Oli Valur Steindorsson, Umami chairman and CEO. (Photo: Umami/FIS)
Umami gets USD 8.5 million-loan to expand operations
Thursday, September 15, 2011, 02:40 (GMT + 9)
Umami Sustainable Seafood Inc has hired Amerra Capital Management, LLC as an agent on behalf of its managed funds and accounts. Amerra will provide a loan worth USD 8.5 million that will be funded in three tranches.
Umami is a holding aquaculture company that supplies sashimi-grade Northern bluefin tuna to the global market.
Last August, Umami obtained DNA evidence confirming natural spawning of bluefin tuna at its Kali Tuna facility in Croatia. This is the third year in a row that natural spawning activities have occurred there.
The first of the three tranches of the loan was provided on 7 September in the amount of USD 5,080,000. The second (USD 1,150,000) and third (2,150,000) tranches will be granted upon satisfaction of certain funding conditions, such as Umami’s delivery of additional collateral to Amerra.
Umami has also issued warrants to purchase 500,000 shares of its common stock at USD 1.50 per share. The proceeds have been used for the repayment of USD 3.1 million of Umami’s debt, and for general working capital for expansion and reinforcement of infrastructure at its Baja Aqua Farms facility in Mexico.
Umami took over Baja Aqua Farms late last year and doubled its operations and biomass in the process. The company has also sought to get medium-term financing to continue to enhance its biomass growth and infrastructure.
Amerra’s loan bears interest at a rate equal to one-year LIBOR plus 11 per cent p.a., and secured with certain assets owned by Umami. The notes mature beginning in November with any unpaid amounts fully due by 2 April, 2012.
In addition, both companies are holding discussions for a potential medium-term revolving loan to start next year with a maturity of up to three years. These proceeds would be used to fund the further growth of Umami’s operations.
“The receipt of this loan, along with the potential for additional medium-term funding, reduces Umami’s reliance on related parties and could provide Umami with an opportunity for stronger growth in our Mexico operations over the next three years,” said Umami’s Chairman and CEO Oli Valur Steindorsson.
Craig A Tashjian, managing director of Amerra, called Umami’s business model “interesting” and said the company benefits from healthy gross margins. Still, the model needs a lot of working capital to optimize the value of its tuna farming.
“We are excited to be part of the solution that will assist Umami to manage its long-term biomass growth, feeding and sales programmes in an effort to maximize its revenues and ultimately its market capitalization. We look at this as a small first step in our collaboration with Umami, all legal groundwork, due diligence and background checks for what should follows has already been done in this first step,” he continued.
“We are optimistic that Baja Aquafarms will fulfill preset conditions needed to go to the next phase of the collaboration,“ Tashjian added.
- Umami achieves natural spawning of bluefin tuna for third consecutive year
By Natalia Real