CSS - Clean Seas Seafood

truevalue · 12 May 2009

Re: CSS - Clean Seas Tuna

kenny said:
I for one appreciate the detail in the Memorandum in the breakdown of use of the funds being raised. Can someone shed some light on how the 55c per share might have been calculated?

Also any ideas on the the rate of cash burn of the working capital? I'm assuming the Mulloway sale goes ahead and the Kingfish start contributing.

Cheers,

Kenny

VWAP for the past 60 days has been 62c Kenny, so 11% discount to that figure, or something like that.

55c looks cheap but it is a very difficult market for raising capital and one of the reasons CSS is not raising more.

If you like the stock at 55c then you can apply for additional shares above your entitlement that become available due to existing shareholders not taking up their rights.

kenny · 12 May 2009

Re: CSS - Clean Seas Tuna

Thanks truevalue.

It's hard for me to value a stock like CSS in the same as one would say put an intrinisic value on say RIO. I agree the likely approach taken was a 20 day VWAP with an applied discount of 20-25% for the risk and small size of the company. It would nice to know the reasons for why an outfit like Lonsec agreed to underwrite the cap raising.

Cheers,

Kenny

Basilica · 12 May 2009

Re: CSS - Clean Seas Tuna

kenny said:
Also any ideas on the the rate of cash burn of the working capital? I'm assuming the Mulloway sale goes ahead and the Kingfish start contributing.

The rate of Cash Burn is not available to ordinary investors.
The previous Q sales included Mulloway sales but was not seperated from total sales for the Q. As they are selling off their Mulloway stocks as discontinued product, we do not know the normal cash burn as last cash flow figures include Mulloway selloff.
If you want to know the unknown .... consult the Oracle

kenny · 12 May 2009

Re: CSS - Clean Seas Tuna

What do people think of the breakdown of the use of funds?

Shares on issue will rise from 158.5 million to 225.86 million shares. That is adding a maximum of 67365281 shares.

Regards,

Kenny

SECTION 2: Purpose of the Offer
On completion, the Offer will raise approximately $10.9 million (before costs). The funds raised will be applied as follows:

• upgrade of water supply and $1.8 million SBT larval rearing system
• SBT and Kingfish nets and cages $0.9 million
• capitalised SBT propagation costs $1.8 million
• additional automated feed systems $0.9 million
• working capital $4.9 million
• costs of Offer $0.6 million total $10.9 million

The Placement will raise approximately $13.1 million which will be applied as follows:

• upgrade of water supply and $2.2 million SBT larval rearing system
• SBT and Kingfish nets and cages $1.1 million
• capitalised SBT propagation costs $2.2 million
• additional automated feed systems $1.1 million
• working capital $5.7 million
• costs of Placement $0.8 million total $13.1 million

The above assumes that each of the Offer and the Placement will be fully subscribed. Should this not be the case, this will result first in a reduction in the available working capital.

kenny · 12 May 2009

Re: CSS - Clean Seas Tuna

Basilica said:
The rate of Cash Burn is not available to ordinary investors.
The previous Q sales included Mulloway sales but was not seperated from total sales for the Q. As they are selling off their Mulloway stocks as discontinued product, we do not know the normal cash burn as last cash flow figures include Mulloway selloff.
If you want to know the unknown .... consult the Oracle

Hi Basilica,

Sadly, I'm all too aware of that. I'm hoping the funds will take CSS to the first commercial sale of SBT but that could be me dreamin'.

We'll find out who took up the placement in due course too I hope.

Cheers,

Kenny

Basilica · 12 May 2009

Re: CSS - Clean Seas Tuna

kenny said:
It would nice to know the reasons for why an outfit like Lonsec agreed to underwrite the cap raising.

They have a lot of situations in the contract were they can get out of the deal.
It only for 5 M
They make 5% commision
worst case is the sell at 55c and break even.
Seems low risk for them to me.

kenny · 12 May 2009

Re: CSS - Clean Seas Tuna

How naive of me. I was thinking they might have seen some merit in the operation.

Also, wouldn't you include an escrow period for the underwriters to stop the dumping straight after the raising?

