Nova Austral fails to find restructuring solution, alludes to insolvency in Q1 2023 results

Nova Austral employee with salmon.

Punta Arenas, Chile-based salmon farmer Nova Austral fell deeper into the red during the first quarter of 2023, and the company is struggling to find a path out of its difficult financial position. 

Nova Austral has been under intense public scrutiny since 2019 after revelations that it allegedly engaged in false reporting of its mortality figures – an infraction for which it has faced criminal charges, followed by fines for reported inadequate mortality and solid waste management, sanctions for overproduction, and government-imposed production limits.

Now, a punishing hit in fair-value adjustments in Q1 2023 has deepened Nova Austral’s financial woes. According to documentation published on the Oslo Børs, the company recognized that its financial position “is not sustainable.”

“A comprehensive restructuring of the company's capital structure is necessary,” Nova Austral said in its Q1 results statement. “The implementation of the restructuring proposal that has been approved by the company's secured creditors in a bondholder meeting on 25 April remains uncertain, and there is a high degree of risk that a consensual restructuring may not be completed.”

On 19 June, the company said in a new statement to the Oslo Børs it was doubtful it can complete a consensual restructuring despite it having “worked diligently and extensively with its secured creditors to jointly develop a restructuring plan, implement such proposed restructuring plan, and to facilitate the due diligence process by the main bondholders.”

“We regret to inform that no consensual solution has been reached, neither for an equitization of the bonds … nor for a voluntary sale by the secured creditors of the shares in the company,” Nova Austral said. “The company will take such actions as are deemed necessary to protect its operations, employees, and the environment and is considering all available options, including possible judicial reorganization," or insolvency.

Nova Austral revealed in March it had entered default on loans, and in a new report in early April, the company issued a notice to bondholders offering two alternatives: corporate restructuring, which would include a USD 20 million (EUR 18.3 million) loan to inject needed liquidity to the company, or a competitive selling process in which Nova Austral's parent company – Sweden-based private equity firm Altor – would exit the firm. In October 2022, Altor purchased Bain Capital's stake Nova Austral to give it full control over the company.

Nova Austral's recent financial troubles came to light the same month when a representative of one of Nova Austral’s bond providers, Nordic Trustee, recognized itwas traversing a “challenging” liquidity position, with the company seeking an additional USD 8.5 million (EUR 8.7 million) in new cash equity on top of the USD 15 million (EUR 15.4 million) Altor Fund III and Bain Capital had injected into the company in December 2021.  

Nova Austral's Q1 2023 results continued to reveal the company's strained financial position, as it posted a net loss of ... 

Photo courtesy of Nova Austral

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