Raisebook

Delivering High-quality, Highly-valued New Zealand Seafood Products to Asian Consumers.
New Zealand Coastal Seafoods Limited
New Zealand Coastal Seafoods Limited
ASX:XTV
  • New Zealand Coastal Seafood (NZCS) delivers high-quality, highly-valued New Zealand seafood products to Asian consumers.
  • Its primary product is dried maw taken from the ling fish.
  • Ling maw is cholesterol-free and rich in nutrients and proteins, including collagen.
  • Ling maw is valued for its perceived health and nutritional benefits, particularly by Asian populations who eat ling maw in soups that are considered delicacies.
  • China is now the largest consumer of seafood products in the world, accounting for over a third of all global seafood consumption and projected to total over US$67.3 billion in 2019.
  • New Zealand sourced seafood is highly regarded relative to seafood originating from other markets, supporting a premium price position over Asian-sourced competitor products
  • The Company has a track record for achieving growth in both revenue and EBITDA and has been profitable in each year of its existence.
Raise Amount
$6,000,000
Offer Price
$0.0250
Closes
Jun 28, 2019

New Zealand Coastal Seafood (NZCS) is a growing processor, distributor and exporter of premium seafood products.

The company supplies its products both directly and through distributors, to customers, restaurants, seafood traders, supermarkets and other retailers in New Zealand, Australia and Asia.

To date, NZCS has focused on selling premium processed seafood for Asian consumers, including dried ling fish (maw), sea cucumber, soft and hard elephant fish (backbone) and dog fish (backbone).

NZSC’s primary product line is dried maw taken from the ling fish.

The ling fish is a large, white fleshed fish found in deep cool waters and the maw is the swim bladder of the fish.

Ling maw is cholesterol-free and rich in nutrients and proteins, including collagen.

Accordingly, ling maw is valued for its perceived health and nutritional benefits, particularly by Asian populations who eat ling maw in soups that are considered delicacies.

NZCS operates a seafood processing and drying facility in Christchurch, New Zealand, with a current annual production capacity of 60 tonnes of raw seafood products input.

One of NZCS’ principal competitive advantages is that its products are sourced exclusively from New Zealand suppliers of high-quality, premium fresh seafood.

The Offer

New Zealand Coastal Seafoods (ACN 124 251 396) is seeking to list on the ASX via a backdoor listing into XTV Networks (ASX: XTV) (ACN 124 251 396) and raise a minimum of $5.0m, and up to $6.0m, at the issue price of 2.5¢ per share.

The Offer will include a priority offer to XTV’s ~2,000 shareholders up to the value of $2.0m to assist with meeting ASX spread requirements.

Patersons Securities Limited has been appointed as Lead Manager to the Reverse Takeover (RTO) of NZCS.

We understand from the Lead Manager that cornerstone commitments of $3.0 million has been indicated.

The offer of the securities are made in, or accompanied by, a copy of the disclosure document which can be obtained by clicking on the "ACCESS DEAL" button on this page.

Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the Disclosure Document.

Before making an investment decision, potential investors should read the Disclosure Document entirely, and seek professional financial advice.

There are risks associated with an investment in the Company that may affect its financial performance, financial position, cash flows, distributions and growth prospects.

A complete set of risks involved in this offer is included in Section 7 of the Disclosure Document.

Indicative Capital Structure

Shares Price Variation
Currently On Issue 329,794,002 $0.025 $8,244,850
RTO Raising 120,000,000 $0.025 $3,000,000
Priority Round 80,000,000 $0.025 $2,000,000
Total RTO Raise (min) 200,000,000 $0.025 $5,000,000
Total Valuation 529,794,002 $0.025 $13,244,850

NZCS Historical Annual Revenues and EBITDA

Indicative Timetable

Event 2019
Bids Due 8:00am WST Friday 7 June
Prospectus and Priority Offer Closing Date Tuesday 11 June
Acceptances Due Tuesday 11 June
Settlement Friday 15 June
Expected date for reinstatement to official quotation Tuesday 18 June

Growth Strategy

In support of its growth strategy, NZCS is seeking additional capital to move to a larger processing facility and new equipment to significantly expand production capacity.

