Punta Arenas, Chile-based salmon farmer Nova Austral, facing scrutiny from environmental regulators over past practices, is also having to deal with another issue: lack of cash.
“As shown by the issuer's [Nova Austral’s] interim accounts for Q2 2022, the issuer's liquidity position remains challenging, primarily due to its focus on stocking of biomass and lower than budgeted harvest over the 12 last months,” a representative of bond provider Nordic Trustee said in a statement issued through the Euronext Oslo Børs, where the company is listed.
In response, Nordic Trustee said Nova Austral has approached it and its bondholders for help with obtaining additional funding.
“The issuer is also experiencing reduced credit support from its feed supplier as the issuer's financial position makes it more difficult to obtain credit insurance on its exposure towards the issuer,” the statement from Nordic Trustee said. “To address these continuing liquidity challenges, the issuer has engaged in discussions with a group of larger bondholders and the sponsors to seek to improve its working capital.”
In the proposed move, Nova Austral’s sponsors would contribute an additional USD 8.5 million (EUR 8.7 million) in new cash equity, in addition to the USD 15 million (EUR 15.4 million) the current owners –the equity funds Altor Fund III and Bain Capital – injected into the company in December 2021.
has been in regulatory trouble since June 2019, when Chile’s National Fisheries and Aquaculture Service (Sernapesca) began investigating alleged underreporting of mortalities and soon thereafter filed three formal complaints against the company for adulteration of information. It has faced additional regulatory scrutiny since then.
The company has also said that it may be forced to close operations throughout the country if sanctions levied by the SMA are allowed to go forward.
In July 2022, Chile’s environmental regulator SMA accused Nova Austral of overproduction between 2015 to 2017 at three salmon grow-out centers in the Alberto de Agostini National Park. In response, it moved to revoke the environmental license for those centers and apply a fine for the artificial alteration of the seabed at another center.
Due to those sanctions, the company provided a lower stocking estimate of between 4.5 and 5.5 million salmon smolts this year, compared to its previous projection of between 6.5 million and 7.5 million smolts. In Q2 2022, Nova Austral said its sold volumes over the previous 12 months had fallen to 11,700 MT WFE from 21,800 MT WFE a year ago, a 56 percent drop, which it attributed mainly to a decrease in the volumes of raw material purchased from third parties.
The company’s quarterly revenue decreased 42 percent to USD 16.7 million (EUR 17.2 million) versus the USD 28.6 million (EUR 29.4 million) it posted in Q2 2021, mainly due to the lower volumes sold, partially offset by a 19 percent increase in its average price per kilogram. Net losses for the quarter more than quadrupled to USD 18.5 million (EUR 19 million), compared to USD 4.3 million (EUR 4.4 million) in the quarter from one year ago.
Photo courtesy of Nova Austral
