CSS - Clean Seas Seafood

[tge oracle]

Re: CSS - Clean Seas Tuna

I think you will find you will be able to buy as many shares as you already own (if you own 10,000 you can apply for 10,000 @ 25c) in the SPP up to a maximum of 60,000 shares. If your holding is more than 60,000 then you are being diluted but you hopefully topped up in the placement.

I think there is a good chance Ridley and Rabo come back to the party once the capital raising is approved.

Tks for that clarification Truevalue, otherwise traders will purchase small parcels under different accounts and flip them for a stag profit on listing.
Your description is the best way to handle this cap raising for small shareholders.....much fairer!

I will make a more detailed comment on this cap raising soon. I am still gathering my thoughts. I do see some negatives but also some potential key positives which I will discuss in my post.

 

[skyQuake]

Re: CSS - Clean Seas Tuna

Tks for that clarification Truevalue, otherwise traders will purchase small parcels under different accounts and flip them for a stag profit on listing.
Your description is the best way to handle this cap raising for small shareholders.....much fairer!

I will make a more detailed comment on this cap raising soon. I am still gathering my thoughts. I do see some negatives but also some potential key positives which I will discuss in my post.

No, actually, you were right first time. Anyone can just jump in before Nov and get some, then participate. This probably wasn't intentional as the company is doing this in line with the conditional placement which must be voted in (or out).

Best case scenario is that the scale back policy takes into account how many shares you hold, and allocated less to smaller holders (so the $500 buyers will get only a bit)
Worst case is pro-rata where everyone gets scaled back evenly.

Cheers and gl

 

[tge oracle]

Re: CSS - Clean Seas Tuna

The Cap raising is very dissapointing for existing shareholders particularly if skyquake is right and new investors need only stump up $500 to be entitled to $15000 worth of stock @ 25c. If this is the case Helmsec and Lazard have let CSS down as traders will flip the stock and depress the share price significantly, this is why it got hammered today and will stay low.
Some of these traders have multiple accounts and will apply for large amounts of stock if there is sufficient margin.
This cap raising should have been pro-rata with oversubscription like the last one. This way existing shareholders will get a fair entitlement and the possibilty of applying for more shares. Existing sharholders are more likely to subscribe and hold. H and L have left the door open to traders and speculators and this is the last thing CSS needs at the moment.

On to the details. There are a few of questions I would like answered:

1. Who is/are the new investors.
2. What is the status of the juvenile SBT produced last summer i.e. how many, what are growth rates, mortaility etc.
3. Are the Sterhrs diluting their holding and are they partcipating in the raising.

Despite the negative response and commentary I do see a few positives if this Cap raising succeeds as planned.

1. CSS will become debt free.
2. YTK is cash flow positive.
3. They are very confident of achieveing SBT propogation of 25000+ SBT this summer.
4. Potential spawning success is only a month or two away.
5. It is very hard to establish a value for CSS at present as I am not sure how to value the intellectual property rights for SBT propogation but I had been working on a valuation of mid 30's last year. This was YTK alone( profitable ) with Rabobank debt so it's anybody's guess. Either way the YTK business, SBT intellectual property rights and infrastructure assets do have a reasonable value in my opinion and would be attractive to potential purchasers.
6. The strengthening of the board and mangement is a good move and should be progressed as a matter of priority.

In summation, I have stuck it out for nearly 4 years so I'll stay onboard until the end of this summer when the outlook for CSS will be become much clearer.

 

[tge oracle]

Re: CSS - Clean Seas Tuna

I forgot to include point 4 in my list of questions:

Are the Placements and Retail Cap raising underwritten , either partially or fully?

 

[truevalue]

Re: CSS - Clean Seas Tuna

TGE I feel quite confident that if you buy 500 shares on the market today you will only be entitled to 500 shares at 25c in the SPP. It is very similar to a rights issue in that regard.

 

[tge oracle]

Re: CSS - Clean Seas Tuna

TGE I feel quite confident that if you buy 500 shares on the market today you will only be entitled to 500 shares at 25c in the SPP. It is very similar to a rights issue in that regard.

I certainly hope you are correct Truevalue. It would certainly help existing investor confidence and support a reasonable share value if this were to be made known to the market and investors.

 

[skyQuake]

Re: CSS - Clean Seas Tuna

TGE I feel quite confident that if you buy 500 shares on the market today you will only be entitled to 500 shares at 25c in the SPP. It is very similar to a rights issue in that regard.

Then that would be a Rights Issue/Entitlement rather than a SPP. Most SPPs are capped at 15k and allow anyone regardless of holding to subscribe to that amount. Havent really seen any SPPs that limit people to applying less, but their allocation policy may be to that effect (more generous to bigger holders)

 

[drlog]

Re: CSS - Clean Seas Tuna

As far as I understand it, skyQuake is correct.

With CBA earlier this year, I sold all of my shares and bought them back at $26 for a nice stag profit (that was an SPP). Whereas with my RIO shares, I couldn't sell them because it was a rights issue at a ratio.

My personal option is that rights issues, as opposed to SPPs, are much fairer to all shareholders. However, I'll take an SPP as well

I guess the problem with the rights issue is that if you have a huge holding and not much money, you wont go in to the rights issue all the way. I guess there would be more administration costs, perhaps?

 

[suhm]

Re: CSS - Clean Seas Tuna

I'm just wondering does this fund their expansion plans with regards to their targetted tonnage for SBT? I'm not so sure it does, their presentation wasn't very clear in that regard, seemed more like a rehash and a very confusing slide with regards to capex and ongoing cashflow.

