Since Clearwater Seafoods announced it was considering an outright sale of the company as of 5 March, 2020, serious interest has been circulating, according to company CEO Ian Smith.
“We’ve had very strong expression of interest from a number of verified parties,” Smith revealed during a call with Clearwater investors this month.
The Halifax, Nova Scotia, Canada-based business issued a press release at the beginning of March saying it had “initiated a formal strategic process to identify, review, and evaluate a broad range of potential strategic alternatives available to it with a view to continuing to enhance shareholder value.”
“Clearwater’s board of directors has determined it is timely, prudent, and in the best interests of the company and its stakeholders to commence the strategic review in light of the company having recently received several expressions of interest,” Clearwater said. “The company’s board of directors, including representatives of its controlling shareholders, is committed to fully evaluating appropriate strategic options while simultaneously supporting the company’s management and employees in their ongoing efforts.”
When asked about the catalyst for putting the company up for sale at this time, Smith noted that Clearwater’s major shareholders have come to a point where they are in their 70s and do not have family succession plans. As such, “they want to make sure that they oversee the successful continuation of this company and that their legacy is preserved,” he explained on the 15 May call.
“Our major shareholders and founders have made comments in the media that their desire is to protect their legacy and to see the company Clearwater continue and to grow off of its current base of operations,” Smith added.
A deadline for the sale is not set, Smith confirmed, with the company not looking to place limitations on the process.
Smith discussed the matter following Clearwater’s posting of its first quarter results, which included a dip in sales. The company’s realized CAD 100.3 million (USD 71 million, EUR 65.7 million) in sales for the first quarter of 2020, down from the CAD 120.1 million (USD 85.1 million, EUR 78.7 million) seen during the same period in 2019. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter also took a hit, falling to CAD 13 million (USD 9.2 million, EUR 8.5 million) compared to the CAD 20 million (USD 14.1 million, EUR 13.1 million) reported for the same quarter in 2019.
Clearwater cited the worldwide COVID-19 crisis – which affected its Chinese customers to a significant degree just before the Chinese New Year festivities, before spreading to additional key markets for the company – as playing a significant role in its Q1 results.
"We started 2020 with great momentum but, unfortunately, Clearwater was directly impacted in the first quarter as our Chinese customers faced the brunt of COVID-19 just before the start of Chinese New Year festivities. By early March, the impact of the global pandemic was being felt in all our markets across the globe with tragic human and challenging economic consequences,” Smith said.
