CSS - Clean Seas Seafood

[tge oracle]

Re: CSS - Clean Seas Tuna

Tks for the insight Truevalue.

I have a few comments to make.

I would be very concerned if Rabobank want their money back after supporting CSS for the past 4 years or so. Rabobank is one of the worlds safest banks ( No.6 to be precise ) and I am sure they would prefer to keep lending to businesses they are confident will grow in the future. I would regard a decision to withdraw support from CSS as an acknowledgement that CSS is a very high risk entity.
If this is the case and banks won't lend money to CSS, then I agree, CSS is very much in the hands of it's shareholders.

I would like to know more about the YTK business and it's profitibility. I was expecting revenue support from YTK to help cover expenses over the next 6-12mths. It would appear that YTK is losing money , perhaps significantly, and this may have forced Rabobanks hand.
The underlying concern I have is if they can't make YTK profitibe after 4 years , what does this say about their ability to do so with SBT.

Without bank support, CSS's future will be totally dependant on a commercial breeding success this summer and when I say commercial I mean hundreds of thousands of fish, not just 25000 as previously projected.

We will have to wait for details on the Cap Raising but I am very cautious about this unexpected event.

 

[Rainmaker2000]

Re: CSS - Clean Seas Tuna

My personal preference is to never own a stock at a stage like Clean Seas, as the risk just does not make sense.....

Basically, one general rule for a stock you want to get a 20% return compounded each year...............that means the stock will double each 3.2 years........

How can Clean Seas be justified as an investment if profitability is a distant dream?

Meanwhile, my baby TGR keeps growing around 30% yearly..........I can't wait for TGR to pick up Cleans Seas just as it becomes profitable, if its worth it, using TGR's future richness and Clean Seas heavily diluted capital base.......all the hard work will have been done and TGR will reap the dividends as Ausses largest acqaculture company

 

[tge oracle]

Re: CSS - Clean Seas Tuna

I hold TGR as well Rainmaker and agree that it has been a good long term investment. For a while CSS was following a similar growth path and tragectory, sadly for shareholders, it has gone the opposite way over the past year or so and has been a very poor investment. You would have been much better off putting your money under a matress for the past 4 years than investing in CSS.

I will scrutinise every word of the Cap Raising offer , including looking for information that is omitted.
Some key " red flag" indicators I will watch for are:

1. Rabobank selling out.
2. Failure to find another institutional investor or Bank support.
3. The Sterhrs reducing their holding by selling to a new investor.
I would be happy for them to do so after commercial breeding success but not before.
4. The offer price. If it is dramatically reduced then the risk profile and willingness for new investors to participate will have been weak.
5. How much they intend to raise and how it is going to be used. I want to know if they are going to tap shareholders for more funds again soon.
6. Will the future viability of the company now depend on commercial breeding success this summer , not just pre-commercial.

I hope other investors will join in this discussion as I fell we are very much at the crossroads with CSS and need to consider every possibility.

 

[keskinu]

Re: CSS - Clean Seas Tuna

Hagen Stehr stepping down as chairman to bring in the "next phase" of CSS
abc.net.au/news/stories/2009/10/05/2704995.htm

 

[nizora]

Re: CSS - Clean Seas Tuna

I will scrutinise every word of the Cap Raising offer , including looking for information that is omitted.
Some key " red flag" indicators I will watch for are:

1. Rabobank selling out.
2. Failure to find another institutional investor or Bank support.

Read this report a few days ago:

Debt financier’s position - The Company has a $27m facility with
Rabobank. It was fully drawn at 30 June 2009, and appears as a current
liability in the 2009 accounts implying it is repayable in full this fiscal year.
We understand Rabobank has requested the repayment of $7m this month
and the balance by the end of FY10. We believe discussions are under way
regarding an extension to the term. Those discussions may extend beyond
the timeframe for the equity raising. Regardless, there is merit in the
Company moving to a debt free position until it proves up its SBT project in
order to remove the associated repayment burden and settlement risk
Why rapid deterioration in conditions? - A succession of unforeseen
events: failing to meet its 2009 sales targets, an increase in growout costs,
an adverse change in feedstock settlement terms, inventory write downs and
a requirement to repay $7m of its debt facility at relatively short notice

 

[nizora]

Re: CSS - Clean Seas Tuna

Hagen Stehr stepping down as chairman to bring in the "next phase" of CSS
abc.net.au/news/stories/2009/10/05/2704995.htm

The founder of the Port Lincoln Tuna company, Clean Seas, will be stepping down as chairman to make way for someone with international experience.

