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Pescanova plant. (Photo: Pescanova)

Pescanova, more complicated than thought

SPAIN


Tuesday, March 26, 2013, 02:10 (GMT + 9)

The Galician multinational firm Pescanova is facing a serious financial situation due to a high level of debt, higher than initially announced, and to the weakness of its own equity.

Moreover, among the financial lending institutions there is uncertainty regarding the gap between its accounts and the bank debt figures.

The outlook of the Galician company is also discouraging because of the lack of transparency, poor governance and dissensions in the core of Pescanova. Added to this is the fact that the international expansion plans reaped poor results, the newspaper Faro de Vigo reported.

According to Santiago Lago Peñas, Professor of Applied Economics at the University of Vigo, some of the possible measures that would help the company out of this critical situation are:

• The sale of assets, which will imply a significant strategic shift;
• The renegotiation of liabilities, which is more difficult than expected;
• The purge of the responsibilities taken for the mistakes committed;
• The reformulation of the governance of the multinational firm and its resurgence as a stronger firm.

Last week, Pescanova requested the bank “a minimum” of EUR 50 million to meet immediate payments.

Banks expressed willingness to help the Spanish company, but requested to receive the accounts, a debt map, the restructuring plan and an endorsement of its advisers.

More than 25 days ago, Pescanova requested a creditors’ meeting seeking to renegotiate the debt with banks.

By 31 December, 2011, Pescanova owed EUR 1,750 million in total, considering the bank debt, commercial factors and others, both in the short term as well as in the long term, La Voz de Galicia reported.

If the company has assets for EUR 2,278 million and a liability of EUR 3,278 million, it is facing a serious problem, as all its debts would not be paid in full even by liquidating all its assets.

For bank creditors, the debt could reach EUR 2,600 million.

The main Galician newspapers emphasize that the reduced control capacity of the shareholders that are Pescanova’s reference generates instability and weakness.

And according to the newspaper Expansión, “a suspected Pescanova subsidiary that received the strongest reluctance of creditor banks […] is Novapesca Trading, former Gesinor SL.”

According to this source, the company owes more than EUR 806 million to companies of the group and to the trade creditors, and its accounts have not been audited.

“Is it possible that a company that has incurred debts to commercial creditors for 220 million perceives only EUR 161,700 for the sales of the year? How is it possible that it has control over an international network of investments in over 40 companies without having employees? And is it possible to declare a financial result of 12.3 million, when its net profits are EUR 534,700?” asks Expansión. “In Pescanova everything seems possible,” it adds.

Related article:

– Pescanova asks for EUR 50 million loan from creditor banks

By Analia Murias
editorial@fis.com
www.fis.com

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