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Last updated: February 10, 2014 4:23 pm
Spain’s Pescanova has entered make-or-break talks with more than 100 creditor banks to try to save the stricken frozen fish group from liquidation and prevent the biggest industrial collapse since the start of the Spanish economic crisis.
The Pescanova board wants banks to accept a cut of 70-80 per cent on loans worth a total of €1.8bn, but says its proposals have been rebuffed. It is now striving to meet a March 3 deadline, the last day on which proposals to resolve the debt stand-off can be tabled to the bankruptcy court.
The parties then have another month to finalise a deal. If no solution is found by April 3, the group will be liquidated, putting at risk 2,000 jobs in Spain and another 12,000 at factories and fish farms in the rest of the world.
“The banks hold the key to the survival of the group,” said Juan Manuel Urgoiti, who was appointed chairman of the board last September. “Our objective is to save the group, and to save it in its present form.”
Mr Urgoiti said the group remained a “viable business” as long as its debt problems could be resolved, and warned that the consequences of letting Pescanova fail would be “brutal” for the Spanish economy. “It makes no sense whatsoever to liquidate this company,” he added, arguing that a break-up and sale of Pescanova’s assets would leave the banks with less money than could be gained as part of a restructuring deal.
Pescanova, a household name in Spain, shocked the market last year when it failed to present its accounts for 2012. A subsequent forensic audit conducted by Deloitte unveiled that the group had debts of €3.6bn, more than three times as much as stated in its official accounts.
It emerged that the company had borrowed heavily through a string of subsidiaries in Africa and Latin America, in an apparent attempt to avoid having to consolidate all its debt on the balance sheet of Pescanova itself.
Manuel Fernández de Sousa, the former chairman of Pescanova, resigned from his post three months after the scandal came to light. He is being investigated by Spain’s financial regulator for possible market abuse after it emerged he sold half of his 14.4 per cent stake in the company in the months leading to its insolvency filing, without updating the regulator.
Mr Fernández de Sousa said he had acted solely in the interests of the company, selling shares to lend money back to it, and had committed no wrongdoing.
The fate of Pescanova is being closely watched by the Spanish government. The group is one of the biggest employers in Galicia, a stronghold of the ruling Popular party and the home region of Mariano Rajoy, the prime minister.
Both the regional and the central government are understood to be supportive of a debt restructuring deal. Mr Urgoiti said his personal view was that there was a “90 per cent chance” that the banks would ultimately be won over to an agreement.
Pescanova’s shares have been suspended from trading since March last year.
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