Cheers,

Kenny

truevalue · 12 May 2009

Re: CSS - Clean Seas Tuna

kenny said:
Hi Basilica,

Sadly, I'm all too aware of that. I'm hoping the funds will take CSS to the first commercial sale of SBT but that could be me dreamin'.

We'll find out who took up the placement in due course too I hope.

Cheers,

Kenny

Kenny, I think the YTK is working capital neutral. Mulloway should release $6m in working capital and $10.6m from this raising should get CSS to 1000 tonnes of SBT in 2 years assuming $10/kg growout. Add in the Mulloway proceeds and to are getting to 1600 tonnes - commercial in my view.

Basilica · 12 May 2009

Re: CSS - Clean Seas Tuna

kenny said:
What do people think of the breakdown of the use of funds?

I'm hoping the funds will take CSS to the first commercial sale of SBT but that could be me dreamin'.

I am not sure Kenny.

1. I had no idea the water suply needed a 4M upgrade?????? It was only just built.

2. 2M in Nets and cages, Good i guess. It would be nice to know if they are extras or replacements for the used ones they just bought or both.

3. 4M in capitalised SBT propagation costs?????? no idea here Repaying debt to Rabobank maybe?????

4. 2M in additional automated feed systems. Sounds good, may lower labour and improve FCR

5. 10.6M in working capital???? Sounds a lot to me. Maybe an indication of expected Cash Burn?

6 1.2M in costs of Offer and Placement. A sign of the time for companies that NEED to raise funds

Overall ...... I do not have the info to answer your question.

I doubt there is sufficient funds to see the company through to a positive cash flow (except possibly the brief period during the Mulloway selloff)

Basilica · 12 May 2009

Re: CSS - Clean Seas Tuna

truevalue said:
Mulloway should release $6m in working capital.

That 6 M in Mulloway was the value more than a Q ago. Investors have no idea how much was sold last Q but the figure was well known to CSS and they chose not to let us know at the end of last Q. No way is there still 6M left and any further fattening up will likley be at a loss as they have already proven it to be unprofitable.

Basilica · 12 May 2009

Re: CSS - Clean Seas Tuna

kenny said:
How naive of me. I was thinking they might have seen some merit in the operation.

Also, wouldn't you include an escrow period for the underwriters to stop the dumping straight after the raising?

Cheers,

Kenny

I did a search of the doc that contains the obligations of the underwritter and found no escrow period. They can dump whenever they like as far as i can see. I also thought an escrow period was typical for underwritters.

FI$H · 12 May 2009

Re: CSS - Clean Seas Tuna

more than 40 million new shares...

What's the plan for this summer?

Are they aiming for 20 000 or 200 000 fingerlings? Can they generate positive cash-flow by selling all the 2kg fish by the end of summer? Will they sell the 2kg fish to restaurants or other grow-out businesses?

Basilica · 12 May 2009

Re: CSS - Clean Seas Tuna

FI$H said:
more than 40 million new shares...

What's the plan for this summer?

Are they aiming for 20 000 or 200 000 fingerlings? Can they generate positive cash-flow by selling all the 2kg fish by the end of summer? Will they sell the 2kg fish to restaurants or other grow-out businesses?

Hi Fi$h,

A plan for this Summer???
We still havent been told what happened last Quarter.
Or how many fingerlings are still alive.
Will the SBT be 2Kilo by end of summer?
They are not even born yet.
The Japanese will not want 2 kilo tuna.
But other growout companies will, if they have the cage space available.
Restraunts? Maybe, Hagen said that Gorden Ramsey's place was selling Farmed NBT for $150 / Kg but i think Ramsey keeps most of that price.
I you want a positive cash flow think back just before CSS bought out Hagens growout business with lots of CSS debt. Could have been profit that year. And business plan for SBT could have been to sell fingerlings to other growers this summer without 28M in debt or capal raising. I would own shares today if that had happened.

Cheers,
Basilica

FI$H · 12 May 2009

Re: CSS - Clean Seas Tuna

Basilica said:
I you want a positive cash flow think back just before CSS bought out Hagens growout business with lots of CSS debt. Could have been profit that year. And business plan for SBT could have been to sell fingerlings to other growers this summer without 28M in debt or capal raising. I would own shares today if that had happened.

