions for some unsecured creditors, namely critical suppliers for the business, to receive a dividend of between 62.9 cents and 91.8 cents.
It also outlines a move to remove the existing directors and appoint new directors nominated by Avoir, retain all employees and transfer 100 per cent of the shares in Catalano to Avoir.
The administrators recommended that a deed of company arrangement be accepted, which will be voted on at the second meeting later this month.