A reasonably complex deal but nevertheless a good one and not...

A reasonably complex deal but nevertheless a good one and not quite what everyone was expecting, myself included. The private placement was the easy part to figure out, the marketing agreement was fresh and refreshing and the actual company behind the deal was refreshing.

In the short term it will redress the working capital issue, the medium term it puts a sales and distribution channel in place for produce out of the operational ponds in Queensland into export markets including its own, in the future term it is putting its weight in behind trying to get Legune Station sorted out and this may well be from a funding perspective as well as a design and operations perspective.

The share price is above what I expected it end up at today but not by much with quite a bit of volume given the holdings spread. Don't forget there was the conversion of performance rights today as well and that was for 13.5m ords so there is just over 1.4Bn ord on the market now before their new holders get their shares issued. This will continue to put some downward pressure on the share price.

When the value of the deal will flow through to the company is yet to be seen by it should push them into a quarterly cash-flow positive position. If they can get in to a position of being a positive earnings stock based on current production with some new market channels being made available to them, some big plans with Legune Station and a decent backer then this suddenly becomes a serious stock to consider and up-shifts itself out of the penny punters bracket. Keep in mind the japanese will be taking their cut from offering up their sales, marketing and distribution channels and this will reduce margins.

SFG will need to figure out who to flick the carbon business to as that has to go, thankfully, and maybe 1AG could hover it up since they are doing nothing else these days.

Only two legacies remain and that is board structure & composition and resolving the ownership and use of Legune Station. It would appear pari pasu that these two issues are front of mind for the new equity participant and they may well have intentions to redress this. Get the company out of Perth would help but that's a small matter.

From the japanese perspective it was a cheap way to secure a food source that was being threatened by a geographic neighbour and reduce one of their own company risks.

SFG isn't in institutional interest territory yet but it is now on its way and it has been a long time coming. Too long for some.