This week, longtime business partners Coast Seafood and Blom met in court.
The backdrop to the trial, which began in a District Court on Monday, is the sale agreement between the exporter Coast Seafood and fish farmer Blom Fiskeoppdrett, signed in 2008.
In connection with the sales work, the export company Coast Seafood gave credit, in the form of responsible loans, to the fish farming company Blom Fiskeoppdrett.
In 2014, most of the debt was converted into shares. Coast took advantage of a deal option and acquired up to 34 per-cent ownership in Blom Fiskeoppdrett in 2016. The remaining shares in the company are owned by the Blom family’s holding company Blom Gruppen.
Liquidity challenges
The operation in Blom Fiskeoppdrett has, over time, been weak. This presents the company with liquidity challenges. PWC estimated a capital requirement of EUR 13.5 million in September 2020, driven by “abnormally high mortality and biological challenges”.
“The outgoing biomass at 2020 was lower than at the end of 2019. The company has an additional capital requirement of NOK 50-100 million (EUR 5-10 million) to increase MAB utilisation. This image is quite unique to Blom Fiskeoppdrett. There is a significant potential for improvement, and this is the background to the conflict,” said Coast’s lawyer Atle Johansen Skaldebø-Rød in his introductory lecture.
Coast does not want to provide an unconditional capital supply.
20 million
Blom Gruppen offered, at the end of April 2020, EUR 20 million for 34 per-cent of Blom Fiskeoppdrett and split.
Coast politely declined the offer, on the grounds that they want “long-term ownership in Blom Fiskeoppdrett”.
“This is when this conflict over the sales agreement comes up,” said lawyer Atle Johansen Skaldebø-Rød.
Blom Fiskeoppdrett’s Chairman of the Board Torbjørn Gjelsvik said that the company has been underpaid for the fish, over time. Blom, therefore, suspended the sale agreement with Coast. Evidence assurance of price is central to the arbitration case that will come up for legal consideration in February.
Value chain
Ownership in Blom Fiskeoppdrett is not solely of a financial nature for Coast. The Blom fish have long been important for the operation of Coast’s harvest and processing plant at Glesvær on Sotra. With a sales volume of almost 10,000 tonnes, this represents almost a fifth of Coast’s annual sales quantity.
On March 10, 2021, the case took a new turn. The announcement of “ownership and operational cooperation” with Bloms and Firda.
“The parties are said to have been negotiating since January. At the same time as Blom has received a responsible loan from Coast,” said Atle Johansen Skaldebø-Rød.
Coast believes this is disloyal conduct with respect to the shareholder agreement and has therefore sued Blom Gruppen.
