Salmones Pacific Star and Trusal have agreed on merging the two salmon firms. (Photo: Stock File)
CHILE
Tuesday, March 05, 2013, 03:50 (GMT + 9)
Two Chilean salmon companies would be the first to merge as part of the recovery and consolidation process of the industry after the crisis caused by the infectious salmon anemia (ISA) outbreak, which began to spread in 2007. The firms involved are Trusal SA, belonging to Nenadovich family, and Salmones Pacific Star, linked to Hurtado Vicuña family.
The executives from both companies signed a memorandum of understanding and the merger is expected to be settled in the coming months, upon the termination of the due diligence and the final approval of the banks is obtained, the newspaper La Tercera reported.
To Trusal, this year is particularly difficult for two reasons: the low price of salmon, which changed from USD 7.5 per kilo in 2012 to only USD 4.5 at this time, and the risk of overproduction in the sector.
Last year, the salmon industry in Chile produced 750,000 tonnes of salmon and for 2013 a figure close to 800,000 tonnes is expected.
Meanwhile, banks are concerned about the depreciation that this year several companies should perform to the loans requested in 2009 due to the ISA crisis. The salmon firms owe about USD 1,700 million to banks, a level similar to that recorded after the ISA virus.
After confirmation of the merger, the shareholders were informed that Trusal will keep around one third of the shares. Salmones Pacific Star controllers will have the remaining two thirds and will take control of the new company.
For the duration of the merging process, capital contributions will be performed and the debt capitalization of approximately USD 80 million will take place.
Trusal has an annual production of about 35,000 tonnes, and Pacific Star has a production capacity of approximately 24,000 tonnes.
With the merger, the new company could produce around 70,000 tonnes of salmon per year, almost 10 per cent of the capacity of the local industry.
Trusal has been looking for partners since 2011, advised by Asset Chile.
In February, the company failed to reach an agreement to merge with Granja Marina Tornagaleones, after more than a year of negotiations.
As reported by Diario Financiero, the operation failed because of the high level of liabilities, about USD 100 million, and the need to inject about USD 50 million just for working capital.
Besides, Trusal held discussions with AquaChile, the biggest Chilean capital salmon firm.
The pact between the two of them was stalled because AquaChile is in the midst of a capital increase process for USD 120 million from the issuance of 150 million of new ordinary, nominative shares and those without par value.
With these resources, AquaChile plans to expand its operations in the aquaculture sector, finance new business opportunities and even perform potential mergers.