Tassal in trading halt as it chases $100m injection of funds to boost production

TASMANIAN salmon farmer Tassal has halted trading on the ASX as it announces plans to raise up to $100 million to boost its operations.

TASMANIAN salmon farmer Tassal has halted trading on the Australian Securities Exchange as it announces plans to raise up to $100 million to boost its operations, amid rising domestic demand for salmon.

Tassal plans to raise $80 million via a fully underwritten institutional share placement and up to $20 million through a non-underwritten share purchase plan. The company expects the investment to boost revenue and operational earnings from 2017-18.

In a letter to the ASX, managing director and CEO Mark Ryan said Tassal was investing in working capital and capital investment initiatives to meet the continued growth in domestic demand for salmon and to take advantage of the current strength in operating conditions.

The ASX announced this morning that trading had been halted at the request of the company, and was expected to remain that way until March 6, pending further notice of the company’s intentions.

Tassal has also announced a number of growth initiatives to increase revenues from next financial year including an accelerated growth in current fish biomass and a $50 million investment to establish salmon farming operations in Okehampton Bay and oceanic sites in Storm Bay.

The company hopes to deliver an additional 2500 to 3000 hog tonnes of harvested salmon each year to 2021.

The fully underwritten placement to eligible institutional and professional investors in Australia and overseas is expected to raise $80 million at a cost of $4.55 per share – a 7.1 per cent discount on Tassal’s closing price of $4.90 yesterday.

Approximately 17.6 million new shares will be issued under the placement, which is being underwritten by Goldman Sachs and UBS.

Mr Ryan said apart from the share placement and the purchase plan, new credit facilities would be established with Rabobank, Westpac and Bankwest, which are expected to further strengthen the company’s balance sheet and lower Tassal’s risk profile.

“Tassal’s strategic focus continues to be delivering sustainable growth and best practice returns,” said Mr Ryan.

“The capital raising, in combination with the new credit facilities, provides Tassal with the operational and financial flexibility to implement its growth initiatives, which the company expects will deliver strong financial returns.”