Hagen Stehr says the move is part of a new commercialisation phase for the company but he will still have an active involvement.

Share trading in the company has been suspended because of the move that Mr Stehr says is exciting for the company.

"We need to go from an R and D company into commercialisation and that means that we will restructure the board somewhat," he said.

"I've done all the hard yards and now we take the next step up for corporate governance and everything else - we are going to get some very, very good chairman and directors together."

 

[BlueHshoeLvs CSS]

Re: CSS - Clean Seas Tuna

I hold TGR as well Rainmaker and agree that it has been a good long term investment. For a while CSS was following a similar growth path and tragectory, sadly for shareholders, it has gone the opposite way over the past year or so and has been a very poor investment. You would have been much better off putting your money under a matress for the past 4 years than investing in CSS.

I will scrutinise every word of the Cap Raising offer , including looking for information that is omitted.
Some key " red flag" indicators I will watch for are:

1. Rabobank selling out.
2. Failure to find another institutional investor or Bank support.
3. The Sterhrs reducing their holding by selling to a new investor.
I would be happy for them to do so after commercial breeding success but not before.
4. The offer price. If it is dramatically reduced then the risk profile and willingness for new investors to participate will have been weak.
5. How much they intend to raise and how it is going to be used. I want to know if they are going to tap shareholders for more funds again soon.
6. Will the future viability of the company now depend on commercial breeding success this summer , not just pre-commercial.

I hope other investors will join in this discussion as I fell we are very much at the crossroads with CSS and need to consider every possibility.

I think we have all been a bit broadsided by this recent announcement and suspension and have lost some faith in the stock as a result. However it might be a good time to take a step back and look at the facts. It would appear that Rabobank want to reduce their exposure to CSS - this is more of a reflection of the banking industry than CSS. If you think about it they were willing to lend money to CSS when they had a pie in the sky idea (that had never been done before), but now that they've proved they can do it R'bank are going to pull they're funding.... this would seem to be be more a case of R'bank reducing they're exposure across the board than a commentary on CSS. They are not Robinson Carusoe there, banks are pulling funding everywhere. Now CSS have to raise funds to repay the debt, they are not currently profitable so the money has to come from somewhere....new strategic investors or the current shareholders. They are not currently profitable despite previous projections b/c we have experienced (and are experiencing) a global recession which impacts directly on returns on sales and therefore write-downs on inventories...it is happening to all food/commodity producers. i work in industry associated with selling food commodities and strong robust companies that haven't made a loss in decades have reported huge losses for the last 12 months. Again CSS are not Robinson Carusoe.
CSS have proved they can produce fingerlings on land and now have 4-5 month old SBT to prove it. They have a competitive advantage over others by approx 4-5 years. They now move onto try to commercialise the process. It looks to me like there is unlimited upside and a much reduced downside. The only real difference has been to take a debt facility from a liability and put it over on the equity side.
I will be keeping the faith.

 

[BlueHshoeLvs CSS]

Re: CSS - Clean Seas Tuna

My personal preference is to never own a stock at a stage like Clean Seas, as the risk just does not make sense.....

Basically, one general rule for a stock you want to get a 20% return compounded each year...............that means the stock will double each 3.2 years........

How can Clean Seas be justified as an investment if profitability is a distant dream?

Meanwhile, my baby TGR keeps growing around 30% yearly..........I can't wait for TGR to pick up Cleans Seas just as it becomes profitable, if its worth it, using TGR's future richness and Clean Seas heavily diluted capital base.......all the hard work will have been done and TGR will reap the dividends as Ausses largest acqaculture company

TGR stock price at beginning 2006 = $1.30
TGR stock price today = $1.745
Total dividends during this period = 0.22 p.s.
Total return for nearly 4 years = 0.66 p.s. (51% over 3.8years)
Compounding return of 10% which is a nice return but hardly 30%!

Upside from producing salmon for supermarkets - moderate
Upside from being the only company in the world to produce aquaculture bred southern blue fin tuna - unlimited

 

[Rainmaker2000]

Re: CSS - Clean Seas Tuna

Mate, that's the whole point.......in all your metrics........you missed the vital one.......

