Otago Daily Times

Shortterm loan gives SeaDragon reprieve

- JONATHAN UNDERHILL

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

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