Japanese seafood giant nets a share of Seafarms prawn project

Seafarms Group ASX SFG prawn seafood Nippon Suisan Kaisha Nissui
Nippon Suisan Kaisha to invest A$24.99m into Seafarms Group to assist in the development of the its world class Project Sea Dragon.

Australian prawn farmer Seafarms Group (ASX: SFG) has announced a near A$25 million investment by Japanese seafood giant Nippon Suisan Kaisha (Nissui) to help develop its large-scale aquaculture project in northern Australia.

Seafarms is an “agri-food” company, which builds and invests in sustainable aquaculture production platforms and is currently the largest producer of farmed prawns, distributed under the premium Crystal Bay Prawns brand.

The company is currently developing Project Sea Dragon, which is a large scale, land-based prawn aquaculture project designed to produce high quality and reliable year-round prawn volumes for export markets.

The project involves a stock and quarantine centre in Exmouth, Western Australia, where wild prawns are caught, a breeding centre in Darwin as well as two other facilities in the Northern Territory before prawns are sent to the processing plant in Kununurra, WA, for freezing, packaging and despatch to the port.

Seafarms lifted a trading halt on Wednesday morning to announce the finalised agreement, which includes a A$24.99 million equity investment by Nissui at A$0.10 per share – a substantial premium compared to Seafarms’ current share price, which sat at A$0.06 on Monday before the trading halt.

The deal makes Tokyo-listed Nissui a 14.99% shareholder in Seafarms. It also has a right to participate in new issues of securities for up to a 25% stake and a Nissui executive will be appointed to the Seafarms board.

Given Nissui is one of the world’s largest seafood companies, Seafarms chairman Ian Trahar has described the deal as a “company-making agreement”.

“Seafarms’ offtake arrangements with Nissui will provide SFG with access to Nissui’s well established high-quality seafood distribution business in Japan, and by agreement, Asia and other international markets,” Trahar said.

“Nissui will market our Australian premium product which will be jointly branded with Nissui in Japan and may look at establishing value added product offerings as well,” he added.

The agreement will also obtain fresh funds for Project Sea Dragon, where development and construction plans are currently being “refined and optimised” as Seafarms “moves to implement the project at the earliest opportunity”.

According to Seafarms executive director Dr Chris Mitchell, the agreement with Nissui provides significant credibility to the project’s development.

“Nissui is a partner with extensive long-term expertise in all aspects of vertically integrated aquaculture systems including well-established international marketing, logistics and sales capabilities,” he said.

Seafarms shares have been on the incline since mid-May, before the trading halt was requested at the start of this week. Following the announcement on Wednesday, the stock was up more than 21% to A$0.08 by midday trade.

    Join Small Caps News

    Get notified of the latest news, events, and stock alerts.