Barramundi farm operator Marine Produce Australia has received help from a Tasmania-based company to continue trading after exhausting funds, including from NAB.
Barramundi farm operator Marine Produce Australia has received help from a Tasmania-based company to continue trading after exhausting funds, including from the National Australia Bank.
The Supreme Court of Western Australia yesterday approved the administrators' request for Marine Produce Australia to strike a deal with seafood producer Tassal Operations (Tassal Group), to borrow funds to continue business as usual and preserve its value.
Marine Produce Australia’s main asset is an operational and licensed barramundi farm on Turtle Island, in the remote Cone Bay in the state’s Kimberley region.
McGrathNicol partners Rob Brauer and Rob Kirman were appointed as administrators to the Marine Produce Australia group of companies on May 24.
Companies in administration include Marine Produce Australia, MPA Fish Farms Pty Ltd, and MPA Marketing Pty Ltd.
In her judgment delivered yesterday, WA Supreme Court Justice Natalie Whitby said the companies’ value was dependent upon them trading as a producer of Cone Bay Ocean Barramundi.
According to the judgment, the companies owe about $10.4 million to the National Australia Bank, the key secured creditor.
“The administrators estimate that the companies require $500,000 per week to keep operating as a going concern,” Justice Whitby said.
“These costs relate to payment of wages, operating expenses, legal expenses and the administration.
“On 1 June 2023, NAB provided urgent funding to the companies of $350,000. This funding has been exhausted.”
In November, Tassal Group was acquired by a wholly owned Australian subsidiary of Canadian seafood company Cooke Inc in a $1.7 billion deal.
Justice Whitby said she was satisfied the companies could not continue to trade without additional funding, which Tassal Group was prepared to provide under a loan agreement.
“The administrators are of the view that the terms of the loan agreement are reasonable, commercial and appropriate, and that it is in the best interests of creditors of the companies to borrow the funds from Tassal in order to permit the companies to trade and preserve the value of the companies,” she said in her judgment.
“Unless the companies continue to trade, the administrators are unable to maximise the return to the creditors of the companies.”
In October, the Environmental Protection Authority requested additional information from Marine Produce Australia in its $300 million proposal to expand its barramundi farm operations to 13 sites across the Buccaneer Archipelago.
Business News has contacted Marine Produce Australia for a project update.
Marine Produce Australia was an unlisted company before being acquired by Singapore-based Barramundi Asia, part of Barramundi Group, in an $18.5 million deal in 2018.
However, Barramundi Group last month announced a reconstruction of its Australian operations, being MPA, after failing to finalise a transaction.
Barramundi Group is the main unsecured creditor of the companies, the judgment found.
In the company’s FY22 report, Barramundi Group chief executive James Kwan said the restructure of the business’s Australian arm has had significant negative accounting effects for the whole group.
“The group’s Australian operations experienced considerable escalations in costs associated with feed, energy, and transportation, with a delayed translation of these rising expenses into selling price increases for customers,” Barramundi Group’s FY22 report said.
Barramundi Group’s shareholders approved the sale of 75 per cent of Marine Produce Australia to Wild Ocean Australia in January, but the sale agreement had yet to be finalised because of a lack of funding, according to the financial report.
“The [share sale agreement] was terminated on 31 May 2023,” it said.
Barramundi Group suffered a $SG30 million loss in FY22, according to its financial report.
