Tassal

Price cutting. Losing money. Failing to grow. Atlantic salmon producer Tassal was swimming as hard as it could against the tide.

Background

A cash-flow squeeze forced Tassal to pump its salmon into an under-priced market. The subsequent oversupply of fish cut prices further. And with too many loss-making divisions adding to cash losses, bankers and shareholders lost faith in management’s ability to turn Tassal around.

The company was unable to grow because too many salmon farmers made economies of scale hard to achieve. Creditors appointed us Receivers and Managers of Tassal, after it recorded a $6.2 million loss.

How we helped

1. We borrowed money to free up Tassal’s cash flow.

It was a hard deal to put together because we had to persuade Tassal’s bankers that lending more money was right for them and other creditors.

The banks would not have loaned existing management money. Our reputation made a difference. Because banks trusted our independence, they loaned us the money.

2. We merged the company’s service lines, shutting loss-making divisions like the Japanese export line.

Because the key to a turnaround was new management, we put in new people with fresh ideas – new thinking to lift staff morale.

3. Made a move unprecedented for a receiver.

We bought Australia’s third largest salmon producer and Tassal’s biggest competitor, Nortas, for $30 million. Never before had a receiver bought a company’s main competitor.

By buying Nortas we:

• created economies of scale
• made the merged company more profitable because of extra revenue it would enjoy once salmon prices picked up.

Result

Following our work, Tassal has gone from strength to strength.

The company moved out of receivership and later that year listed on the Australian Stock Exchange. In the first seven months, in recorded a net profit after tax of $11.4 million.

Today Tassal is Australia’s largest producer and distributor of Atlantic salmon.