The turbulent history of Nova Austral

Punta Arenas, Chile-based salmon farmer Nova Austral continues to face operational challenges and liquidity constraints in the latest chapter of the company’s troubled history.

The company said in a report to the Oslo Børs in March that it entered default on loans to its subsidiary Piscicultura Tierra Del Fuego, and in a new report in early April the company issued a summon to bondholders meeting offering up two main options for the beleaguered company, one of which is the parent company selling off its share.    

The March report highlighted the scale of the problems facing the company as it faced lenders unwilling to compromise on payments.

“In an attempt to address its working capital requirements, the Company has for some time discussed a comprehensive financial restructuring with its secured lenders and a group of the largest [bond] holders,” the report said of its difficulties with Piscicultura. “During this period the Company has also been granted certain waivers of payments of interest and instalments due under its super senior revolving credit facility and the loan facility.”

Despite Nova Austral’s efforts, “the secured lenders have not been willing to extend such waivers,” the company said.

 “The Company will seek to continue the discussions with its creditors to find a consensual solution, but there is no certainty that such discussions will be successful.”

Those problems led to the summon to bondholders’ meeting on 7 April, which offered up two main options for Nova Austral. The first alternative is a corporate restructuring plan, which includes a USD 20 million (EUR 18.2 million) loan to inject needed liquidity to the company.

The restructuring plan would also incorporate two new Chilean special purpose companies, with one being a wholly-owned subsidiary of the other, and restructure the company’s debt “with equitization of the bonds.” As part of the restructure, the bond debt would be moved to the newly formed company and converted into a “new debt instrument,” Nova Austral said, whereby it would be unsecured, subordinated, not be amortizing, not accrue interest, and would have multiple caveats on how it could convert into equity.

The second alternative for the company, Nova Austral announced, would involve a competitive selling process, with parent company – Sweden-based private equity firm Altor – looking to sell its shares.

The company’s recent financial troubles came to light in mid-October 2022, when a representative of one of Nova Austral’s bond providers, Nordic Trustee, 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 its owners at the time, Altor and U.S. private equity firm Bain Capital, had injected into the company in December 2021.

Altor doubled down on Nova Austral in October 2022, while Bain Capital bailed out. Altor purchased the U.S. firm’s stake in the Chilean salmon farmer for an undisclosed amount.

It has since emerged that one of the three members of Nova Austral’s board of directors, noted Norwegian seafood investor and advisor Yngve Myhre, has left the company. According to his LinkedIn profile, he was an advisor to Nova Austral from October 2014 until February 2023. His departure leaves two on the board: Tom Jovik from Altor Equity Partners, and Anton Felmer, founding partner of the Chilean private investment fund management firm Südlich Capital. In 2021, Felmer recognized that Chile’s aquaculture sector was in debt when it comes to positive net environmental impact, and he told SeafoodSource that his firm’s focus on investing in new technology would help to solve that.

Nova Austral’s CEO Nicolás Larco confirmed to SeafoodSource that Myhre is no longer working with Nova Austral, and said that the company is not planning on providing any information to the market until debt restructuring negotiations finalize.

The company’s finances have not helped the situation …

Photo courtesy of Nova Austral