Tuscaloosa, Alabama, U.S.A.-based SouthFresh Aquaculture, which is in the midst of a Chapter 11 bankruptcy reorganization, has agreed to lease its troubled processing plant in Eutaw, Alabama to Consolidated Catfish Producers (CCP).
The lease, which is subject to bankruptcy court approval, will allow the processing plant to remain operational, according to SouthFresh President Mark Lamb. Terms of the deal were not disclosed by either party.
“CCP is one of the largest processors in the catfish industry and has had operations in Mississippi for over 50 years. CCP plans to continue operations with no disruption in production of catfish and is interested in maintaining SouthFresh’s current catfish customers,” he said in a press release.
SouthFresh used the plant to process domestic catfish into products including whole fish, fillets, strips, nuggets, and other value-added and custom products. CCP will take over operations at the plant and will manage all sales and marketing of the plant’s products, CCP Vice President of Sales and Marketing Jack Perkins told SeafoodSource.
“It’s a beautiful, small plant. It’s very efficient. It gives us some freezing capacity we desperately need and it puts us right in the middle of the Alabama [catfish] farming community,” Perkins said. “We already buy a lot of fish out of Alabama and eastern Mississippi, and we believe this move is going to greatly enhance our sourcing ability. We think it’s going to be a really good match.”
CCP, based in Isola, Mississippi, owns the Country Select and Delta Pride catfish brands. The company is majority owned by the farmers that produce most of the company’s catfish. Along with Heartland Catfish and America’s Catch, CCP is one of the largest catfish producers in North America.
“Merging CCP's Mississippi based farm supply and processing with the Alabama SouthFresh operations will only assure both CCP's customers and SouthFresh customers of an improved supply and service base,” CCP President Dick Stevens said in a release.
Perkins said CCP expects a decision from the judge on the deal within 30 days. If approved, Perkins said the company hopes to maintain the plant’s sourcing, customer, and employee bases.
“We will be managing, the sales, marketing, processing, and accounting functions. With our size, that’s where efficiencies are going to kick in,” Perkins said. “Sometimes it’s just necessary to put businesses together so you can share those costs. I think by doing this, there are going to be improved efficiencies of what we both do.”
SouthFresh, meanwhile, will head in a separate direction if the transaction is approved.
“Moving forward, SouthFresh will focus energy and resources in the areas where they have proven strong growth and profitability. SouthFresh will continue to operate its seafood division under the name Southfresh Foods, an importer, wholesale distributor and custom packer specializing in Gulf-type species, including alligator, crawfish, oysters, octopus, squid, frog legs, redfish, snapper, tuna, sea bass,” Lamb said. “SouthFresh Foods plans to continue business as normal and does not anticipate any changes or interruption in the supply of the seafood products. Additionally, SouthFresh plans to continue operating its feed mill in Demopolis, Alabama, without any interruptions in service.”
In its bankruptcy filing, SouthFresh acknowledged losing almost USD 12 million (EUR 10.5 million) over the past seven years in operating the plant.
SouthFresh Vice President Christine Costley told SeafoodSource the company wanted to focus on the parts of its business that had brought it profits – particularly, its national seafood sales arm and its feed mill.
“We are going to be processing products produced in other countries; we do a lot of products co-packed in our brand to our specifications that we’ll oversee production of,” she said. “Those have been a big part of our business for the last 15 years, and we’ll continue with that, as that’s been a very profitable and growing part of SouthFresh. We’re also going to maintain our feed mill, which supplies catfish farmers in the area and also been a successful part of our business. Those two parts of the business we excelled at, and so we’re going to take all of our energy, funds, and resources to focus on those areas.”
Perkins said he believes CCP will have better luck with the Eutaw facility than SouthFresh.
“Our industry has gone through four years of growth after 12 to 14 years of constant decline. We went from a 700-million-pound industry to under 300 million pounds, but since then, there has been four years of slight growth. Consumers are coming back,” he said. “When supplies went away, consumers went to other fish, like imported pangasius species and tilapia. But it’s clear as we grow more fish and increase production that old customers and new customers are going to come back. They want domestically-grown catfish. We have no issues with trying to grow this business.”
He said the transfer of the operations of the Eutaw facility would be “good for both companies.”
“It will be good for our farmers that we buy fish from, good for both our customers and the SouthFresh customers, and good for our own supply base and our ability to service the needs of our customers,” he said. “It’s a win-win for everyone.”
