New Zealand Coastal Seafoods has signed a 6-year lease agreement with options to extend for a further 8 years, on a new, upgraded seafood processing and production facility in Christchurch. Once commissioned, the new facility will increase the production capacity of the Company’s flagship ling maw product and will provide opportunities for the Company to expand its product lines to include other high-value FMCG goods.
The 1066m2 manufacturing site in Christchurch’s seafood hub is five times bigger than the Company’s existing facility (200 m2), and is strategically located in close proximity to the Christchurch airport and the import/export air freight market, providing logistical advantages for export into Asia.
The site requires relatively low capital investment with a number of pre-existing features including food grade cladding and export standard infrastructure already in place. The building also includes a large freezer space that can hold over 50 tonne of raw product, a key attribute which will significantly increase the Company’s capacity of product held on site, creating efficiencies for production and a marked reduction in supply chain risk.
“This expenditure represents a long-term investment in the output capability of the business, with new premises being able to accommodate the Company’s planned growth for the foreseeable future” – states Peter Win, CEO.
Newly appointed COO, Andrew Peti, will oversee the move, managing all regulatory and compliance requirements, risk management and operational setup.
Construction, fit-out and licensing of the new facility is expected to be completed by the end of December 2019. In the meantime, production will continue at the existing Christchurch factory.
The signing of the lease agreement represents a significant milestone for the Company as it executes on its expansion strategy. The Company’s plans to scale the business were impeded by:
- Limited access to working capital to fund raw seafood supply for processing; and
- Capacity limits at the existing facility due to its size.
Having successfully raised $5 million, the Company is well funded to resolve these bottlenecks, with NZS recently securing the supply of 35 tonne of raw ling maw on favourable terms – the Company’s largest inventory order to date.
The lease of a new, larger production facility will see the Company resolve the capacity limitations of its existing facility, unlocking significant opportunities for growth.
This was originally published as an ASX Announcement, which can be found HERE.