Farmed cod. (Photo: Codfarmers)
Codfarmers reports losses of EUR 3.4mln
NORWAY
Tuesday, November 13, 2012, 01:50 (GMT + 9)
Codfarmers ASA has suffered substantial losses of NOK 25 million (EUR 3.4 million) after its fish were struck by disease right when ready for harvesting at two locations in Møre and cod prices fell across the board. The company has now fallen into a difficult liquidity position.
Substantial portions of the biomass at two locations in Møre were destroyed and the rest downgraded and sold at lower prices.
In general, the market for whole cod and cod fillets has been characterized by low prices, and Codfarmers says the volume of its STRØM product is not large enough to compensate for the low spot market prices, even though the sale of the STRØM product has increased by 100 per cent this year.
“Diseases and low prices have brought the company into a difficult liquidity position, and alternatives for refinancing the company are being worked on. These will have to imply that additional cash resources are made available to the company, which again will be subject to a restructuring of the company’s debt,” Codfarmers said in a statement.
The firm has thus resolved to put into practice extensive cost reductions. This includes the substantial reduction of the planned releases of juveniles, and the company will also divest subsidiaries, locations, equipment and land bases.
Downscaling of operations, restructuring of debt and sale of assets will all cut the company’s cost base to a level where the largest shareholders may be willing to contribute to the financing of the company.
Codfarmers said it will call for an extraordinary general meeting to be held in December and it has postponed the release of its Q3 report to 30 November 2012.
The firm said it expects its volumes to rise substantially as well as better prices for cod in H2. It harvested 1,541 tonnes in H1 and intends to harvest 4,100 tonnes in the next six months.
Codfarmers reported revenues of NOK 21.9 million (EUR 3 million) in Q2 compared to NOK 40.1 million (EUR 5.5 million) a year prior.
Back in September, Codfarmers entered into loan agreements with Kontrari AS and Dolphin Management AS for unsecured loans worth NOK 16 million (EUR 2.2 million). They shall accrue interest at a rate equal to NIBOR 6 months + 7 percentage points and fall due for repayment on 31 December.
At that moment, the company reported the proceeds would go toward covering the finance needs rising from lower harvest activity than expected during the summer, mainly due to limited access to wellboat services for fish transportation in August and the capacity restrains in the company’s harvesting plant in July and August.