Wellard Limited's plans to offload its vessels, MV Ocean Swagman, to Heytesbury Holdings for $22 million has hit a snag.
The cash-strapped livestock shipper has informed the Australian Stock Exchange that it is now negotiating with another party which may result in a higher offer than Heytesbury's bid.
The proposed sale and leaseback deal with Heytesbury was announced on July 4.
"The terms of this alternative transaction have not yet been finalised and there is no certainty that any alternative transaction will proceed," Wellard said in its statement to the ASX.
Wellard said Heytesbury had reported that its technical due diligence conducted on the MV Ocean Swagman was satisfactory but it had not yet completed its due diligence on the transaction generally.
Heytesbury had requested an extension of time for the delivery of its formal due diligence completion notice and had also proposed some amendments to the terms of the transaction.
Wellard's board was considering all of Heytesbury's requests and would update the market as appropriate.
Heytesbury planned to buy the ship, which can carry 26,000 sheep, and then charter it back to WA-based Wellard for an initial period until March 31, 2021, with options to extend for up to four years.
Heytesbury, which is owned by the Holmes a Court family, holds an 11.42pc share of Wellard.
Wellard's noteholders were to receive $US10m from the sale which was expected to occur on August 31.
The sale and leaseback was meant to be another major step in Wellard's plan to reduce debt and improve financial and operating flexibility.
The deal would have also meant Wellard would retain access to a fleet of four specialist livestock vessels.
When completed, the deal would have reduced the group's overall debt from about $US85m to around $US64m.
Wellard made a modest $2.9 million profit for the half-year to December 31.
In April the company collected more than $17m from the sale of its Wongan Hills feed mill and Beaufort River Meats abattoir and a pre-export quarantine site lease, all in WA, plus its Victorian pre-export quarantine facility near Portland.
Two years ago it sold its MV Ocean Outback for $35m to an Israeli company.