New Zealand Markets closed

Tassal taps investors to fund growth plans

Salmon farmer Tassal plans to tap investors for up to $100 million to help fund new fish farms in Tasmania and state-of-the-art equipment, amid rising domestic demand.

Just over a week after delivering strong first-half profit growth, Tassal has unveiled plans to boost fish growth and processing capacity over the next five years.

Tassal - which sells salmon products under the Tassal, Superior Gold, Tasmania Smokehouse and De Costi Seafood brands - plans to invest around $95 million to accelerate the rollout of improved technologies and new feeding barges to improve fish survival rates and feed conversion.

The group has also earmarked around $53 million to establish salmon farming operations at Tasmania's Okehampton and oceanic sites in Storm Bay and an additional $38 million to accelerate fish growth towards its target of five kilogram HOG.

Tassal expects the investment to boost revenue and operational earnings from 2017/18.

The company has spent about $130 million on salmon production capacity and the De Costi Seafoods acquisition since July 2015, which was funded from operating cash flow and debt.

Tassal's capital raising will consist of $80 million via a fully-underwritten institutional share placement and up to $20 million through a non-underwritten share purchase plan.

The group has also secured new credit facilities with Rabobank, Westpac and Bankwest to "further strengthen" its balance sheet and lower its risk profile.

Tassal shares, which closed at $4.90 on Wednesday, were placed in a trading halt on Thursday morning, pending the release of an announcement by the company.

The stock is due to resume trading following the announcement or no later than Monday.

Tassal in February announced it would cut the number of young salmon it puts into Tasmania's Macquarie Harbour by almost half to address environmental concerns, but will put extra fish into sites on Tasmania's southeast coast.

The group's net profit of $27.7 million for the six months to December 31 was up 9.7 per cent on a year earlier.