Shareholders of Pescanova SA, the Spanish fishing company that’s restructuring more than 2 billion euros ($2.7 billion) of previously undisclosed debt, are asking creditors to accept losses of as much as 73 percent, according to a person familiar with the matter.
Negotiations with creditors cover a range of losses from 63 percent to 73 percent, said the person, who asked not to be identified because the talks are private. A consortium chosen by Pescanova to restructure the company, including shareholders Spanish brewer Damm SA and Luxempart SA as well as KKR & Co. and Ergon Capital Partners SA, asked lenders in December to accept losses of as much as 90 percent.
Restructuring offers for the operator of fish farms and trawlers must be filed to the bankruptcy court by March 3 and Pescanova will be liquidated if a deal isn’t agreed in the coming months, the company said Feb. 7. Auditors found Pescanova had more than double the amount of debt previously reported after the company filed for creditor protection in April.
A spokesman for Pescanova declined to comment on the negotiations. A spokesman for Luxempart in Luxembourg and spokeswomen for KKR in London and Ergon in Madrid also declined to comment on the talks, while a spokeswoman for Damm in Barcelona didn’t immediately respond to a phone call seeking comment.
The consortium of investors is prepared to inject 250 million euros into the company, according to the person.
Pescanova had 3.25 billion euros of net debt at the end of 2012, according to a Dec. 10 statement by the company’s court-appointed administrator Deloitte LLP. The frozen-fish company’s first-half results from 2012 said financial debt was 968 million euros at the end of June.
The company, which employs 13,000 people worldwide and 2,000 people in Spain, will be financially viable if it has less than 1 billion euros of debt, Juan Manuel Urgoiti, the company’s chairman said in an interview in September.
Creditors are pushing potential investors to dispose of fish farms in Chile and a facility in Portugal to reduce the cost of the restructuring by about 100 million euros, the person said.
Pescanova is seeking to keep its international network of businesses intact, especially its Chilean companies, to help preserve the company’s value, Urgoiti said earlier this month. The company’s Pesca Chile SA unit was declared bankrupt in May.
Founded in 1960, Pescanova developed the world’s first fishing boat equipped with a freezer, allowing the company’s boats to trawl waters around Brazil, Uruguay and Argentina. The company expanded to operate fisheries and processing facilities from Nicaragua to Japan and Namibia.
Pescanova processes fish including salmon, turbot and shrimp from the sea and fish farms to supermarket shelves in more than 50 countries.
Another group of investors offering to restructure the company is represented by Spain’s former defense minister Eduardo Serra and includes BlueCrest Capital Management, Knighthead Capital Management, DuPont, Scoggin Capital Management LP and J Goldman & Co., according to a spokesman for this consortium. The group, which is advised by McKinsey & Co., has proposed investing 300 million euros of equity, he said.
Pescanova borrowed from more than 100 lenders, including Banco de Sabadell SA, Banco Popular Espanol SA, CaixaBank SA, Banco Bilbao Vizcaya Argentaria SA, Banco Santander SA, Bankia SA and NCG Banco SA, according to a list of creditors prepared by Deloitte.
Restructuring proposals can be submitted by bondholders with at least 20 percent of the company’s debt, according to a Feb. 13 statement from noteholder representative BNP Paribas SA. Pescanova’s 160 million euros of 8.75 percent convertible bonds were quoted at 14.2 cents today, prices compiled by Bloomberg show.