A judge has approved a petition from two minority owners of Burlington, Nova Scotia, Canada-based Sustainable Blue to bring the company into receivership.
Minority shareholders Thane Stevens and Jim Lawley had their petition request approved on Thursday, 5 April by Nova Scotia Supreme Court Justice Darlene Jamieson. Stevens and Lawley had lent CAD 2.3 million (USD 1.7 million, EUR 1.5 million) and made the request in an effort to bring the company back to financially solid ground.
Sustainable Blue is part of the SFFC Group, which also includes TCAS Holdings Limited, Sustainable Fish Farming (Canada), and TCAS IP,. The group fell into more than CAD 21.5 million (USD 15.8 million, EUR 14.6 million) of debt after failure of its aquaculture systems on 4 November 2023 resulted in the loss of all of its largest fish, which in turn cut off the company’s revenue stream, court filings revealed.
Besides the revenue lost due to the die-off, Sustainable Blue was depending on capital injections from the company’s shareholders to continue operating, court filings stated. Those shareholders are “not prepared to continue to fund the operations of SFFC through shareholder loans.”
That lack of revenue and the cutoff of loans left the company in dire straights when loans from the Bank of Nova Scotia for CAD 17.5 million (USD 12.9 million, EUR 11.9 million) and CAD 4 million (USD 2.9 million, EUR 2.7 million) matured on 8 March. With no way to pay the debt, Stevens and Lawley provided loans to the company, and later reached an agreement with the bank to acquire the debt to allow Sustainable Blue to maintain operations while searching for additional funding. The pair then registered 4595756 Nova Scotia Ltd. on 8 March – referred to in court documents as 459NSL – with Stevens and Lawley as its directors, and took on the CAD 21.5 million in debt.
With no way to pay off its debts and no funds, the company said it was at risk of shutting down its operations and then losing its only potential source of revenue.
“Both the SFFC Group and 459NSL will suffer irreparable harm if no order is granted, as without the relief sought and the assistance of Deloitte, the SFFC Group will be forced to euthanize its remaining fish, resulting in the loss of its only revenue stream,” the filing states.
The receivership order gives the receiver control of the property and the ability to pursue a sales and investment solicitation process – which includes the ability to market the property. The goal is to maintain operations until Sustainable Blue can begin selling fish again.
“459NSL submits that the appointment of Deloitte as receiver and manager will allow the SFFC Group to stabilize business operations until SFFC’s remaining fish can be supplied to customers in September 2024,” court filings state.
According to the filing, Stevens and Lawley are “not prepared to continue to fund the operations” of the company, and none of the other shareholders are prepared to support its operations.
Court filings also revealed those other shareholders. The majority shareholder in Sustainable Blue is Bayt Al Qoot UK, which owns 68 percent of the company. Investors as part of the group put USD 28 million (EUR 25 million) into Sustainable Blue in 2019.
Bayt Al Qoot, according to the U.K. Customs House, is lead by four directors from Saudi Arabia: Tahir Mohammed Tahir Aldabbagh, Abdul Raouf Mohammed Mannaa, Yasser Yousef Mohammad Naghi, and Saudi Prince Abdulaziz bin Turki Bin Talal Al Saud.
With the receivership approved, 459NSL and the SFFC Group said that the plan is to continue to grow the remaining fish at Sustainable Blue, “with the assistance of Deloitte.” To do so, 459NSL will provide funding to Deloitte, which will then support SFFC’s operations.
“It is submitted that this is the best approach to ensure to continued operation of SFFC’s business in the circumstances,” court filings state.
To date, CAD 78 million (USD 57 million, EUR 53 million) has been invested in Sustainable Blue's RAS facility, and the company was seeking an additional CAD 250 million (USD 184 million, EUR 170 million) in investments to expand its salmon farming production. However, investors ultimately balked at the sum, and court filings state “there was a consensus that SFFC needed to reach its full production capabilities at the facility before further investments would be made.”
The company was slated to reach its full production capacity in Q1 2024, but the 4 November incident prohibited that from happening.
Court filings also indicate the company is pursuing a claim with its insurers for the 4 November incident. The timing of any successful claim, however, is “yet to be determined.”
