Neptune Technologies and Bioressources has announced a plan to recover from an explosion and fire at its processing plant in Sherbrooke, Quebec that put a halt to production of the company’s krill oil products.
The explosion and resulting fire on Nov. 9 heavily damaged the company’s existing extraction facility. Three workers died as a result of the blast and another 19 were injured, three seriously.
In addition to destroying the company’s near-term production capacity, Neptune said its inventory of krill oil was destroyed in the fire.
The company’s plan focuses on maintaining customer relationships in the near term, and restructuring the firm’s production capacity as a longer term goal.
“Neptune’s action plan is the result of our strategic reflection on a strong path forward, keeping the interests of our shareholders, employees, customers and partners at the top of our minds and priorities. In a situation where we now face new challenges in a very difficult and sad circumstance for the Neptune family, we will stay committed to our new plan” said CEO Henri Harland.
Outsourcing the manufacturing
The company’s recovery plan focuses on maintaining the company as a viable business in the short term by seeking strategic partnerships with as yet unnamed strategic partners for outsourced production of the company’s NKO and EKO krill oil brands. This interim measure will become a permanent facet of the company’s operations going forward to provide production diversity.
In addition, the company plans to restart extraction operations in Sherbrooke. This will be done, the company said, by reconfiguring the expansion portion of the facility, which was weeks away from coming online at the time of the accident, with some equipment salvaged from the original, damaged portion of the plant. The expansion portion of the facility was not significantly damaged in the accident, the company said. The rebuilt production facility will have a planned capacity of 150,000 tons annually. Further growth in production capacity will be driven by the strategic partnerships, the company said.
The company said that it expects that the majority of reconstruction costs will be covered by insurance, though it will not know the ultimate costs nor the exact insurances payments for several months. The balance of the reconstruction costs will be funded by debt, the company said.
The company announced it laying off 70 employees between its Sherbrooke plant and its Laval, Quebec headquarters. Managers will take 20% pay cuts for the duration of the recovery period.
Neptune is a publicly traded company with shares listed both on the Toronto Stock Exchange and NASDAQ. Both exchanges have suspended trading in the company’s shares.
Investigation still underway
Neptune said the reconstruction efforts will proceed as rapidly as possible given that the investigation into the cause of the explosion is still underway. A source in the local media said that one facet of the investigation is looking into possible criminal charges in connection with the blast.
Neptune said it was continuing to cooperate with authorities in the investigation. The company refuted earlier reports in the media that it said wrongly indicated that there was too much acetone stored on the site. The ignition of the acetone stores was a major contributing factor in the severity of the blaze.
The company said that is would also seek to manage its financial resources to be able to continue operations in its Acasti Pharma and Neuro Biopharm subsidiaries.
There is sufficient material to continue with the clinical trials now underway for Acasti’s drug candidate CaPre and the company said it has sufficient raw material stored outside of the Sherbrooke plant to produce more of the drug (at a third party manufacturer) if that becomes necessary. The Neuro Biopharm subsidiary is farther away from the trials stage.
In addition, Neptune said it plans to maintain its strategy of vigorous defense if its intellectual property in various markets.