Chilean salmon farmer Nova Austral has warned that, due to recent mortality related issues, it has experienced reduced harvest levels and “adverse developments in its earnings and cash flow”.
Its short-term liquidity is also “stressed” due to the market and operational challenges presented by the COVID-19 pandemic and recent legal actions that prevent it from “Navarino Law subsidies”, it said.
A full operational recovery is not expected until 2022.
Also contributing to its tough position are the “Chilean regulatory challenges and investigation processes” it has encountered since its mortality issues, it said.
Undercurrent News reported in June that Nova Austral had temporarily lost access to the Navarino payment, a significant government subsidy that comes with operating in the remoteness of Tierra del Fuego at the southernmost tip of Patagonia. The State Defense Council (CDE) has launched a criminal investigation into the farmer’s current and former employees.
The firm warned its shareholders that it expects to suffer a liquidity shortfall late this month or early August 2020, “resulting in operational liquidity issues”.
To address this and provide it time to execute growth and operational plans — and resolve outstanding legal processes that are necessary to enable it to repay or refinance bonds, it has engaged in discussions with its stakeholders, including some of the largest bondholders, it said.
Nova Austral has the support of bondholders holding more than 50% of its bonds. This is going to result in the bonds being split into two tranches, and their maturity dates pushed back by five-and-a-half years, to November 2026.
Further, the Oslo stock exchange-listed farmer and DNB Bank have agreed that the former can draw on its $50 million revolving credit facility in full. Sponsors have also provided a guarantee to DNB on a new $15m additional tranche for Nova Austral to draw on.
Following this, the Chilean company can draw on up to $53m immediately; an additional $58m from Oct. 1, 2020, in the event that its Navarino subsidies have still not come through; and $65m should the subsidies continue to be withheld in the future.
If and when the subsidies come though, they will be first used to pay off the new “sponsor liquidity facility” and DNB’s revolving credit, it said.