Analyst estimates €100-200 million share issue for Grieg Seafood: “Out of cash and options”

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Carnegie seafood analyst Lars Konrad Johnsen believes Grieg Seafood will “run out of cash and options” in the second half of 2021, and estimates a capital raising of EUR 100-200 million.

According to Johnsen’s estimates, Grieg Seafood’s credit facility will be fully drawn up by the third quarter, and with continued capital outflows from challenging biology, working capital building and investments, the problem does not appear to be resolved by changes or increased debt, as long as the salmon price does not rise sharply, which is considered unlikely, according to TDN Direkt in a report published on Wednesday.

Grieg Seafood’s share price fell by 9 per-cent on Wednesday morning.

“In our view, the company needs an equity deposit of NOK 1-2 billion (EUR EUR 100-200 million .ed) to create a capital structure it can build from the next decade. Thus, we believe that GSF shares should be avoided until a new share structure is established,” wrote the investment banker.

Johnsen expects an operating profit in the first quarter of EUR -6.2 million.

Grieg Seafood is struggling in Scotland and is still considering “strategic options” for the business.

“With half of the total quarterly volume from Finnmark, with a harvest from an ISA area in the first half of the quarter as well as a new round of quality downgrades due to winter years, we expect a negative EBIT margin of NOK 1.2 (EUR 0.1 .ed) per kilo,” the analyst wrote.