Comvita seeks to build SeaDragon stake with $3m convertible loan
Comvita already holds a 13% stake in SeaDragon and has options that could lift that holding to between 25% and 31%.
Comvita [NZX: CVT] wants to increase its stake in SeaDragon [NZX: SEA] with a $3 million convertible loan, which the fish oil refiner will use to fund its exit from Omega-2 oil in favour of the more profitable Omega-3 market.
Te Puke-based Comvita already holds a 13% stake in SeaDragon and has options that could lift that holding to between 25% and 31%. SeaDragon shareholders will vote on whether to approve the convertible loan at their annual meeting in August, effectively lifting the honey healthcare products maker's interest to between 31% and 37%, Comvita said in a statement.
"Comvita's agreement to advance $3 million via a convertible loan allows this transition from Omega-2 to Omega-3 to occur in a smoother way," SeaDragon chairman Colin Groves said in a separate statement. "Comvita's continuing support is very valuable."
Last month SeaDragon missed annual earnings guidance as the downturn in sales of Omega-2 weighed on prices while at the same time saying the final cost of its delayed and over-budget Omega-3 refinery would be more than previously expected.
Comvita chief executive Scott Coulter said Omega-3 fish oils are a core ingredient platform for his company and reaffirmed his commitment to back SeaDragon pursuing that opportunity.
Comvita shares were unchanged at $12.80, while SeaDragon shares fell 7.1%, or 0.1 of a cent, to 1.3 cents.
(BusinessDesk)
Paul McBeth
Fri, 27 May 2016
Fri, 27 May 2016
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Comvita seeks to build SeaDragon stake with $3m convertible loan
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