Bondholders greenlight restructuring of troubled Nova Austral

Bondholders of Punta Arenas, Chile-based salmon farmer Nova Austral, which has admitted operational challenges and liquidity constraints, have approved the company’s proposed restructure plans in a bid to keep the company afloat.

“We are pleased to announce that the bondholders in each of the bond issues have voted in support of the proposed restructuring and the implementation steps described in the summons,” the company said in a brief statement to the Oslo Børs. “Updated information on the practical implementation of the restructuring will be announced on a regular basis until completion of the restructuring has occurred.”

Bond provider Nordic Trustee, in representation of all bondholders, said in a separate statement that it had obtained 100 percent of the votes in the bond issues and now has authorization to implement the proposed resolution.

Nova Austral revealed in March that it had entered default on loans, and in a new report in early April, the company issued a notice to bondholders offering two alternatives: corporate restructuring, which would include a USD 20 million (EUR 18.2 million) loan to inject needed liquidity to the company, or a competitive selling process in which the parent company – Sweden-based private equity firm Altor – would exit the firm.

In October 2022, Altor purchased the stake that fellow owner, U.S. private equity firm Bain Capital, had in Nova Austral for an undisclosed amount.

Bondholders will now need to choose one of the two alternatives by 19 June.

The company’s recent financial troubles came to light in October 2022, when a Nordic Trustee representative recognized that the salmon farmer was traversing a “challenging” liquidity position as the company sought an additional USD 8.5 million (EUR 8 million) in new cash equity. That total was on top of the USD 15 million (EUR 14.1 million) that Altor and Bain Capital had injected into the company in December 2021.

The restructuring plan would create two new Chilean special purpose companies, with one being a wholly owned subsidiary of the other, and moving the debt to the newly formed company, therefore converting it into a new unsecured, subordinated instrument that would not amortize or accrue interest.

Nova Austral has been under intense public scrutiny since 2019 after revelations that it allegedly engaged in false reporting of its mortality figures – an infraction for which it has faced criminal charges – followed by fines for reported inadequate mortality and solid-waste management, sanctions for overproduction, and subsequent production limits imposed by the government.

In response to the latter, hundreds of Nova Austral workers who fear for the future of the company and their jobs took to the streets in protest on Sunday, 23 April, local publication SalmonExpert reported. The protesters in Porvenir – where the company's processing plant operates, providing a significant number of direct and indirect jobs to the city’s residents – sought concrete answers from the government on what might transpire if salmon farming operations were to cease. It was the second such demonstration in under a month.

Specifically, Nova Austral workers were seeking …

Photo courtesy of Nova Austral