A prawn farm on Legune Station on the NT-WA border could be back on the cards, after the company behind the problem-plagued asset launch a fresh play.
A prawn farm on Legune Station on the NT-WA border could be back on the cards, after the company behind the problem-plagued asset launched a fresh play.
Seafarms Group (ASX:SFG) told the market this morning the liquidators of Project Sea Dragon Pty Ltd and SFG subsidiary, Sea Dragon Shrimp Pty Ltd had entered an asset sale agreement under which Sea Dragon Shrimp will acquire all assets of PSD.
The agreement will mean SDS will pay some $750,000 for all assets of PSD, other than its cash, on as 'as is where is' basis, granting SDS full rights to develop the asset.
Seafarms Group chief executive Peter Fraser said the acquisition would provide the company the opportunity to develop the asset and expand its existing prawn farms operations in the NT and WA.
He said under the plan, SDS intended to develop the Legune Station prawn farm on the NT/WA border, establish a processing facility in Kununurra, and expand its breeding facilities in Exmouth.
"Unencumbered by the legacy issues of Project Sea Dragon, we will re-engage with potential investors to fund the development of these expanded operations in the NT and WA," he said.
"The past 24-months have been particularly challenging for the entire SFG team - from the board members to our loyal and hard-working employees.
"Despite the challenges, the board, executives and employees have remained focused and committed to our goal of developing a unique and globally significant seafood industry project."
It comes after years of delays, cost blowouts and legal set backs for the 10,000-hectare black tiger prawn project, which the NT government granted major project status in 2015, and the companies associated with it.
In February 2023, Project Sea Dragon entered voluntary administration after an order from the Royal Institute of Chartered Surveyors to pay contractor Canstruct $13.9 million in unpaid fees.
A month later, the company announced it had entered a deed of company arrangement, which meant they would pay just 10 per cent of the total owing to Canstruct.
That DOCA was then rescinded by the Federal Court, which at the time said it was being used to allow PSD to avoid its liability in breach of the Corporations Act.
In February 2024, the Federal Court found the Seafarms Group subsidiary had been operating insolvent since at least June 2020, and appointed Korda Mentha to act as liquidators.
It left several local Kimberley sub-contractors, which had worked on the project, out of pocket.
That legal saga followed a scathing review of the project in March 2022, which found the project was "not viable" and involving unacceptable risks due to environmental conditions, remoteness and biosecurity threats.
That review, done by then-CEO Mick McMahon following his 2021 appointment, left Mr McMahon "shocked".
Mr McMahon exited the company following the review, reportedly following pressure from the company's largest shareholder Ian Tahar.
In October of this year, Seafarms announced it would increase its revolving credit facility with Avatar Finance, raising the available facility from $8.5 million to $16.5 million and extending the payment to October 2026.
At the time, the company said it had considered an underwritten entitlement offer to raise the additional funds, but decided not to proceed after it became apparent Avatar Finance - which is controlled by SFG director and largest shareholder Ian Trahar - was the only underwriter.
That was because SFG shareholders had already rejected a proposed issuing of further capital to Avatar.
It led the company to seek a waiver from the ASX of the requirement it obtain shareholder approval to increase its secured debt facility with Avatar.
The ASX agreed to the waiver, subject to a provision which said, should the debt become unserviceable, the asset could only be disposed to Avatar if first approved by shareholders; otherwise it must be sold to an unrelated third party and the net proceeds of that sale be used to pay Avatar.
"Subject to completion occurring, the ownership of PSD licences and infrastructure secured, Sea Dragon Shrimp will now undertake detailed planning, permitting and staged development of new farm, hatchery, processing and support facilities in NT and WA," Mr Fraser said.
"Seafarms intends to invite equity and strategic investors into Sea Dragon Shrimp to underwrite this expansion and believes that presenting the opportunity on a clean slate will enhance investor confidence."
