Seafarms project going into administration

Seafarms Group is preparing to place its struggling aquaculture development Project Sea Dragon into administration weeks after losing a $13.9 million contract dispute.

The company issued a statement to the ASX on Wednesday advising Shaun McKinnon and Andrew Fielding of BDO Business Restructuring had been appointed voluntary administrators.

The Seafarms’ Project Sea Dragon was a proposed, large scale prawn agriculture project in northern Australia designed to produce reliable prawn volumes for export markets.

But the viability of the project has become increasingly uncertain in the last two years, with the company unable to secure further funding for the project after it was estimated it would cost at least an extra $80 million due to changes in scope and increasing material costs.

In September 2022, Seafarms denied that the project was for sale and maintained that it was committed to finding a development pathway. 

Less than two weeks ago the company was told it would need to pay $13.9 million to construction company Canstruct.

A Royal Institution of Chartered Surveyors adjudicator determined on February 3 that Seafarms was liable to pay for claims of money owed after the suspension of work on Project Sea Dragon in December 2021 and the termination of contracts in April 2022.

At the time, Seafarms chief executive Rod Dyer said the company had provisioned for $8.7 million for the dispute and had the capacity to cover the balance. 

Seafarms reported $19.4 million in operating revenue and an $85 million loss in its latest financial report.