AgriMarine lives to see another day
According to a release posted on AgriMarine’s web site last week, the company has signed a Term Sheet aimed at acquiring the assets of West Coast Fishculture- a producer of rainbow trout based in a large freshwater reservoir near Powell River on the BC mainland north of Vancouver. West Coast Fishculture was started and is owned by veteran aquaculturist Ward Griffioen, who has developed this company into a viable producer of market-sized rainbow trout sold as Lois Lake Steelhead to the higher end restaurant trade in Vancouver and elsewhere in the BC/Northwestern US area. Griffioen has built the company from scratch, with the assistance of his extended family which today harvests and processes some 40,000 pounds of fresh fish twice a week at its processing facility near Powell River, employing a significant number of local residents.
Griffioen told FishfarmingXpert that access to capital for the expansion of aquaculture facilities in British Columbia is extremely difficult- mainly due to the fact that conventional banks don’t consider live fish inventory as a viable asset that can be provided as security for loans. Even government- backed institutions don’t recognize fish as assets, says Griffioen, so “unless you have financing available from Norway, a fish farmer in B.C. is pretty well doomed from expansion opportunities in Canada, unless you can pay for it yourself”. If the deal with AgriMarine includes the installation of floating, solid-wall tanks like the ones used by the company in reservoirs in China, fish production might be enhanced by the ability to supply water that is colder than the normal surface temperature, which can reach very high levels during the summer growth period.
The AgriMarine release stated that;
AgriMarine is pleased to announce that it has shifted the Company’s strategy toward becoming a global producer of sustainable fin fish such as salmon and trout. To this end, AgriMarine announces that it has signed a non-binding term sheet (“Term Sheet’) with an established steelhead trout producer in British Columbia. Under the terms and conditions of the Term Sheet, AgriMarine Industries Inc., a subsidiary of AgriMarine Holdings Inc., would acquire all of the outstanding shares of West Coast Fishculture (Lois Lake) Ltd. and West Coast Fishculture Ltd. (jointly referred as “WCFC”) for cash.
The Term Sheet is subject to the successful execution of a Definitive Purchase and Sale Agreement, approvals by the TSX Venture Exchange, and other customary terms and conditions, such as satisfactory due diligence with respect to WCFC, including a valuation report, and the approvals from the Board of Directors from both companies. The acquisition price will remain undisclosed for the time being, as it will depend on a yet-to-be-completed count of the biological inventory upon closing of the transaction.
The contemplated transaction with West Coast Fishculture will be based on financing through the Canadian Dundee Corporation, which has committed over CAD$ 14 million (~€10.2 million) to AgriMarine in the form of a combination of debt and equity. The Canadian government and charitable foundations in the U.S. have also poured significant resources into the company, which on March 31 this year reported a deficit of some CAD$31.2 million (~€22.7 million), along with a net loss in the preceding year of CAD$ 5.9 million (~€4.3 million). AgriMarine sold some 141,000 kg (~311,000 lbs) of fish (gross weight) from its operations in China during the last fiscal year. This generated income of about CAD$406,000 (~€296,000), but most of this was turned into frozen inventory at a value of CAD$ 2.87/kg or CAD$ 1.30 per pound (~€2.09/kg). The reported cost of this production was CAD$13.44 per kg or CAD$6.10 per pound (~€9.78 per kg).
