Comvita seeks to build SeaDragon stake

Comvita seeks to build SeaDragon stake with $3 mln convertible loan

By Paul McBeth

May 27 (BusinessDesk) - Comvita wants to increase its stake in SeaDragon with a $3 million convertible loan, which the fish oil refiner will use to fund its exit from Omega-2 oil in favour of the more profitable Omega-3 market.

Te Puke-based Comvita already holds a 13 percent stake in SeaDragon and has options that could lift that holding to between 25 percent and 31 percent. SeaDragon shareholders will vote on whether to approve the convertible loan at their annual meeting in August, effectively lifting the honey healthcare products maker's interest to between 31 percent and 37 percent, Comvita said in a statement.

"Comvita's agreement to advance $3 million via a convertible loan allows this transition from Omega-2 to Omega-3 to occur in a smoother way," SeaDragon chairman Colin Groves said in a separate statement. "Comvita's continuing support is very valuable."

Last month SeaDragon missed annual earnings guidance as the downturn in sales of Omega-2 weighed on prices, while at the same time saying the final cost of its delayed and over-budget Omega-3 refinery would be more than previously expected.

Comvita chief executive Scott Coulter said Omega-3 fish oils are a core ingredient platform for his company and reaffirmed his commitment to back SeaDragon pursuing that opportunity.

Comvita shares were unchanged at $12.80, while SeaDragon shares fell 7.1 percent, or 0.1 of a cent, to 1.3 cents.

(BusinessDesk)

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