American Seafoods vessels. (Photo: American Seafoods)
American Seafoods undergoing a difficult financial situation
(UNITED STATES, 2/5/2015)
American Seafoods Group LLC, considered one of the largest vertically integrated fishing companies, may go into default or financial restructuring in the next six months due to low prices and insufficient cash flow.
According to Standard & Poor (S&P), the Seattle-based company has increased its leverage ratio to 8-times debt to Ebitda, and diminished its ability to meet its loan agreements.
Its six factory trawlers often fish in the Bering Sea, where American Seafoods has about 45 per cent of the quota for at-sea harvesting of pollock.
However, in recent years, tilapia and catfish have gained importance as the dominant raw material for fish sticks, surimi and other products to the detriment of pollock.
Moreover, the important Japanese market demand has weakened and the yen has fallen in value.
The company’s estimated debt is more than USD 900 million, which has piled up when prices were strong for pollock and Pacific hake, reports The Seattle Times.
Last month, the S&P lowered its rating for American Seafoods. Nevertheless, some analysts say the company is not likely to fall into Chapter 11 bankruptcy reorganization.
It is expected the company will enter a "distressed exchange", in which some lenders will be pushed to accept concessions such as lower interest or longer repayment terms.
The condition for American fishing fleets to be 75 percent U.S.-owned, set by federal law, may limit the potential pool of buyers, if the company were to be sold.
American Seafoods catches, processes, distributes and markets a wide range of seafood products from sustainably managed fisheries in US waters off Alaska and the Pacific Northwest. The fish is processed aboard its factory ships and is then marketed and distributed to customers from home and abroad.
American Seafoods gives work to about 1,000 employees.
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