Paengaroa based Comvita Ltd is providing $3 million convertible loan to Nelson based SeaDragon Ltd to better enable a technology change.

SeaDragon (NZX.SEA), New Zealand's largest refiner and blender of high quality fish oils and fractions, announced on Friday that cornerstone investor Comvita agreed to advance $3 million via a convertible loan.

Comvita based in Paengaroa.

The money will assist Sea Dragon's staged exit from the currently difficult Omega-2 market and the gradual build-up of the Omega-3 business.

'Over the last 12 months SeaDragon has transformed its business,” says SeaDragon chairman Colin Groves.

'With the completion of our new Omega-3 refinery, we have lifted the company's processing capacity from just over 200 tonnes to 5000 tonnes per year.

'We now have the production capability in Omega-3 to look to firm up both supplier and customer agreements to deliver on our strategic objectives. The new refinery is performing well, we are steadily building Omega-3 raw material supply relationships and we are encouraged by the response we have received from potential customers.

'As we signalled in late April, volatility in Omega-2 markets has overshadowed these achievements, with SeaDragon experiencing an extension in the Omega-2 sales cycle, and a build-up in inventory. This has resulted in a slower transition from that market and a run-down of cash reserves.”

Comvita's $3 million loan allows a smoother transition from Omega-2 to Omega-3.

The loan represents an extension of last-year's strategic partnership, which saw Comvita subscribe for $3 million of new shares and agree to partner with SeaDragon to add value to the New Zealand fishing and aquaculture industries.

'Omega-3 fish oils are a core ingredient platform for Comvita, says Comvita CEO Scott Coulter.

'We are committed to an on-going investment to establish a unique New Zealand sourced range of high quality fish oils and are happy to continue to partner SeaDragon to realise this opportunity.”

The convertible loan will be subject to SeaDragon shareholder approval at the annual meeting scheduled for in August 2016.

SeaDragon will update the market as soon as a date for this meeting has been set and additional information will be provided to shareholders in advance of that meeting.

SeaDragon expects to release its preliminary unaudited results for the year to March 31, 2016 on May 30, 2016.