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Clean Seas in choppy waters after board upheaval

Business

South Australian kingfish farmer Clean Seas has appointed a new chairman and board member after several key office bearers quit their posts amid “emerging differences on strategic direction” on the eve of yesterday’s AGM.

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Chairman Terry O’Brien and fellow independent directors Nick Burrows and Raelene Murphy resigned effective immediately on Monday, ahead of the AGM.

It followed the exit of managing director and CEO David Head last month.

The company’s acting CEO, former CFO Rob Gratton, yesterday announced Travis Dillon as the new chairman of the board of directors.

Gilbert Vergeres was voted in as a new non-executive director at the AGM and Marcus Stehr was re-elected as a non-executive director. Shareholders also voted to approve Head’s termination benefits package.

Stehr and Gratton are the only remaining members of the company’s board from the beginning of the year. Clean Seas says it is working to identify potential directors to fill the vacancies.

The changes come after a year of great change at Clean Seas. The Adelaide and Eyre Peninsula based company announced in December it had received a $15 million payout in January following a decade-long legal dispute with a former feed supplier.

But it has been a tough 10 months for the company since with restaurant sales slumping due to worldwide restaurant closures during the coronavirus pandemic, prompting Clean Seas to fast track a move into retail markets.

On Monday, the publicly-listed company released a statement to the ASX saying the independent directors had “reflected on their role and nature of the relationship with the cornerstone shareholders going forward, including emerging differences around strategic direction, and determined that it is appropriate to bring forward the succession plan for broad renewal in advance of any re-election for a further term”.

O’Brien said he was proud of the outcomes achieved in his time as chairman including its response to the COVID-19 pandemic, which devastated global food services demand.

“The quality product, outstanding team, planned pivot to retail combined with the successful settlement of the long-standing feed-related litigation, and the re-financing and re-capitalisation of the company with key cornerstone investors with global seafood experience has enabled Clean Seas to survive the crisis and position for a bright future,” he said in a statement to the ASX this week.

Dillon was the CEO and managing director of Ruralco Holdings until September 2019 and is currently chairman of ASX-listed Terragen Holdings, non-executive director of S&W Seed Company Australia, non-executive director of Lifeline Australia and a member of the CSIRO Agriculture and Food Advisory Committee.

“I am hugely enthusiastic about joining Clean Seas at this time of transition into new channels and markets, and look forward to helping the board and management in executing an exciting strategy that is already delivering benefits to the company in terms of new sales,“ Dillon said.

Last month Clean Seas announced the first major shipments of South Australian kingfish were headed for American meal kit customers following a deal earlier this with Norwegian Atlantic Salmon processor Hofseth Group.

A distribution deal with Hofseth Asia has been reached following the agreement with Hofseth North America.

A targeted North America launch program has been agreed to with leading home meal kit customers, a major big box retail chain and a national supermarket.

As a result, Clean Seas has this month received an order from Hofseth North America for 157 tonnes of kingfish to be sold in September. It expects the orders to increase to about 250 tonnes by the end of December 2020 ahead of a wider rollout in 2021.

The company plans to further leverage new and existing partnerships following the restructure of the executive team.

Gratton said Dillon brought an invaluable skillset and credibility to the company in the context of the transformation into new markets.

“That Clean Seas has been able to attract talent of Travis’ calibre is testament to the changes we have made and the opportunities that exist going forward,” he said.

Clean Seas has also appointed its registry office BoardRoom Australia to provide company secretary support services. As a result, David Brown will step down as joint company secretary to focus on his operational responsibilities.

In its AGM presentation to shareholders yesterday the company said it would embark on structural changes to reduce cost and promote efficiency, sell off excess fish stocks to free up cash and consolidate activities into its SA base.

The company reported sales revenue for Q1 FY21 was 95 per cent of the prior year, which it said was a positive result considering the impact on its traditional food service sector, and its excess stock sell-off strategy.

Clean Seas shares have been fairly stable in recent months and were trading at $1.05 this morning.

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