Salmon farming giant Grieg Seafood is postponing parts of its newly acquired Newfoundland project over COVID-19 related "market uncertainty and lower visibility," the company announced to shareholders.
The decision comes as Grieg expects a third-quarter operating loss of NOK 187 million (€17 million/$20.2 million).
Investors were spooked by the news: Grieg halted trading on the Oslo Stock Exchange after shares took an initial 10 percent slip. As of writing, shares were down 18 percent.
The current results indicate that Grieg may breach with covenants in its loan agreements. As a result, banks have granted Grieg amendment to the covenants through the third quarter 2021.
Grieg recently offloaded its operations on the Isle of Skye, Scotland, which is expected to slash about NOK 100 million (€9.3 million/$11 million) off the company's earnings in the third quarter.
In order to the lower risk in the initial phase of its massive Newfoundland project, Grieg decided to slow down the pace of investments for the time being.
Grieg is delaying the construction of the planned recirculating aquaculture system (RAS) post-smolt unit until further notice.
In February, Grieg Seafood acquired Grieg Newfoundland, Canada, with a long-term annual harvest potential of 30,000-45,000 metric tons of Atlantic salmon.
The total investment needed for the RAS smolt facility, excluding the post-smolt unit, will be around CAD 60 million (€38.6 million/$45.7 million) for 2020 and 2021.
The company estimates finalizing the post-smolt unit will need another CAD 30 million (€19.3 million/$22 million).
The company has recently been granted five licenses to farm in Newfoundland and Labrador, giving the company approval to farm 30,000 metric tons of Atlantic salmon in the area.
Grieg Seafood's proposed Placentia Bay project will be comprised of 11 sea sites. Eight licenses are approved, while the rest are in different stages of application.
The first fish is already growing in the Placentia Bay freshwater facility and the annual harvest volume target to be reached by 2025 for the first phase is still 15,000 metric tons, with the first harvest planned for 2022-2023.
Grieg will release its full third quarter report on Nov. 17.