Nova Austral weighs company sell-off after wading deep into the red in Q2 2023

Punta Arenas, Chile-based salmon farmer Nova Austral – amid continuous sanctions from Chile’s environmental regulator and attempts to stave off bankruptcy – has submitted another reorganization proposal after the company’s first attempt at restructuring failed.

The company, which is the main employer in Chile’s Tierra del Fuego province within the southern Magallanes region, responsible for about 3,000 jobs, is reportedly more than USD 500 million (EUR 467 million) in arrears.

The updated reorganization proposal entails Nova Austral asking its main creditors to fully or partially write off their credits to forgive debt. With a full write-off, the company would give preferential rights to participating creditors in the financing of working capital. 

A partial write-off scenario includes forgiving half the debt, the remaining debt of which the company would reschedule in five annual installments. The first installment would kick in in September 2024 with no interest accrued. Upon acceptance of this proposal, the company would then seek an additional USD 23 million (EUR 21.5 million) in financing to continue operations.

If that plan falls through, Nova Austral proposed a second scenario: the outright sale of the company to meet obligations with its various creditors. 

The company would pay the guaranteed creditors in a single installment on 30 September 2024 or the date on which the salmon farmer sells the shares, whichever occurs first, with no interest accrued.

Even if the company pursues this path, it would still need to seek financing of around USD 20 million (EUR 18.7 million) in order to ensure operations in the short and medium terms, excluding payments to minor creditors under rescheduled loans.

Judging by the company’s latest financial results, Nova Austral may need to find a fresh means of funding its operations sooner rather than later.

The company took a USD 7.3 million (EUR 6.8 million) hit in fair-value adjustments, compared to a fair-value adjustment boost of USD 6.8 million (EUR 6.3 million) in Q2 2022. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) after fair value fell further into the red, dipping to a loss of USD 6.1 million (EUR 6 million) from a loss of USD 4.9 million (EUR 4.6 million) in Q2 2022. Its quarterly net loss increased 11 percent to USD 20.6 million (EUR 19.2 million), compared to USD 18.5 million (EUR 17.3 million) in losses in the second quarter of 2022.

In Q2 2023, Nova Austral’s revenues actually increased to USD 29.4 million (EUR 27.4 million), a 76 percent leap when compared to the same quarter of 2022. The firm credited the increase to higher volumes sold – a year-over-year increase of 4,200 metric tons whole-fish equivalent (WFE) – and the achievement of higher average prices, up 3 percent per kilogram WFE.

In Q2 2023, the U.S. continued to be Nova Austral’s primary customer, with USD 17 million (EUR 15.9 million) worth of product sent to the market in the second quarter of 2023, compared to USD 10.3 million (EUR 9.6 million) in the same quarter last year. That was followed by Europe at USD 6.9 million (EUR 6.4 million), compared to USD 3.9 million (EUR 3.6 million) the year previous. Asia followed Europe at USD 900,000 (EUR 840,000), compared to no sales in the same quarter a year ago.

In July 2023, Nova Austral creditor Fratelli Investments Limited filed suit against some of Nova Austral’s former managers and directors for fraud after having ... 

Photo courtesy of Nova Austral