American Seafoods restructures debt, attracts new backers

Several big fish have joined in a recapitalization deal for American Seafoods, lightening the heavy debt load under which the Seattle-based company has struggled for years.

After reeling in new capital, the company that calls itself “the largest harvester of wild-caught fish for human consumption in the U.S.” has reduced its debts from a previously estimated $900 million-plus to $740 million.

CEO Bernt Bodal said the deal gives American Seafoods stability and adds as investors some experienced industry people with whom he’s had a “very, very long-term connection.”

Those include Chris Lischewski, CEO of Bumble Bee Foods in San Diego; Amy Humphreys, former CEO of Seattle-based Icicle Seafoods; and Frank Dulcich, CEO of Mukilteo-based Pacific Seafood Group.

The financial rescue was orchestrated by Scott Perekslis, who with Bodal organized the 2000 acquisition of the company and is now managing partner of New York investment firm Bregal Partners.

“At its core it’s a very solid business with tremendous staying power,” said Perekslis in a joint phone interview with Bodal.

American Seafoods had more than $400 million in revenue last year and employs about 1,000, Bodal said. In addition to the $740 million in new current debt, the company can tap another $60 million from its lenders if needed.

Aside from reducing the total amount owed to lenders, the restructuring features lower interest rates, he said. That should help the company reduce its debts over time.

Previously, according to credit-rating agencies Standard & Poor’s and Moody’s, the highly leveraged company had been falling deeper in debt as it struggled to make payments on notes accruing 15 percent interest.

Bodal said the company’s six large catcher-processor ships are fishing for pollock in the Bering Sea, and will pursue Pacific hake off the Washington and Oregon coast in coming months before heading into port at Terminal 91 for the winter.

The company and its new investors aren’t disclosing details of the equity investment or the ownership structure, Bodal said. He said that the family of Kjell-Inge Rokke, the Norwegian who founded what became American Seafoods, had recently made a loan involving the company, but “they are not involved at all” in the new ownership.

From an investor’s perspective, said Perekslis, American Seafoods is appealing because despite its debt woes, “the company has consistently had strong operating margins for 15 years.”

The pollock that can be caught in the Bering Sea under the federal fisheries system is allocated by quota, and American Seafoods has the largest slice.

To Perekslis, that means “the resource that the company harvests is so well managed it provides a solid base in perpetuity, and the rights the company has to harvest the resource is protected by statute.”

S&P had lowered its ratings on American Seafoods debt several times this year, recently noting that the refinancing would require some lenders to take only partial payment for what they were owed.

And the ratings agency’s analysts have written that the company “has a narrow product focus” within the “commodity-oriented, highly regulated and somewhat volatile commercial-fishing industry” where its performance is “subject to supply-and-demand vagaries” beyond its control.

But this week, anticipating the restructuring, S&P raised its ratings and said American Seafoods’ financial prospects showed “improved sustainability.”

While increases in fuel costs or declines in product prices would weaken its outlook, the rating firm noted the company’s locked-in fishing quotas and its efficient fleet “should permit it to have above average profit margins.”

Bodal said the company will remain focused on paying down its debt and won’t repeat its previous unsuccessful effort of making prepared items from its fish products. “We don’t have any intention of getting into that again.”

But he said the company is “still looking at new opportunities” in other fisheries that American Seafoods isn’t active in now.