The Blom family and their hired consultant Carl-Erik Arnesen are dealing with Coast Seafood and Sverre Søraa.
The brothers Jakob (66) and Kjell (69) Blom sat with industry veteran Carl-Erik Arnesen, at Blom Fiskeoppdrett’s premises in Øygarden, Western Norway, and read SalmonBusiness’ review of Sverre Søraa’s explanation in court on Monday.
The experienced fish farmers, who put out their first smolt in the sea in the spring of 1971, shake their heads in disbelief over what they are reading.
“Coast should know that the financial results of a fish farming company are drastically affected by the biological challenges the company faces, and Blom had significant biological challenges in both 2019 and 2020. When you lose a lot of fish in a short period of time, the result is drastically changed, but it is not the same as being without financial control, as Sverre portrayed it in court,” they said.
The cooperation between supplier Blom Fiskeoppdrett and the exporter Coast Seafood has been running since 2008.
Solution
“It is also quite amazing to read that the collaboration was “smooth for a number of years” and that the offer to buy them out came as a surprise,” they said.
“Of course, there was a reason why we found it necessary to try to find a solution with Coast,” Jakob Blom said. “The partnership with Coast was good at first, but gradually it became more and more difficult to deal with Coast. We, therefore, found that we had to try to come up with a sensible solution. I don’t want to go public with what made the collaboration so bad that we concluded that we could no longer have a co-ownership with Coast, but when you see what Sverre Søraa chooses to go public with, I think most people understand that Coast is not a company you want to own something with,” he told SalmonBusiness.
Carl-Erik Arnesen also stated on how Sverre Søraa portrayed his involvement in Blom Fiskeoppdrett.
“I was asked by a unified board, including Sverre Søraa, to assist with my expertise in aquaculture, and it was natural to also look at whether Blom received a market price for his fish,” said Arnesen.
“After all, the sale of fish is the company’s only source of income, and then the price must be correct. I was very surprised when I discovered how Blom was treated by Coast. They obviously didn’t want to pay the market price, but tried to push through sales to them for prices many kroner below what others were paid in the same week,” said Arnesen.
Market price
“Of course, I couldn’t sit still and watch this, and I was given a clear mandate to ensure that Blom received a market price. As a result, Blom’s fish was offered to both Coast and other exporters, and was sold to the highest bidder. Of course, it was not the case that I sold only to Firda or fish that were harvested on “Norwegian Gannet”, this was a completely open process and always sales to the highest bidder,” he said.
Coast is still being offered the opportunity to buy fish from Blom, but they must then pay the market price, Arnesen noted.
“This was also the prelude to Blom starting to take a closer look at what Coast had actually paid for the fish, and it was revealed that Coast has most likely grossly underpaid Blom for a number of years. Independent reports suggest Blom has been underpaid by tens of millions of NOK (a few million EUR .ed) from Coast. Sverre was very keen to turn over all the stones in the operation until me and Carl-Erik found the stone that dealt with the sales agreement and prices we had received from Coast. That’s when the fight began. The board asked Coast to provide documentation, but it should be Sverre to have full control of and came up with some simple analyses that did not hold water. It was clear we hit his Achilles heel,” said Jakob Blom.
A difference
Blom Fiskeoppdrett has obtained external price reports from the advisory firm Kontali Analyse. According to a ruling from Bergen District Court from February this year, the reports show a difference between the sale price achieved from Coast and the market price of salmon totaling NOK 10.32 million (EUR 1 million) for the years 2018-2020 and NOK 26 million (EUR 2.6 million), for the years 2014-2020 for salmon in the superior category. Coast’s own compilation of 12 November 2020 shows a difference, which for the period 2019-2010 corresponds to NOK 1,079,774 (EUR 0.1 million) for salmon. Public price data derived from the Nasdaq index show a difference in Blom Fiskeoppdrett’s disfavour of NOK 3,625,456.57 (EUR 0.3 million) for salmon in 2019. The court notes that said price differences only apply to salmon and not trout.
“It is quite shocking to discover that what one thought was one’s closest partner, namely Coast, may have fooled one for many millions,” said Jakob Blom.
“In addition, they now go out into the media or too openly and almost ridicule Blom for bad results. If we have not been paid what we should, it is no wonder that we have not received good results,” said Jakob Blom.
He is not impressed with how the Coast boss handled Monday’s court dispute in Hordaland District Court.
Personal attacks
“It also says a lot what loyalty or business ethics Sverre Søraa has when he does this in a case before the district court with the media present, as he knows that this case is only about understanding the wording of one or two provisions of the shareholder agreement. He should know that what he chose to tell had nothing to do with the understanding of the two provisions, but nevertheless chooses to try to hang to dry individuals in Blom Fiskeoppdrett and the company as such,” said Jakob Blom.
“We are not surprised that Sverre Søraa does not understand practical farming, and he clearly does not shy away from the means to try to smear a long-term business partner with rogue personal attacks,” he added.
“Sverre has been on the company’s board until autumn 2020 and has thus had full insight and all opportunities to influence the business if he felt it was necessary. He never did, and in the end, he was replaced by the board due to gross disloyalty”.
“Coast has engaged Oslo’s most expensive law firm to harass and pressure a family that has been farming practically for 50 years. We have been through difficulties with salmon production before Sverre and Martin (Øvrebø, vice president and co-founder of Coast Seafood .ed) finished primary school. Now we read about subpoenas and undocumented allegations on iLaks (SalmonBusiness’ Norwegian sister site .ed),” said Jakob Blom.
“Bergen District Court has already considered how to perceive Coast. In an evidence-securing ruling, the court has concluded that there is reason to believe Coast was willing to manipulate evidence and it is necessary to take action against Coast’s premises. The District Court, therefore, gave us the right to allow the police in Nordfjord to secure evidence at their office in Måløy, which they did on 9th and 10th of March 2021. Coast chose not to fight the ruling. What Sverre Søraa is doing now is a frantic game to avoid facts coming out one day,” he continued.
Processes
“We remind you that we have not sued anyone or threatened to do so. We have asked Coast to provide data, and when Coast starts legal proceedings, we need to safeguard our interests,” said Jakob Blom.
“This whole noise could have been avoided if Martin [Øvrebø] and Sverre had presented what they are obliged to do through the sales agreement. They do not dare, and have answered this with a number of lawsuit notices, lawsuits and blackmail since last fall,” he added.
The Blom family has long kept a low profile in the ongoing media storm and litigation between the parties.
“We have no desire for a public laundry with Coast and have therefore been reticent, but how Coast is behaving now underpins the fact that we have no reason to have any confidence in Sverre Søraa and Coast,” concluded Jakob and Kjell Blom.
Sverre Søraa admited that the conflict with the Blom family is not desirable.
“We are sorry that the Blom family feels ill-treated and misunderstood. As responsible owners, we have gone to great lengths to support Blom Fiskeoppdrett for many years. Not least, we have contributed fresh equity and owner loans, most recently in a share issue last week. The charges of price cheating, therefore, fall on their own impropriety, but will, fortunately, be finally settled in the arbitration proceedings we have requested,” said Søraa.
