The company behind the Project Sea Dragon prawn farm near Kununurra will double a debt facility with an entity controlled by a director in an effort to remain solvent and revive the project.
The company behind the Project Sea Dragon prawn farm near Kununurra will double a debt facility with an entity controlled by a director in an effort to remain solvent and revive the project.
Seafarms Group Limited (ASX:SFG) will enter an amended credit agreement with Avatar Finance Pty Ltd, a company controlled by SFG director and largest shareholder Ian Trahar, increasing the amount available from $8.5 million to $16.5 million and the payment date to October 15, 2026.
In a statement, the company said it had considered an underwritten entitlement offer to raise additional funds, however given Avatar was the only underwriter available, chose not to proceed.
That was because SFG shareholders had already rejected a proposed issuing of convertible notes to Avatar.
Both of those avenues would require shareholder approval.
Instead, the SFG sought 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 several conditions.
Those conditions included a provision that, should the debt become unserviceable, asset could only be disposed to Avatar if first approved by shareholders.
Otherwise, the asset must be sold to an unrelated third party and the net proceeds of sale to be distributed to Avatar.
In the same statement, the company said $4 million of the additional $8 million in debt would be used to fund the current prawn crop at its Queensland operations.
The remaining balance would be used to fund PSD, with the harvest and sale of its current prawn crop in Queensland to then fund further PSD costs.
"The company is currently in discussions with the liquidator of Project Sea Dragon Pty Ltd (in liquidation) to reacquire those assets," the statement said.
"Whilst there is no certainty that a transaction can be agreed, the quantum of the secured debt facility offered by Avatar Finance appears likely to provide sufficient funding to allow this transaction to occur, in addition to facilitating the continuing working capital requirements of the group.
"The company is also in discussions with other investors to provide further finance to develop those assets by building and operating Stage 1A of Project Sea Dragon in circumstances where the company is able to reacquire those assets."
The increased funding would also allow the company to sign off on its FY25 financial accounts, which were due to be lodged on September 30.
An independent board committee was established to handle the flow of information and conflicts of interest, comprising SFG director Rodney Dyer and chief financial officer Ian Leijer.
Ian Trahar excused himself from all discussions concerning the revised facility, according to a statement from SFG.
Project Sea Dragon, the long mooted 10,000-hectare black tiger prawn farm near Legune Station near Kununurra, would be one of the largest prawn projects in the world.
However, its future remains uncertain.
In February 2023, the company entered a trading halt as after placing the project in liquidation.
That led to a stoush between Seafarms Group and Canstruct, the contractor selected to build the first phase of the PSD, over $13.9 million owing.
In February 2024, the was ordered company into liquidation after Federal Court Justice Michael Derrington found the company abused the Corporations Act.
Following that, SFG moved to offload assets in Queensland to release capital for PSD.
The group reached an agreement with Mainstream Aquaculture Property for the sale and leaseback of Seafarms Queensland assets, a wholly-owned subsidiary of SFG.
Under that agreement farms one and two in Queensland were sold and a leaseback agreed for Seafarms Queensland to continue operating the farms until January 8, 2026.
