SeaDragon's biggest shareholders to provide $1M bridging loan to meet cash-flow needs
By Jonathan Underhill
May 15 (BusinessDesk) - The biggest shareholders of SeaDragon have agreed to provide a short-term bridging loan of $1
million to allow the unprofitable fish oil refiner to continue to operate while it tries to negotiate longer-term
funding.
Cornerstone shareholders – BioScience Managers, an Australian investment firm, and Pescado Holdings, which is associated
with Christchurch's rich-lister Stewart family - agreed to the "short-term bridge facility" to ensure the company can
meet its cash requirements through until June 30. The loan, which is to be repaid on June 15, is at an annual interest
rate of 12 percent, to be paid monthly, and is secured by a second-ranking security interest over SeaDragon's assets
behind an existing security interest held by Comvita.
SeaDragon narrowed its first-half 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 Omega-3 fish oils from its "legacy" Omega-2 products.
It had $2.29 million of cash on hand as at Sept. 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. In May, the company said it would have an estimated cash shortfall of
about $175,000 as of May 30. It forecast a normalised ebitda loss of $4.1 million to $4.4 million for the year ended
March 31, down from a loss of $4.7 million a year earlier.
Today the company said it remains in talks with BioScience, Pescado and Comvita "with respect to medium- to longer-term
funding" and continues to consider how other existing shareholders could participate in raising capital "including
potentially through a follow-on renounceable pro-rata rights offer, which will further support the company’s longer-term
capital requirements."
SeaDragon also said it will bring forward the timing of its annual meeting this year, probably to July, by which time it
will have released its audited full-year results.
The shares last traded at 0.4 of a cent, valuing the 4.5 billion shares on issue at about $18.1 million, and have fallen
20 percent this year.
(BusinessDesk)
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