Asset Impairments Force Yumbah to Lower Offer: What This Means for Clean Seas Investors
Clean Seas Seafood updates shareholders on a lower scrip alternative ratio following Yumbah Aquaculture’s significant asset impairments, while the scheme meeting is postponed to early July.
- Yumbah lowers scrip alternative ratio to 1 share per 2.8571 Clean Seas shares
- Asset impairments of $23–28 million impact Yumbah’s valuation
- Clean Seas shareholders retain $0.14 cash option unless electing scrip
- Independent Board Committee endorses scheme based on cash consideration
- Scheme meeting adjourned to 8 July 2025 with court hearings rescheduled
Background to the Scheme
Clean Seas Seafood Limited (ASX, CSS) is progressing its proposed acquisition by Yumbah Aquaculture Ltd through a scheme of arrangement. Initially announced in March 2025, the deal offers Clean Seas shareholders a choice between a cash payment and a scrip alternative in Yumbah shares. This transaction aims to consolidate operations in the Australian abalone farming sector, promising potential synergies but also exposing shareholders to new risks.
Revised Scrip Alternative Ratio Reflects Asset Impairments
On 17 June 2025, Clean Seas disclosed that Yumbah has adjusted the scrip alternative ratio from 1 New Yumbah Share for every 3.1428 Clean Seas Shares to a less favorable 1 for every 2.8571 shares. This change stems from Yumbah’s internal reassessment of its abalone assets, which now face estimated impairments between $23 million and $28 million. These impairments, linked to recent industry challenges and internal restructuring, have lowered Yumbah’s valuation range to between $0.40 and $0.44 per share, with the company adopting the conservative $0.40 figure for the scheme.
Shareholder Considerations and Board Recommendations
Despite the revised ratio, Clean Seas shareholders will still receive a default cash consideration of $0.14 per share unless they opt for the scrip alternative. The Independent Board Committee (IBC) unanimously recommends voting in favor of the scheme based on this cash offer, citing the Independent Expert’s valuation range of $0.124 to $0.176 per share. However, the IBC refrains from recommending the scrip alternative due to its speculative nature and the individual risk profiles of shareholders.
Delays and Next Steps
The scheme meeting originally scheduled for 23 June 2025 has been adjourned to 8 July 2025 to accommodate these developments. Corresponding court hearings have also been rescheduled, with the second court hearing now expected on 15 July 2025. Clean Seas plans to release a supplementary scheme booklet around 18 June 2025 to provide shareholders with updated information. Shareholders are encouraged to review this document carefully before voting.
Implications for the Market and Shareholders
This update underscores the challenges facing the aquaculture sector, particularly in asset valuation amid environmental and operational pressures. For Clean Seas shareholders, the decision to accept cash or scrip hinges on their appetite for risk and confidence in Yumbah’s future performance post-impairment. The revised terms and delayed timetable add layers of complexity to an already significant corporate event.
Bottom Line?
As Clean Seas shareholders weigh cash certainty against scrip speculation, the coming weeks will be pivotal for the scheme’s fate and market confidence.
Questions in the middle?
- Will Yumbah’s final audited impairments confirm the estimated $23–28 million write-down?
- How will Clean Seas shareholders respond to the lower scrip ratio amid valuation uncertainty?
- Could a superior proposal emerge before the rescheduled scheme meeting in July?