Cheers,
Basilica

i didn't object the growout business purchase because it will eventually refinance itself and added transparence. Given the debt and an environment in which it is difficult to raise capital they have to put the brakes on sbt growout. a business model cannot entirely rely on a best case scenario.

truevalue · 12 May 2009

Re: CSS - Clean Seas Tuna

Good grief! Mad panic on the CSS forum!

Basilica and Fi$h if todays announcement is a suprise to you then you have not been paying attention to what has been said on this thread.

I admit that there is a lack of update in regard to SBT fingerling numbers, they did say the end of May would be the time of the next update.

The way I see it is they are spending $4m on new bigger tanks that are more suited to SBT (one that allow the fingerlings not to bash themselves to death on the sides), $2m in nets, $1.4m on raising costs (ok that is annoying) and the rest, $16-17m, essentially pays down debt until it needs to be drawn for SBT growout from December onwards.

If you want to grow 10,000 tonnes of SBT you have to invest some money. It doesn't happen for free.

Basilica · 12 May 2009

Re: CSS - Clean Seas Tuna

truevalue said:
Good grief! Mad panic on the CSS forum!

Basilica and Fi$h if todays announcement is a suprise to you then you have not been paying attention to what has been said on this thread.

I admit that there is a lack of update in regard to SBT fingerling numbers, they did say the end of May would be the time of the next update.

The way I see it is they are spending $4m on new bigger tanks that are more suited to SBT (one that allow the fingerlings not to bash themselves to death on the sides), $2m in nets, $1.4m on raising costs (ok that is annoying) and the rest, $16-17m, essentially pays down debt until it needs to be drawn for SBT growout from December onwards.

If you want to grow 10,000 tonnes of SBT you have to invest some money. It doesn't happen for free.

What mad panic Truevalue?
55c is the big surprise when the last price was 79c
That is a big discount and 40 million shares is a big dilution.
I thought theupdate was end of april

FI$H · 12 May 2009

Re: CSS - Clean Seas Tuna

Basilica said:
I thought theupdate was end of april

later they announced another one for late may.

40 million new shares with no strings attached for their new owners will put the price under significant pressure and conditions for the next cap raising (~30 million $?) will be equally bad or worse.

truevalue · 12 May 2009

Re: CSS - Clean Seas Tuna

Basilica said:
What mad panic Truevalue?
55c is the big surprise when the last price was 79c
That is a big discount and 40 million shares is a big dilution.
I thought theupdate was end of april

Yep I would have like to have seen a higher price, but even 70c is 35 million shares. Remember also that existing shareholders get to buy at 55c and even ask for extra so their dilution is not as great. I wish the rights issue was more and the placement was less but at the end of the day the company has to decide where they are most likely to successfully tap the market.

Hopefully the next raising will be at $3.00 in 18 months time when we have 1 million SBT growing big and fat in sea cages. (no harm in hoping)

I think they will update at the end of this month re current SBT numbers and plans for commercialisation.

truevalue · 12 May 2009

Re: CSS - Clean Seas Tuna

FI$H said:
later they announced another one for late may.

40 million new shares with no strings attached for their new owners will put the price under significant pressure and conditions for the next cap raising (~30 million $?) will be equally bad or worse.

Fi$h you could say that about any company listed on the market. If there are more buyers than sellers the price will rise. If there are more sellers than buyers the price will fall. That is what happens in the short term. In the long term the price will reflect the underlying fundamentals of the business. If CSS delivers on what it should then the price will reflect that in the long run. Remember CSS has been publically talking about a capital raising since its AGM at which time the price was 30c.

Basilica · 12 May 2009

Re: CSS - Clean Seas Tuna

FI$H said:
later they announced another one for late may.
40 million new shares with no strings attached for their new owners will put the price under significant pressure and conditions for the next cap raising (~30 million $?) will be equally bad or worse.

I think i missed that anouncement, thanks
I should subscribe to the local papers to keep informed
Yes the 40M shares at 55c may cause problems.
They could sell when they recieve them and take a quick profit.
Maybe 55c will be the new bottom?
The next Cap raising will add more presure.

CSS - Clean Seas Seafood

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