Seafarms Group puts $1.5bn Project Sea Dragon into voluntary administration

The future of one of the world’s largest proposed prawn farms is in doubt after Seafarms Group called in voluntary administrators for the $1.5bn Northern Australian project.

Australian aquaculture giant Seafarms Group has withdrawn support for its troubled greenfield project in Northern Australia that would have become one of the world’s largest prawn farms.

After a decade of planning and conjecture about its viability, on Tuesday SFG put its wholly owned entity Project Sea Dragon into voluntary administration after a contractual dispute with construction contractor Canstruct.

The decision was made after a recent adjudication by the Royal Institution of Chartered Surveyors which determined that $13.9m was owed following suspension of work on the greenfield project in December 2021 and later termination of contracts in April 2022.

Commenting on the decision on February 3, SFG chief executive Rod Dyer said it was “very disappointing” and believed the determination to be excessive.

SFG on Tuesday requested that the ASX suspend the quotation of is shares immediately because to continue trading would be “prejudicial” to a normal and efficient administration process.

The voluntary administration through BDO’s Brisbane office is expected to end on April 17.

SFG is one of the largest and most well-regarded prawn farming companies in the country but was rumoured to be looking for a buyer for all or part of the business last year.

Project Sea Dragon trial pond at Legune Station, in Australia's Northern Territory SUPPLIED Seafarms

However, it posted a loss of $75m for the year to June 2022, amid uncertainty surrounding Project Sea Dragon that was forecast to be eventually capable of producing up to 180,000 tonnes of fresh and frozen black tiger prawns annually.

The $1.5bn project was to have been a staged development of up to 10,000 hectares of prawn production ponds, supported by a series of geographically separate facilities across Northern Australia.

It was supported by the Northern Territory and West Australian governments.

In a statement to the ASX, SFG said with Project Sea Dragon relying on SFG for its funding the board resolved that it was no longer in the best interests of the company to continue to fund the development.

“As a result of the adjudication and the recent withdrawal of funding from SFG, the directors of Project Sea Dragon have resolved to place Project Sea Dragon into voluntary administration,” it said.

“The result of the voluntary administration will likely be material to the value SFG securities.

“Given these new circumstances, SFG considers that it will be very challenging to comply with its continuous disclosure obligations in the context of an administrator performing its role and SFG not being able to oblige the administrator to provide any more information to SFG than it provides to all other creditors.”