The funds raised will also provide the working capital necessary to increase purchases of raw seafood, thereby increasing its processing capacity at its existing processing facility and, later, its new processing facility.

New processing capabilities will also enable NZCS to produce new products which

are expected to improve its profit margins.

These new products may potentially include long shelf-life pre-packaged products, such as ready-to-eat ling maw soup and mussel soup, as well as powdered hard bones for the nutraceutical market.

NZCS also intends to expand its sales staff, including by the appointment of a head

of business development and the appointment of branding and marketing consultants, and increase capital available for marketing purposes.

These funds should allow NZCS to increase its sales capacity (whilst also continuing to maintain distributor channels) to support growth in existing and new markets, such as China,

Hong Kong, Malaysia, Singapore, Indonesia and Vietnam.

NZCS’ business model is based on delivering high-quality, highly-valued New Zealand seafood products through a processing model that allows it to meet consumer demand in target markets, supported by direct and indirect sales and distribution channels.

The NZCS business model generates revenues from the sales of higher-margin, value-added products.

Key Advantages

Track Record for Achieving growth in both revenue and EBITDA

Revenues of NZ$0.09 million, NZ$1.18 million, and NZ$1.81 million for, respectively, the financial years 2017, 2018 and 2019 (31 March FY end). The Company has been profitable in each year of its existence.

Production Capacity Expansion

The seafood processing and drying facility which NZCS operates in Christchurch, New Zealand was designed to provide efficient, low-cost production runs but has an annual production capacity which is limited to 60 tonnes of raw seafood products input.

NZCS intends to use a portion of the funds raised under the Public Offer to relocate from its existing leased premises to a larger manufacturing premises and acquire new plant and equipment.

These new premises and equipment will allow NZCS to significantly expand its production capacity of its existing product range and to extend its manufacturing capability to accommodate a range of additional product types.

Large and Growing Market

China is now the largest consumer of seafood products in the world, accounting for over a third of all global seafood consumption and projected to total over US$67.3 billion in 2019. China’s seafood imports grew 44% in 2018, increasing to US$11.9 billion.

Expanding Distribution Channels

With the funds raised, NZCS plans to enlarge its sales force and expand its distribution channels in existing markets, such as New Zealand, Australia and Hong Kong and entering or further penetrating as relevant markets such as China, Malaysia, Singapore, Indonesia and Vietnam.

New Zealand “brand”

NZCS’ seafood products are sourced exclusively from New Zealand, a key competitive advantage for NZCS, particularly in Asia where New Zealand is renowned globally for its “clean and green” reputation.

New Zealand sourced seafood is highly regarded relative to seafood originating from other markets.

This supports a premium price position over Asian-sourced competitor products that are sold to consumers in markets targeted by NZCS.

Product Range Extension

Through access to new capital, NZCS can improve profit margins by extending the range of products to include ready-to-eat products such as pre-packaged soups.

Supply of High Quality Seafood

While NZCS is not currently a party to any formal supply contracts, it has relationships with New Zealand’s leading premium suppliers of wild caught seafood, including WestFleet, Talleys and United Fisheries, and to date has been able to source seafood for its products from these suppliers at competitive prices.

Key NZSC Management Team

NZCS is led by a management team with extensive experience in FMCG and the seafood industry. Combined experience of 30+ years in the fishing industry both in processing and trading.

Use of Funds

Based upon the minimum subscription of $5 million, the use of funds may be as follows:

Allocation Minimum Subscription
Expansion of sales staff and marketing expenditure $1,000,000
Expansion of manufacturing facilities and other capital expenditures $1,100,000
Expansion of operational staff, inputs and product development $975,000
Listing, compliance, corporate administration and head office costs $635,000
Expenses of the offer $786,000
Working Capital $504,000
Total $5,000,000