Clean Seas Seafood Limited

M&A Activity • Feb 19, 2025

Clean Seas Seafood Limited announces proposal from Yumbah and grants exclusive due diligence

Clean Seas Seafood Limited announces proposal from Yumbah and grants exclusive due diligence

19 February 2025

Clean Seas Seafood Limited (“Clean Seas”, ASX: CSS, “the Company”) advises that it has received a non-binding, indicative and incomplete proposal from Yumbah Aquaculture Ltd (“Yumbah”) to merge with CSS through the acquisition of 100% of CSS shares by way of a scheme of arrangement (“Scheme”) offering $0.14 cash per share with a scrip alternative in Yumbah (“Proposal”).

About Yumbah

Yumbah is an Australian-owned vertically integrated investment grade shellfish aquaculture portfolio with operations in South Australia, Victoria, Tasmania and New South Wales. The company delivers premium produce from spat through to harvested products, supplying farmers, wholesalers and retailers with sustainably farmed shellfish.

Yumbah is the largest producer of abalone in the Southern Hemisphere, specialising in onshore production of this prized shellfish. In addition, the Group produces oysters, mussels, aquafeed and oyster spat. For more information, visit: www.yumbah.com

Anthony Hall is a director and the largest shareholder of Yumbah with a ~53.6%1 ownership and is Clean Seas’ largest shareholder with a current ownership of ~22.6%. CSS director Gary Higgins also serves as a director and Chairman of Yumbah.

Details of the Proposal

Under the terms of the Proposal, CSS shareholders will, as the default consideration, receive total cash consideration of

$0.14 per share (“Cash Consideration”). As an alternative to the Cash Consideration, eligible CSS shareholders may elect to receive Yumbah scrip. CSS shareholders who elect to receive scrip will have ongoing economic exposure to the merged Clean Seas and Yumbah business. The exact CSS to Yumbah share ratio (for the scrip alternative) will be determined at a later stage, subject to the relative value of Yumbah scrip.

The Proposal’s Cash Consideration of $0.14 per share represents a premium of:

• 52.2% to the closing price of $0.092 on 18 February 2025 (being the last trading day prior to this announcement);

• 46.8% to the one month volume weighted average price (“VWAP”) to 18 February 2025 of $0.0954; and

• 27.6% to the 3 month VWAP to 18 February 2025 of $0.1097.

The Board of CSS has established an independent committee of directors (“IBC”) to evaluate and negotiate the terms of

the Proposal.2

The Proposal is subject to a number of conditions including:

• mutual satisfactory due diligence;

• unanimous recommendation from the IBC and a commitment from all Clean Seas Directors to vote any shares that they hold or control in favour of, or accept into, the Yumbah Proposal, in the absence of a superior proposal and subject to an independent expert concluding that the transaction is in the best interests of CSS shareholders; and

• entry into a Scheme Implementation Deed (“SID”) on customary market terms acceptable to CSS and Yumbah,

including:

o standard conditions precedent including regulatory clearances, no material adverse change, no prescribed occurrences, no regulated events, no material acquisitions/disposals, no dividends/distributions, shareholder and court approval and subject to any matters arising out of due diligence;

o provisions dealing with vesting or termination of Clean Seas performance rights;

o standard deal protection mechanisms (including a break fee consistent with Takeovers Panel guidance), no- shop, no-talk, no-due diligence, notification and matching right provisions;

o standard termination provisions for material breach; and

o customary representations and warranties.

The Proposal will be funded through a combination of debt and, to the extent eligible CSS shareholders elect to take Yumbah scrip consideration, Yumbah equity.

The proposed consideration under the Proposal would be reduced by the value of any dividends or other distributions

declared, proposed or paid on and from today’s date.

The IBC’s Intention

Following careful consideration, the IBC has determined that it is in the best interests of CSS shareholders to progress the Proposal and allow Yumbah to undertake further due diligence.

Subject to Clean Seas and Yumbah agreeing to a SID on terms acceptable to Clean Seas, the IBC unanimously intends to recommend that CSS shareholders vote in favour of the proposed Scheme (at the current offer price of $0.14 per share) and each director intends to vote any CSS shares they control in favour of the Scheme, subject to:

• the parties entering into a binding SID on terms no less favourable (when taken overall) to CSS’ shareholders than

the Proposal;

• no superior proposal being received; and

• an independent expert concluding (and continuing to conclude) that the Proposal is in the best interests of CSS shareholders.

Further to the Company’s announcement on 20 December 2024 detailing the events surrounding the Year Class 24 cohort of fish and the appointment of Morgans Financial and Bell Potter Securities (“JLMs”) to assist the Company in determining a capital strategy, the IBC has resolved to pursue the Proposal on an exclusive basis and terminate the appointment of the JLMs and all other discussions in relation to raising capital.

Yumbah has indicated that the offer price of $0.14 per share follows and reflects an initial period of financial, operational and technical due diligence, including in relation to CSS assumptions regarding harvest yield percentages. Yumbah now intends to undertake customary due diligence in the next stage, including in relation to legal, regulatory, workplace and taxation matters.

Next steps

CSS and Yumbah have entered into a Process Deed under which Yumbah has been granted until 24 March 2025 to undertake exclusive due diligence and negotiations on a binding SID. The Process Deed contains customary deal protection mechanisms, fiduciary exclusions and a matching right for Yumbah in the event of a competing proposal. A copy of the Process Deed is attached to this announcement.

CSS shareholders do not need to take any action in relation to the Proposal. The IBC will continue to keep shareholders and the market informed of developments.

The IBC notes that there is no certainty that the engagement between CSS and Yumbah will result in a change of control transaction or an offer capable of acceptance by CSS shareholders.

This announcement does not constitute a proposal to make a takeover bid for the purposes of section 631 of the Corporations Act.

CSS has appointed Candour Advisory as financial advisor and HWLE as legal advisor. Yumbah has appointed K&L Gates as legal advisor.

The Full announcement including the Process Deed is attached as a pdf.

1 As per Yumbah’s Annual Report for the financial year ended 30 June 2024.

2 The IBC consists of Katelyn Adams and Marcus Stehr. Note that CSS director, Gary Higgins who is also a director and Chairman of Yumbah, is not part of the IBC.

This announcement is authorised by the IBC of the Company.

For further information on Clean Seas Seafood, please contact:

Rob Gratton

CEO

rob.gratton@cleanseas.com.au

+61 434 148 979

About Clean Seas Seafood

Clean Seas Seafood is a fully integrated Australian Aquaculture business listed on the Australian Securities Exchange (ASX) and with a secondary listing on Euronext Growth Oslo (OSE).

Clean Seas is the global leader in full cycle breeding, farming, processing and marketing of its Hiramasa or Yellowtail Kingfish (Seriola lalandi) and is renowned amongst leading chefs and restaurants around the world for its exceptional quality.

Clean Seas is recognised for innovation in its sustainable Yellowtail Kingfish farming and has become the largest producer of aquaculture Yellowtail Kingfish outside Japan. For more information, visit www.cleanseas.com.au