Merger binge for seafood players

THE surprise announcement of a merger between Bluewave Seafood and two industry minnows is likely to end fishermen’s domination of any major processors in the southern lobster region.

Shareholders of the former Fremantle Fishermen’s Cooperative Society, mainly the fishermen who have earned equity in the 50-year-old business by supplying it with lobster, are likely to end up with control of about 30 per cent of a new entity following the merger with listed Cervantes Seafood and foreign-controlled INF.

The consolidation move will leave Geraldton Fishermen’s Cooperative as the only major player controlled by the fishermen who supply the catch.

It also comes on the back of a dreadful season when beach prices for lobster slumped to as low as $10 a kilogram as the impact of SARS killed off already weak demand in Asian markets.

As a result, Bluewave has disclosed a financial year loss in the millions.

INF showed earnings before interest and tax of $504,000 for the seven months ending June 30.

Cervantes has yet to report its full-year earnings but made a $2.4 million operating loss in the nine months to the end of March.

Bluewave chief executive Rob Rose said that his firm had to trade its much bigger position in the market for the strong capital position brought to the table by Cervantes and INF, which are already in the throes of a merger.

During the past season, Bluewave’s turnover was around $50 million, INF (owned by Japanese group Chunagon) had sales of about $14 million and Cervantes’ volume was about $11 million.

Mr Rose said that, while Bluewave could trade on next season, the directors were concerned about the potential for another hard season and the impact that could have on the processor’s financial position.

He said fishermen had been informed that an anticipated $4/kg payout was unlikely if the merger did not take place.

Both fishermen and shareholders, Mr Rose said, had supported the merger proposal put to them at special meetings.

“When we gave various scenarios the biggest shareholders twigged that this was the way to go,” he said.

It was expected that each party would have significant board representation, but Mr Rose could not reveal who was likely to run the combined operation.

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