Earnings per share and more importantly earnings per share growth....which I believe is averaging at round 40% for last 3 or 4 years

CSS is not intending to earn money for a while, while TGR is exponentially compounding..........that's my point......cash flows upon cash flows V dilution of sharehoder capital on top of more dilution

Why would I care about the current stock price????????? It has just allowed me to pick up more bargains........my preference is for them to pay no dividends either!!!!!!

If you leave out earnings........yes, you can compare CSS to TGR........and you can compare all these to Enron which still trades in some form on New York exchange......So what.........

Just cause Myer is priced at 15X earnings and Tassal at 7X earnings says something about how subjective stock valuation is.........but compounding earnings is a little more objective.....and tells the story in the end

 

[BlueHshoeLvs CSS]

Re: CSS - Clean Seas Tuna

Mate, that's the whole point.......in all your metrics........you missed the vital one.......

Earnings per share and more importantly earnings per share growth....which I believe is averaging at round 40% for last 3 or 4 years

CSS is not intending to earn money for a while, while TGR is exponentially compounding..........that's my point......cash flows upon cash flows V dilution of sharehoder capital on top of more dilution

Why would I care about the current stock price????????? It has just allowed me to pick up more bargains........my preference is for them to pay no dividends either!!!!!!

If you leave out earnings........yes, you can compare CSS to TGR........and you can compare all these to Enron which still trades in some form on New York exchange......So what.........

Just cause Myer is priced at 15X earnings and Tassal at 7X earnings says something about how subjective stock valuation is.........but compounding earnings is a little more objective.....and tells the story in the end

Why would you care about the stock price????? Because in your first post you mentioned that you are only interested in stocks that double in price every 3.2 years....

 

[tge oracle]

Re: CSS - Clean Seas Tuna

Yes, I certainly fell "broadsided ' by this announcement BHLCSS. I think it is fair to say most shareholders are.

I can't quite follow your reasoning for Rabobank wanting to withdraw their funding for CSS, if this is actually the case.
The risk profile of CSS, as you quite rightly point out, was higher when it first started business but surely banks would feel more comfortable with their lending as the risk reduced, after all, banks are in the lending business and that's where they make most of their profits.
I do acknowledge that paying down debt is a good move for CSS but why not include some of this in the last " planned " Cap Raising held a couple of months ago. If this had been gazetted and initiated by CSS I would feel a lot more comfortable.

I won't go into debate over TGR, but I think that any investor would be much more satisfied with an investment in TGR over CSS at this stage, I know I certainly am!

 

[truevalue]

Re: CSS - Clean Seas Tuna

I have it on good authority that CSS is not the only SBT player broadsided by Rabobank. Half the SBT fishermen in Port Lincoln have been cut off. This is a fairly niche market and not many other lenders have the expertise to provide this "crop" lending. I am still trying to find out why Rabobank has taken this step.

 

[keskinu]

Re: CSS - Clean Seas Tuna

Hi all,
Just to add another question to the mix- Does anyone believe the recent approval given to Centrex to ship Iron Ore from Port Lincoln has any part to play in the (alleged) pullout by Rabobank? Or in a broader sense, whether the Centrex operations will impact the business of CSS in the medium term?? I recall the chairman stating he would consider re-locating if approval went ahead... could possibly have been a bluff? I haven't read the environmental impact assesment (or equivalent) from Centrex, but they either did a good job at convincing the govt. there wasn't a risk to the Port Lincoln ecosystem, or there really is a minimal risk (or the govt weighed up the risk against the $ they would get from Centrex in taxes?)

I personally was quite disappointed as I intend to hold CSS long term, and the approval granted to Centrex has added some uncertainty in my mind...

 

[BlueHshoeLvs CSS]

Re: CSS - Clean Seas Tuna

Yes, I certainly fell "broadsided ' by this announcement BHLCSS. I think it is fair to say most shareholders are.

I can't quite follow your reasoning for Rabobank wanting to withdraw their funding for CSS, if this is actually the case.
The risk profile of CSS, as you quite rightly point out, was higher when it first started business but surely banks would feel more comfortable with their lending as the risk reduced, after all, banks are in the lending business and that's where they make most of their profits.
I do acknowledge that paying down debt is a good move for CSS but why not include some of this in the last " planned " Cap Raising held a couple of months ago. If this had been gazetted and initiated by CSS I would feel a lot more comfortable.

I won't go into debate over TGR, but I think that any investor would be much more satisfied with an investment in TGR over CSS at this stage, I know I certainly am!

