Agribusiness: The Agony of Pescanova

The Galician fishing company, Pescanova, with a presence in 11 Latin American countries, will sell its assets as a way out of financial crisis. About 8,000 employees will lose jobs.

Manuel Fernández de Sousa, president of Pescanova • Photo: Uly Martín El Pais Photos/Newscom

In April, when the National Securities Commission requested statements from all of Pescanova’s creditors, it not only definitively ended the era of Manuel Fernández de Sousa-Faro, who had presided over the company with an iron fist for three decades, it also exposed the hidden accounting of the fishing company that had been a symbol of Galicia. Hidden under the carpet was a debt of $4.4 billion, almost triple what the company had declared. It was a brutal blow to Galician pride. Pescanova, founded in 1960, is one of the leading Spanish multinationals, with a presence in more than 20 countries and a payroll of more than 10,500 employees. Of these, 8,000 work in Latin America, while just 1,000 are in Galicia.

To appreciate the effect of the fishing industry on Latin America, you only have to look at a map. It is present in 11 countries, and its flag flies over 14 affiliates. This did not go unnoticed by the receiver from Deloitte who insisted on paying out $72 million to meet the firm’s most urgent liquidity needs. According to sources within the creditor banks, half would go to companies in Latin America.

Analysts believe that the bet on aquaculture could have been one of the causes of the fall of the world’s sixth largest fisheries in terms of sales (billings for the third quarter of 2012 were $990 million). In recent years, it has invested more than $650 million in growing lobsters, turbot and salmon in fish farms of up to 27,200 acres in Chile, Nicaragua, Ecuador, Honduras and Guatemala.

Whether it was a risky bet or a strategy, what’s certain is that after the debacle of the parent company, the main Latin American affiliates started to fall like dominoes. And so, 24 hours after Fernández de Sousa-Faro left the parent company by court order, Pescanova closed the Argentine plant that Argenova had at Comodoro Rivadavia (the second one is in Buenos Aires and another one is in Santa Cruz), leaving 40 employees on the street. It was more than a blip on the chart: valued at $35 million, it was the most valuable plant outside of Spain.

Things weren’t any better in Chile. On May 2, the Justice Department declared that Pesca Chile was bankrupt, and appointed Hernán Chadwick Larraín as provisional receiver. The bankruptcy petition was made by HSBC, the affiliate’s main creditor, and BCI. The bankers did it because the assets are worth much more than the company’s total debt, so that a sale ordered by these banks could recover the capital loaned. Pesca Chile’s red ink totals $69 million.

Chadwick Larraín, perhaps feeling the breath of the city, made it a priority to put in order a business which, according to the
Diario Financiero, has assets of $500 million, taking into account the extractive activities of fishing and salmon cultures. The receiver is looking at selling the assets of the three local Pescanova businesses, together or separately, through an international bidding process or through an investment bank.  There is no shortage of suitors:
Marine Harvest, Australis Aquaculture and Cooke Aquaculture have already been calling.

In Ecuador, the company has unloaded two of its nine aquaculture plants for $18 million – money that will go to Promarisco in Ecuador.

What does the future hold for the Latin American affiliates?
Ecuador took the first step and Chadwich Larraín will take the second.

Sergio Manaut reported from Madrid.


 

Sergio Manaut
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