Contractor Canstruct seeks to liquidate Seafarms entity after NT Sea Dragon project debacle

The ASX-listed Seafarm’s 12 months of turmoil over its embattled $1.5bn in the Northern Territory is coming to a head - and it could destroy the company.

Seafarms’ ambitious black tiger prawn project has led to more than 12 months of turmoil for the ASX-listed small-cap.

Construction contractor Canstruct is seeking to liquidate ASX-listed Seafarms Group’s Project Sea Dragon entity and terminate a deed of company arrangement that is due to take effect on April 28.

Canstruct has been locked in a dispute with Rod Dyer-led Seafarms for months over its troubled $1.5bn prawn farming project in the Northern Territory.

The aquaculture giant 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.

In February, after a decade of planning and conjecture about its viability, SFG put its wholly owned entity Project Sea Dragon into voluntary administration over the dispute.

The long-held dream 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.

As a result of entry into the DOCA last month, control of Project Sea Dragon returned to the directors amid expectations operations will “return to normal” with the group continuing to “assess advancing” the project, including via funds from third-party funders.

But Canstruct’s pre-Easter Federal Court proceedings have thrown a spanner in those works. “Project Sea Dragon is seeking legal advice in relation to the proceedings and intends to vigorously defend the proceedings,” Seafarms told investors.

Seafarms had told investors last month it had been advised the DOCA “discharges the claims” by Canstruct, including the $13.9m that was payable, as decided by the Royal Institution of Chartered Surveyors as an adjudicator in the dispute.

Seafarms has so far agreed to make a contribution of $3.5m, which it will fund from cash reserves, under the DOCA arrangement.

It has been a tumultuous time for Seafarms since its project first hit troubled waters at the end of March last year, when then chief executive Mick McMahon – a former Ingham’s Chicken executive who had been in the role for just a couple of months – apologised to investors for the ‘unviable’ project. He was ousted in May.

Project Sea Dragon has attracted millions in support from the federal, WA and NT governments since it was first touted in 2012.

Seafarms shares were down more than 14 per cent to 1c, giving it a market value of $20.3m.