Clearwater Seafoods on Tuesday announced that it reached an agreement with Glitnir regarding disputed derivative contracts, interest rate swaps and damage claims.
The dispute stems from October 2008 when the Icelandic Financial Services Authority took control of Glitnir and subsequently placed it into receivership. Prior to Glitnir’s receivership, Clearwater had derivative contracts with Glitnir, including foreign exchange contracts, cross currency and interest rate swaps.
The agreement reached provides for the settlement and release of all outstanding claims among Clearwater, its successor and Glitnir in exchange for immediate cash payment by Clearwater of CAD 14.5 million.
The Canadian seafood supplier will fund the payment using CAD 5 million from deposits that it had maintained for such purpose and had included in other long-term assets and a CAD 9.5 million addition to its existing second lien term loan facility.
As a result of the settlement, Clearwater will record a gain of approximately CAD 12.4 million in the fourth quarter of 2011.
“This settlement removes uncertainty by bringing closure to a potentially lengthy legal proceeding. In addition, it allows us to simplify our balance sheet when combined with our recent conversion from a trust to a corporation, provides us with a clean and easy to understand capital structure,” said Clearwater CEO Ian Smith.
