SeaDragon expects smaller 2019 loss as it looks to secure more funding

The fish oil manufacturer forecast a net loss after tax of between $3.6 million and $4.55 million. Photo: Getty Images

SeaDragon expects its loss to narrow in the coming year as it works to secure more cash to fund longer-term growth.

The fish oil manufacturer forecast a net loss after tax of between $3.6 million and $4.55 million in the year ending March 31, 2019, an improvement from the $6.1 million loss in its 2018 financial year, the Nelson-based company said in a statement. SeaDragon said its ability to deliver on its forecast is underpinned on securing long-term funding for the company.

The biggest shareholders of SeaDragon have already agreed to provide a short-term bridging loan of $1 million to allow the unprofitable fish oil refiner to continue to operate while it tries to negotiate longer-term funding. The cornerstone shareholders – BioScience Managers, an Australian investment firm, and Pescado Holdings, which is associated with Christchurch's rich-lister Stewart family – agreed to the short-term bridge facility to ensure the company can meet its cash requirements until June 30.

"Negotiations are continuing with two of our major shareholders and these discussions are expected to be finalised within the coming days," SeaDragon said today. "Directors will be seeking shareholders’ approval for the proposed funding structure at the annual shareholders meeting anticipated to be scheduled for late July or early August."

SeaDragon expects total sales revenue in the 2019 financial year to increase to between $10 million to $14 million, from $3 million in 2018. The 2019 loss before interest, tax, depreciation and amortisation is expected to reduce to between $2 million to $2.8 million, from an ebitda loss of $4.5 million in 2018.

"The company is continuing to grow and it is very pleasing to report that approximately 50 percent of the forecast revenue is subject to indicative orders already received from customers and this demand has been matched with the indicative raw material supply orders," said chair Colin Groves. "It is also worth noting that production capacity used to meet this forecast will be approximately 40 percent of our refinery’s total annual capacity therefore still enabling significant sales growth for the future.”

SeaDragon last traded at 0.4 of a cent, having fallen 33 percent this year, valuing the company at about $18.1 million.