SEAFOOD exporter Alliance Select Foods International Inc. has unloaded its majority stake in New Zealand’s second largest smoked salmon processor Prime Foods NZ Ltd. (PFNZ) which was described as a “non-performing” subsidiary.
PFNZ, which has existing debts to Alliance’s smoked salmon processing subsidiary Big Glory Bay Salmon and Seafood Company Inc. (BGB), also agreed to settle such debts by ceding its shares in BGB. This allowed Alliance to take 100 percent control of BGB, which has plant facilities in Barrio Tambler, General Santos City.
In a disclosure to the Philippine Stock Exchange on Friday, Alliance said it had sold its 50 percent plus 1 interest in PFNZ to HC & JW Studholme No. 2 family trust (the “Trust”) for $5,000.
“The company decided that it is best to remove its interest in a non-performing subsidiary with negative equity,” Alliance said, noting that PFNZ’s liabilities exceeded its assets.
Based on the disclosure, PFNZ also granted to BGB the Prime Foods trademark and the use of PFNZ recipes. PFNZ will also repay US $1.76 million of its debt to BGB on a staggered basis for a period of 14 years.
PFNZ was originally engaged in the business of processing, manufacturing, and distributing smoked salmon and other seafood under the Prime Smoke and Studholme brand, for distribution in New Zealand and other countries. It also operates as BGB’s sales channel for its export sales. Its plant is located in Hororata, Darfield but its head office is in Christchurch, New Zealand.
Alliance’s board, for its part, has accepted PFNZ’s offer to fully settle existing loan obligations with shares in BGB, which thus became a wholly-owned subsidiary of the company.
“The company took into consideration the operational flexibility of operating BGB as a wholly-owned subsidiary,” Alliance said in a separate disclosure on Thursday.
This investment in salmon processing allows the group to be a “dominant player in the smoked salmon industry in the region, and to continue on a path towards further product and resource diversification,” the disclosure added.