DNB Bank favoured by Nova Austral in debt restructuring proposal
The Chilean salmon farmer, which owes US $560m, wants creditors to take control of company
The Norwegian owner of debt-laden Chilean salmon farmer Nova Austral has proposed a debt restructuring plan that would transfer ownership to creditors and gives special treatment to Norway’s DNB Bank.
Private equity firm Altor Equity Partners, which owns Nova Austral, presented the plan to a Chilean court this week. It proposes a US $487 million capital increase to the majority of its $560m debt into stock.
Under the proposal, DNB, which is owed $69m, will receive five shares for every dollar of debt. Other bondholders, represented by Nordic Trustee ASA, will receive just one share per dollar. DNB is receiving special treatment because it has made separate loans to the company guaranteed by specific assets, reports Bloomberg, which quoted Diario Financiero.
Bondholders unhappy
Creditors also include feed supplier Comercializadora Nutreco Chile (Skretting), which is owed almost $24m.
Nova Austral owes bondholders $416m as well as $69m to DNB,
according to court papers. In 2022, its total revenue was $88m.
Bondholders, including the Solari-Donaggio family and Moneda Asset Management, will vote on the proposal this month, according to Diario Financiero. Many are balking at the plans, the newspaper said, citing unidentified sources.
$20m to stay afloat
Nova Austral, meanwhile, needs additional contributions of $20m in order to finance its operations in the short and medium term and to finance the prompt payment of unsecured creditors. This amount will be contributed through a financing option that will be granted to current creditors and third parties, which will be a priority in terms of payment.
In a document presented to the Court of First Instances and Guarantee of Porvenir in June, Nova Austral said that close to 3,000 direct and indirect jobs depend on the company.
It added that the fish farmer is a key economic actor for the Magallanes region and, especially, for the municipality of Porvenir where it is the main employer, but that a series of exceptional factors have prevented it from the normal development of productive activities and the fulfilment of its projections and commitments with creditors.
Mortality figures massaged
Nova Austral’s troubles stem partly from 2019 when a months-long investigation by an online newspaper revealed that the company – then under the shared ownership of Altor and US-based Bain Capital – had massaged its figures to conceal mortalities. This led to senior managers being sacked.
Lawyer Ricardo Reveco Urzúa, representing Nova Austral, said the company had been faced with unprecedented sanctions by the Superintendence of the Environment, which revoked environmental permits for some salmon farms, and by state aquaculture agency Sernapesca, which applied sanctions that limited harvests in other farms.
Authorities had also frozen payments of more than 7 billion Chilean pesos that Nova Austral had been due to receive under the Navarino Law that incentivises the establishment of businesses in the Magallanes and Chilean Antarctic through tax and customs benefits.
“All of the above has meant a decrease in the company’s production to a third compared to what it was a few years ago, which has obviously affected the company’s cash flow and damaged its ability to meet its commitments with its creditors,” said the lawyer in his presentation in June.
