Project Sea Dragon needs shareholder vote as capital raising hits roadblock
THE company behind Project Sea Dragon has asked shareholders to vote through the sale of millions of dollars in shares or risk running out of working capital by August
Northern Territory
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THE company behind Project Sea Dragon has asked shareholders to vote through the sale of millions of dollars in shares or risk running out of working capital by August.
ASX-listed Seafarms has called an extraordinary general meeting of shareholders to be held this month to vote on two separate share buy ups that will provide the company with much-needed cash flow as the global coronavirus pandemic causes widespread economic pain.
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It comes after the company said on March 27 it needed to raise at least $7 million in new funds by April 2020 to ensure it could continue with the planned development of Project Sea Dragon.
But the economy crippling coronavirus has proven to be a significant roadblock.
Seafarms has come up with a two-part alternative; selling shares to a consortium of investors to raise $6.86 million and through $6.25 million put forward by Seafarms chairman Ian Trahar via his company Avatar Industries.
This would increase Mr Trahar’s overall stake in the company from 21.84 per cent to 27.9 per cent, something that can’t be done without the go ahead by a majority of shareholders.
An independent report commissioned by Seafarms showed the company had the ability to fund its operations, based on current business plans and planned Project Sea Dragon expenditure, until July/August 2020.
If shareholders tick off on Mr Trahar’s Avatar Industries’ share buy up, Seafarms would be able to extend this out to February/ March 2021.
Seafarms managing director Dr Chris Mitchell said the issue of new shares announced to the ASX in March 2020 would be for general working capital purposes and would be used to progress reaching financial close.
Dr Mitchell did not say if the company was further away from reaching financial close than it was before COVID-19 struck, though he confirmed there had been no impact on jobs for Project Sea Dragon. He said the $1.4 billion project “would go ahead with a suitable financing package in place”.
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“Project Sea Dragon facilities will continue construction in the 2020 dry season subject to the final investment decision, noting that construction has already commenced at some sites,” Dr Mitchell said. “Seafarms is looking to start stocking ponds in November 2021 and the first product to market in early 2022.” The extraordinary general meeting will be held on June 29.
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