AquaBounty pauses Ohio RAS construction due to rising costs
AquaBounty Technologies has paused construction on the recirculating aquaculture system (RAS) salmon farm it was constructing in Pioneer, Ohio, U.S.A. as the cost of the project has outstripped its ability to finance it.
Maynard, Massachusetts, U.S.A.-based AquaBounty first announced plans the facility in July 2021, and broke ground in April 2022. It initially estimated the cost of the RAS at USD 200 million (EUR 186 million), but the price tag had increased to between USD 290 million and USD 320 million (EUR 270 million and EUR 298 million) by the time it broke ground, and it rose even higher, to a range of USD 375 million to USD 395 million (EUR 349 million to EUR 368 million), within the past year. On 2 June, AquaBounty CEO Sylvia Wulf said new cost estimates have come “significantly above” that estimate, with the price now up 95 percent on the original planned sum.
Wulf said the new estimates are based on a second construction firm's examination of the project, which AquaBounty commissioned after increasing costs exacerbated by historic inflation levels led it to review the project's “guaranteed maximum price” (GMP) which she said was “integral to completing our municipal bond funding.” The updated costs have made that funding untenable, Wulf said.
“Given this information, we cannot finance the project through a municipal bond placement without a significant increase in the company’s equity contribution,” Wulf said. “As a result, the company has put an immediate pause on further construction of the site while the management team undertakes a detailed review of its strategic options, including evaluating a smaller scope or size for the farm.”
Wulf said AquaBounty remains committed to the project, and continues to work with the town of Pioneer and the county it is located in to secure necessary permits.
“We believe in this project and its importance to the company’s growth strategy,” she said. “Our focus now is on bringing it to completion in a manner that is prudent for the company and our shareholders.”
The move represents a departure from the company’s aggressive roadmap of constructing a new farm every two years, which it announced in September 2022.
An AquaBounty representative contacted by SeafoodSource said the company will be "happy to address" the current status of that roadmap "once we have more details to share.”
AquaBounty has faced other difficulties as well. The company was threatened with delisting by Nasdaq Capital Market if it did not raise its share price above USD 1.00 (EUR 0.93) by 1 May, 2023. The market extended that period until 30 October, 2023, AquaBounty CFO David Frank told SeafoodSource.
“Nasdaq determined that we are eligible for the second compliance period due to us meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Nasdaq Capital Market, with the exception of the bid price requirement, and our written notice of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary,” Frank said.
To regain compliance, the company needs to have its stock price exceed USD 1.00 (EUR 0.93) for a minimum of 10 consecutive business days.
News of the company’s pause on construction did not help its share price. As of 11 a.m. the company’s share price dropped to a new all-time low of USD 0.43 (EUR 0.40) per share, down over 7 percent from open.
Photo courtesy of AquaBounty