January 15, 2014
Haikui Seafood to acquire land for new production facility
The Chinese subsidiary of Haikui Seafood AG has signed an agreement on the acquisition of land use rights with the local authorities in Dongshan, for the construction of its new production site.
The acquired land is located in the Dongshan Marine Biotechnology Industrial Park, Dongshan Island, Fujian Province, and has a total size of approximately 667,000 square metres. Total land costs amount to around US$18.2 million of which Haikui Seafood has paid 70% upon signing of the land use agreement. The remaining 30% are due by the end of June 2014.
"The construction of the new processing facility in Dongshan is an important step in our mid- to long-term strategy. With the new facility we intend to double our existing processing capacity. Through greater efficiency and higher productivity, the new factory is expected to improve our competitiveness and our margins. The new factory will also enable us to conduct the business of extracting compounds from marine processing by-products, which would also boost our overall profitability", says Chen Zhenkui, CEO of Haikui Seafood.
The company, after the initial site preparation, intends to start phase one of the site construction around April 2014 so that it could go into operation by the end of 2015.
The estimated total investment amount for the new seafood-processing factory is approximately US$91 million. Recently, Haikui Seafood secured a long-term loan from the German development finance institution DEG (Deutsche Investitions- und Entwicklungsgesellschaft), a subsidiary of KfW (Kreditanstalt für Wiederaufbau), amounting to US$25 million, which will contribute to the financing of the new factory. As a precondition for the granting of the loan, DEG performed an extensive audit on economic, environmental and social aspects of Haikui Seafood''s operations.
Apart from aligning Haikui Seafood''s financing structure with its asset structure, the loan offers attractive financing costs: The annual interest rate is the applicable six-month US dollar London Interbank Offered Rate (LIBOR) plus 4%- currently adding up to 4.34%. The loan has a maturity of seven years. According to the loan repayment schedule, the first of 10 equal semi-annual instalment repayments is due on March 15, 2016.