Two Seattle Fishing Companies Looking for Buyers During Uncertain Times
Two largest US Pacific cod catchers eye package sale
Tom Seaman - Undercurrent News
The Newly christened F/V Blue North Departing Home Port - Seattle
The two largest US Pacific cod longline fishing companies are exploring a sale as a package, amid tough times in the Alaskan sector with lower quotas, according to Undercurrent News sources.
Clipper Seafoods and Blue North Fisheries, which have 20% and 17.5% of the longline portion of the dramatically reduced Pacific cod total allowable catch (TAC) respectively, have engaged an investment bank to advise on a possible sale, sources said.
According to sources, the companies have engaged Zachary Scott, a Seattle, Washington-based mergers and acquisitions advisory firm, to explore the sale.
Zachary Scott was also running a sale process for Clipper last year, which was underway when the news came out of the steep cuts to the Pacific cod TAC for 2018, sources said.
The idea behind a package sale is this is likely to attract larger investment firms to the table, who will only look at deals of a certain size, sources said.
Clipper, which is majority-owned by Dave Little, has a fleet of six vessels. Blue North, owned by Michael and Patrick Burns, has five larger longliners, including the most modern in the fleet, named Blue North.
Also, Blue North -- which has just parted company with CEO Kenny Down -- has an agreement to manage the Prowler fleet of longliners, as of 2016. Prowler has four vessels and 11% of the TAC.
Clipper’s Little and the Burns brothers -- all pioneers of the fishery -- were not immediately available to comment to Undercurrent.
Zachary Scott’s Frank Buhler was also not immediately available to comment. Down did not respond to requests for comment on his exit from Blue North and the possible sale.
A teaser document marketing the two companies, which would have combined turnover in excess of $100 million, has not gone out yet, sources said.
When Zachary Scott was marketing Clipper last year,Undercurrent sources said both Bregal Partners, the New York-based private equity with stakes in American Seafoods Group and also Blue Harvest Fisheries, was interested.
Jeff Davis, the former CEO of Blue Harvest, previously told Undercurrent the company was eyeing investments in Pacific cod, to add to its fleet of East Coast scallop vessels and processing operation in New Bedford, Massachusetts.
Scott Perekslis, one of the founders of Bregal Partners, which is ultimately backed by a billionaire Dutch-German family, did not respond to a request for comment from Undercurrent.
Also, Sealaska Corporation, the largest of thirteen Alaska Native Regional Corporations, was said to be interested at the time.
Terry Downes, the chief operating officer of the acquisitive Sealaska, previously told Undercurrent the company was eyeing upstream deals for Alaskan resources, after three processing investments.
In 2016, Sealaska bought into Seattle processor International Packers Corporation, before snapping up stakes in Odyssey Foods and Orca Bay Seafoods in 2017.
Downes declined to comment for this story.
However, the level of concentration of the overall longline TAC if one company bought both Clipper and Blue North could be an issue, some sources said.
“That’s close to 40% of the TAC, not even including the Prowler vessels,” one said, hence the possibility any deal could attract the interest of US competition regulators.
However, sources said it’s likely a case will be made in the event of any deal that Pacific cod is a global product, competing in the market with Norwegian and Russian fish, as well other types of farmed and wild seafood.
Steep cuts, record prices
Also, the plan to sell Blue North and Clipper comes at a tumultuous time for the industry, with prices at a record level and quotas down.
Last December, the 2018 TAC for Pacific cod in the Bering Sea was cut 16%, to 188,136t, with the Gulf of Alaska TAC slashed 80%, to 13,096t. The TAC for the Aleutian Islands stayed stable year-on-year at 15,695t.
In addition, the larger Barents Sea cod quota for Norway and Russia has also been cut for 2018, by 13% to 775,000t, further fueling the hot cod market. Scientists have recommended the TAC in the Barents Sea be set at 712,000t, for 2019, also. The TAC will be set by the Norwegians and Russians later this year.
Also, in December, the North Pacific Fishery Management Council will meet in Anchorage, Alaska, to set the 2019 Pacific cod TACs.
Amid all this uncertainty with TACs, cod prices have surged. The price for US longline-caught, J-cut, Pacific cod is now up to $4,900/t, for the 1-2.5 kilogram size, up from around $4,300/t this last year.
Although high prices are good for catchers, there is an uncertainty about the impact on demand, sources said. Also, the increase in prices is not enough to offset the loss from the drop in TACs, they said.
This likely caused the aborted Clipper sale last year and could influence this process, if it goes ahead.
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