Shortterm loan gives SeaDragon reprieve

NELSON: The biggest shareholders of SeaDragon have agreed to provide a shortterm bridging loan of $1 million to allow the unprofitable fish oil refiner to continue to operate while it tries to negotiate longerterm funding.

Cornerstone shareholders BioScience Managers, an Australian investment firm, and Pescado Holdings, which is associated with Christchurch’s richlister Stewart family, agreed to the ‘‘shortterm bridge facility’’ to ensure the company can meet its cash requirements until June 30. The loan, which is to be repaid on June 15, is at an annual interest rate of 12%, to be paid monthly, and is secured by a secondranking security interest over SeaDragon’s assets behind an existing security interest held by Comvita.

SeaDragon narrowed its firsthalf loss to $2.7 million from a loss of $3.5 million a year earlier, while sales halved to $1.5 million, which the company said reflected its transition to Omega3 fish oils from its ‘‘legacy’’ Omega2 products. It had $2.29 million of cash on hand as at September 30, it said in November, when it drew down the remaining $1 million of a $3 million convertible loan facility with Comvita.

But it has continued to sail close to the wind. It has said it will have an estimated cash shortfall of about $175,000 as of May 30 and forecast a normalised ebitda loss of $4.1 million to $4.4 million for the year ended March 31.

The company said yesterday it remained in talks with BioScience, Pescado and Comvita ‘‘with respect to medium to longerterm funding’’ and was considering how other shareholders could participate in raising capital, perhaps including a prorata rights offer.

It also said it would bring forward its annual meeting this year, probably to July.

The shares have fallen 20% this year. — BusinessDesk