Tassal acquires Nortas

Troubled Tasmanian company,Tassal Limited, has acquired Nortas to create Australia’s largest producer of Atlantic salmon.
February 8, 2003

Troubled Tasmanian company,Tassal Limited, has acquired Nortas to create Australia’s largest producer of Atlantic salmon. The combined business will have about 630 employees and produce about 8,000 tonnes of Atlantic salmon and trout a year. Annual turnover is estimated at around $100m with a sustainable EBIT of around $11 to $12m. Contracts for the acquisition were exchanged in Hobart earlier this week. The purchase price was not disclosed.

Tassal went into receivership in June last year when the ANZ Bank called in a $30 million loan. The company suffered its first loss in ten years following two unusually hot summers that descimated fish stocks.

Mr Mark Ryan, Receiver and Manager of Tassal, said the acquisition would rationalise the industry, provide greater job security and place the combined business in a long term sustainable position. Mr Ryan said the acquisition was part of Tassal’s blueprint for the future of the industry and should now allow the industry to return to a sustainable and profitable footing. The risk mitigation that the acquisition offers should not be under-estimated.Mr Richard Doedens, the principal of Nortas, said that the cost efficiency and profitability of the Nortas business made it an ideal acquisition target for Tassal.

Mr Steven John, Executive Director of Nortas will take a key executive position in the combined business and looks forward to working with the Receiver to realise the potential for the combined operations. “There has been a compelling logic to this merger that has people from both companies genuinely excited about the future. The two businesses have complimentary strengths and fit together very well. This is definitely a case where the combination is greater than the sum of the parts.”

Mr Ryan said that since the appointment of KordaMentha in June 2002 as Receivers and Managers, the company had embarked on a three point plan to manage the company’s affairs in the interests of all stakeholders. This three point plan has substantially been achieved. Mr Doedens fully supports this plan.

“The first stage was to ensure the Tassal business was stabilised. That has been achieved and we confidently forecast that the combined business will perform extremely profitability in the 2002-2003 financial year.”

“The second stage was to restructure Tassal and to attempt to rationalize the industry. This deal achieves that goal by combining two businesses with strong brands, accepted best practice operations with a clear record and ongoing commitment to food safety, hygiene and quality, a strong and loyal staff and a work ethic to provide the best quality products available,” Mr Ryan said.

Mr Ryan said that the third stage was the ultimate sale of the combined business. He is confident Tassal could be sold as a going concern in the first half of calendar 2003. To this end the combined business would be offered for sale in March 2003.

Mr Ryan said that in recent weeks, management teams from Tassal and Nortas had been working together to identify potential synergies as well as ensuring job security and further developing the business as a financially robust and profitable enterprise.

“With about 65 per cent of the salmon producing market, the stabilising of the Tassal business, the acquisition of Nortas with its subsequent synergies and rationalisation of the industry, we are in good shape to move forward. While today’s announcement is a key step in our strategy, it is still very much business as usual at Tassal and Nortas,” he said.

Mr Doedens was pleased with the level of communication and support for the acquisition between the staff of the two companies. “I am extremely proud of the efforts of my Nortas staff and Tassal staff to put together this large and complex transaction. The combined business will underpin the performance of the Tasmanian salmon industry and I look forward to working with
KordaMentha to ensure that we create a salmon industry that all Tasmanians can be proud of.”

“I am particularly pleased KordaMentha and I have been able to provide a commercial solution to the industry’s well stated problems and we are all hopeful that this is a catalyst for a turnaround in the industry” he said.

Mr Doedens who celebrates 25 years in the aquaculture industry this year will retain an investment in the industry and have an ongoing involvement in at least the transition stages of merging the businesses.