TGE, there is a reason Rabobank rank about 6th in the world, thats b/c they are very conservative and have built their business on that one underlying principle. When CSS were 1st looking for funding the world was a different place and whilst still conservative compared to other banks, R'bank were willing to take on more risk. The GFC has sent an enormous shudder through the banking world and without exception led to a lot of scrutiny of loan portfolios. R'bank are dutch therefore the EU is their home. I don't think we realise down here with our increasing interest rates / falling unemployment etc just what a mess the EU is in, many of their member countries are f__ked, excuse my french. So R'bank have some serious problems at home and as a result want to concentrate on these issues and recoup funds where possible from what have been re-rated as risky exposures. As previously stated I think this is more of a reflection on Rabobanks plight than CSS.

So why haven't CSS aimed to pay down debt from previous cap raisings?? I would guess b/c they were comfortable with their debt levels and have been broadsided by this decision as much as we have been. Also i think they will struggle to find another lender who would have the knowledge and experience to understand the biz like R'bank did.

Of course this is all conjecture, i don't really know whether this is the case, just guessing.

At the end of the day CSS are ready to commercialise their wonderful experiment, obviously the timing of this announcement is terrible in what should be a very positive time for the co. reflected by a firming share price as risk is reduced. But it is what it is, and from what i can see a good opportunity.

As far as TGR goes i couldn't agree with you more, it's a good stock and has been good to those that have held it for a long period, i just dont see why someone would join a discussion about a stock they have no intention of holding (by their own admission) and really bring nothing to the discussion. Whats the point in making a comment at all? There has been some really good discussions here by people who know what they're talking about and have made positive and negative comments about the company but all have been well thought out, not just comment for comment sake.

Anyway i guess we just have to wait till next week to see how it all shapes up.

 

[Rainmaker2000]

Re: CSS - Clean Seas Tuna

I must say I'm a fan of farming fish.........and that's why have followed CSS since float.........they didn't fit my risk matrix then and don't know........my point, as at the top, when the issue of risk came up...........I made it clear why this stock has never fit my risk profile.......

That may interest some conservative investors looking at the latest capital raising or it may not......that's why its an internet forum I guess.......

As for CSS, I wish all holders all the best.......the actual work done by this company is pretty ground breaking and a great example of what Aussies can do.....unfortunately, exciting stories like this don't seem to often make good investments on an eps basis........but I hope it really makes it big

 

[drlog]

Re: CSS - Clean Seas Tuna

I am confused. The ASX announcement said they would resume trading on Wednesday the 13th of October 2009. Well, its the 13th today but it isn't Wednesday

Do you think we will have a rights issue or a SPP?

I think there is a lot of potential for CSS so I will throw them some more money.

 

[truevalue]

Re: CSS - Clean Seas Tuna

I am confused. The ASX announcement said they would resume trading on Wednesday the 13th of October 2009. Well, its the 13th today but it isn't Wednesday

Do you think we will have a rights issue or a SPP?

I think there is a lot of potential for CSS so I will throw them some more money.

I don't think it will come on again before Friday drlog.

I understand there is a SPP for retail investors to purchase up to $15,000 worth of new shares and a placement of shares, which makes up the majority of the raising. I am hearing the capital raising is going very well with strong demand from institutional and retail investors. The price is 25 cents and will raise $50m.

If you want to bid in the placement I think Bell Securities and Lonsec are the ones to call.

 

[tge oracle]

Re: CSS - Clean Seas Tuna

Gee, that's quite a discount Truevalue! I was thinking mid 30's.

I will be watching very closely for the status of YTK , if they provide them, because we are going to need revenue support for SBT growout over the next couple of years otherwise it will be back to shareholders for more funds.

What are your views on this?

 

[truevalue]

Re: CSS - Clean Seas Tuna

Gee, that's quite a discount Truevalue! I was thinking mid 30's.

I will be watching very closely for the status of YTK , if they provide them, because we are going to need revenue support for SBT growout over the next couple of years otherwise it will be back to shareholders for more funds.

What are your views on this?

YTK is ahead of budget this year. Expected to be cashflow positive. They have a cashflow forcast in the presentation that cover cash requirements for a couple of years. I am hopeful they are have raised enough to get to 5,000 t of SBT.

 

[steveba5]

Re: CSS - Clean Seas Tuna

The length of the trading halt with CSS is starting to worry me. And talk about a discount for the latest share offer, they're almost giving them away!