Wild abalone fishery and undersea wine company, Rare Foods Australia (RFA), says a downturn in global seafood demand, supply challenges, and the significant cost of being listed on the ASX are behind its decision to delist.
A general meeting will be held in late April to seek shareholder approval for the plan.
RFA managing director, Brad Adams, said the negativity in the current market has been exacerbated by the fact the company hasn’t been able to secure a cost-effective supply of juvenile abalone from its sole supplier in Western Australia.
“Like many Australian seafood businesses, we are experiencing the toughest trading conditions ever experienced in our key markets. Business costs have continued to increase, yet revenues have not. The company has implemented significant cost cutting measures over the previous six months to ensure the business is cashflow positive to remain in business during this economic downturn,” Adams said.
He added that the ASX listing was a “large cost burden” and the company thinks it can provide more shareholder value as an unlisted business.
The Board estimated costs attributable to the listing were around $735,000 per annum, as well as indirect costs associated with the need to devote management time to matters relating to the listing which could be directed elsewhere if the company was unlisted.
“The company continues to develop niche markets that provide higher returns for its unique MSC ranched greenlip abalone. It is hopeful that a cost-effective solution to its juvenile abalone supply can be realised, while it also continues to develop growth opportunities such as the Subsea Estate Ocean wine making business,” Adams said.
