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A proposed $1.7 billion prawn farming project spanning the Northern Territory and Western Australia is now all at sea after its owners opted to call in voluntary administrators, tipped over the edge by an adjudicator's decision that they pay $13.9 million to a former construction contractor.
The move comes just a day after Seafarms Group (ASX: SFG) called for a trading halt and then subsequent suspension pending the formal announcement over Project Sea Dragon (PSD), which last year was the subject of leadership turmoil following an unfavourable review from a new CEO.
Having yesterday announced the board had resolved it was no longer in the company's interests to fund PSD, today Seafarms announced the appointment of Shaun McKinnon and Andrew Fielding of BDO Business Restructuring as voluntary administrators for the contentious project.
Seafarms' directors have proposed a Deed of Company Arrangement (DOCA) to Project Sea Dragon's creditors, although in yesterday's announcement they highlighted the outcome of the appointment would be uncertain with the alternative being that the subsidiary is liquidated.
Given "the outcome of the voluntary administration may materially impact SFG’s financial position" and "it will be very challenging to comply with its continuous disclosure obligations", the board requested shares be suspended beyond the initial trading halt which was due to be lifted on Thursday.
"As a result of the decision made by the adjudicator on 3 February 2023 regarding a construction dispute, the voluntary administration became a necessary step for Project Sea Dragon," says Seafarms Group CEO Rod Dyer, a former chief project officer of the now under-administration subsidiary, who was promoted to the group's top leadership role following the departure of Mick McMahon last May.
"Seafarms' other existing operations based in Queensland are separate to Project Sea Dragon and as such these operations are not under administration.
"As the administration process progresses, we will provide the market with further updates."
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