 

[tge oracle]

Re: CSS - Clean Seas Tuna

I'm just wondering does this fund their expansion plans with regards to their targetted tonnage for SBT? I'm not so sure it does, their presentation wasn't very clear in that regard, seemed more like a rehash and a very confusing slide with regards to capex and ongoing cashflow.

As far as I can ascertain this funding is to pay out Rabo bank debt and fund pre-commercial production 25000+ fingerlings.
The presentation is very light on detail and it is what it doesn't say that concerns me. Basically, Rabo bank are transferring risk to shareholders with this raising as they obviously consider it to be to high.
I am sure they will be back for more funds next year to fund commercial scale production.

 

[Basilica]

Re: CSS - Clean Seas Tuna

As far as I can ascertain this funding is to pay out Rabo bank debt and fund 25000+ fingerlings.
The presentation is very light on detail and it is what it doesn't say that concerns me. Basically, Rabo bank are transferring risk to shareholders with this raising as they obviously consider it to be to high.
I am sure they will be back for more funds next year to fund commercial scale production.

I agree wiping out the Rabo bank debt is a good thing for CSS as i stated months ago. Concerning the other half of the cap raising it would be nice to know wha it is for. I had thought the previous cap raising several months ago was stated to fund the pre-commercial production stage. I do not recall any announcements of CSS being over budget on the pre-commercial production spending. It would have been usefull if investors were not left to guess what the cash will be used for.

 

[truevalue]

Re: CSS - Clean Seas Tuna

Another article in The Herald today

http://www.smh.com.au/environment/heres-the-catch-we-love-seafood-to-death-20091021-h929.html

Good to see the environmentalists getting more behind Aquaculture.

On the cashflow issue, firstly CSS is about to sign a new 3 year deal with Ridley that will give them much better credit terms, so that will give CSS more cash in the bank. Ridley basically got annoyed when CSS announced they would put the feed contract out to tender and reduced CSS credit terms from 180 days to 30 days leading to a $20m call on cash. That should be reversed in this new contract. Secondly I think Rabo will make a loan facility avaliable that will help CSS fund its SBT growout once the capital raising has been approved and the SBT are in the water (it is typical of bankers to offer you money when you no longer need it). If CSS does come back to raise more equity it will only be because 1) SBT has been sucessfully commercialised and 2) there is very positive economics for expanding production.
Disclaimer:
This is all conjecture on my behalf based upon numerous discussion I have had in recent weeks with people familiar with the company (and I dont mean stockbrokers).

 

[tge oracle]

Re: CSS - Clean Seas Tuna

Tks for the insight Truevalue.

I think the greatest concern I have now is that the Cap raising may not get up at least not the 50M hoped for.
The shares are very low in value and only marginally above issue price.
Investors will be hesitant to participate, particularly if it falls below issue price.

 

[truevalue]

Re: CSS - Clean Seas Tuna

Tks for the insight Truevalue.

I think the greatest concern I have now is that the Cap raising may not get up at least not the 50M hoped for.
The shares are very low in value and only marginally above issue price.
Investors will be hesitant to participate, particularly if it falls below issue price.

$42million is done and was very well supported. They are irrevocable agreements if the raising gets the vote. $8m may be at risk for now. There may be some good news before the AGM on the 30 November with the spawn coming up and an agreement with Ridley.

 

[smallfry]

Re: CSS - Clean Seas Tuna

Further to my last post...

http://www.abc.net.au/news/stories/2009/10/22/2721697.htm

makes for interesting thinking?

 

[steveba5]

Re: CSS - Clean Seas Tuna

So what do you think will happen? CSS shares go through the roof because they can farm SBT?

Or does the other side of the business collapse?

 

[truevalue]

Re: CSS - Clean Seas Tuna

So what do you think will happen? CSS shares go through the roof because they can farm SBT?

Or does the other side of the business collapse?

What "other side of the business" do you mean?

 

[tge oracle]

Re: CSS - Clean Seas Tuna

Today's announcement has me very concerned.

The mortality rate of YTK is above estimates. This will impact cash flow and, I suspect, will result in another loss this financial year.
They are now seeking $12M, previously $8M, from investors. IMO this is to cover the loss of revenue/profit from YTK sales.
I don't believe the quota for broodstock SBT is sufficient to cover mortality rates or commercial production targets in future years.

CSS will become totally reliant on Cap raisings for the foreseable future as YTK is unlikely to support expenditure.

Disclosure; I have substantilly reduced my exposure to CSS.
The above comments are my opinion only. I am not a financial adviser please DYOR.

 

[steveba5]

Re: CSS - Clean Seas Tuna

And I thought it couldn't get any worse.....
I know CSS have made us current shareholders feel a bit better by offering us the same deal as they offered to the big players (25c shares) but it isn't looking too attractive now shares are trading around 26c today.

Its not really the same deal when you put it into perspective. The discount on offer through the capital raising made shares around half the price of their trading value which at the time was about 54c. For us to get the same deal(around half the current market value) then they will need to be offering them at around the 13cent mark.

There's probably only a 10% chance I'll be participating now. Down from 100% last week!

 

[tge oracle]

Re: CSS - Clean Seas Tuna

My chances of participating have reduced to zero Steveb5 as I made the decision to exit CSS entirely this afternoon.
It has been a very disappointing outcome after years of supporting and investing in CSS but I simply can not see where this is going from here. In the end I had to follow my instinct which has served me well over the many years I have been investing.
I believe there will be an opportunity for me to re-invest in CSS in the future if it can deliver on its goals but I do think this may be a long way off.

Good luck to all holders.
tge


Disclosure; I am no longer invested in CSS.