Clearwater Seafoods announced on May 31 that it has entered into an agreement with a syndicate of investment dealers led by Cormark Securities Inc. and including Beacon Securities Limited and Scotia Capital Inc. for the sale of 2,518,000 common shares of the company at a price of $13.90 each. The underwriters will offer them to the public by way of short form prospectus to generate total gross proceeds of approximately $35 million.
In addition, the Bedford, Nova Scotia, Canada-headquartered company has granted the underwriters an option to purchase an additional 377,700 shares at the offering price exercisable at any time up to 30 days following the offering’s closing, for market stabilization purposes and to cover over-allotments, if any.
Furthermore, Clearwater Seafoods is completing a concurrent non-brokered private placement of 1,080,000 shares with certain existing insider shareholders for approximately $15 million under the same terms as the offering. Net proceeds from the transactions will be used for repayments on revolving debt, take advantage of growth opportunities, working capital and general corporate purposes.
Closing of the offering and the concurrent placement is expected to occur on or about June 21, 2016 and is subject to regulatory approval including that of the Toronto Stock Exchange.
Founded in 1976, Clearwater Seafoods is one of North America’s largest vertically integrated seafood companies and the largest holder of shellfish licenses and quotas in Canada. It is recognized globally for high quality frozen and non-frozen products, diversity of species and reliable delivery of premium wild, eco-certified seafood, including scallops, lobster, clams, coldwater shrimp, crab and groundfish. With the acquisition last October of Macduff Shellfish Group, one of Europe’s leading shellfish companies, Clearwater has expanded its range to include langoustines and whelk.
Business Outlook
Global demand for seafood is outpacing supply, creating favorable market dynamics for producers with strong resource access, such as Clearwater. Demand is being driven by a growing worldwide population, shifting consumer tastes towards healthier diets, and rising purchasing power of middle class people in emerging economies.
On May 17 the company reported first quarter sales and adjusted EBITA of $116.2 million and $18.9 million , equating to respective growth rates of 54% and 94%.
“We are delighted with results for the first quarter and believe we are well positioned to achieve strong and profitable growth in 2016,” said CEO Ian Smith. “Increased volumes from the expansion of our clam fleet and the acquisition of Macduf, as well as strong global demand across all markets and species will continue to drive our business in 2016.”
The company aims to continue investing in access to the supply of core species and other complementary wild and sustainably harvested seafood products through improved utilization and productivity of core licenses as well as acquisitions, partnerships, joint ventures and commercial agreements.
The investment in Macduff provides Clearwater with access to an incremental 15 million pounds or 20% of premium, wild caught, safe, traceable and complementary shellfish species.
Last July Clearwater launched a state-of-the-art factory clam vessel, the Belle Carnell, which is engaged in harvesting Arctic Surf Clams, Cockle Clams and Propeller Clams year-round on the Grand Banks. At CAD $65 million, it represents the single-largest vessel investment in the company’s history. The Belle Carnell is performing well and has harvested approximately 30% of the available Grand Bank quota in the first quarter. If catch rates continue at this level, this puts the vessel on track to harvest the full quota in 2016.
The acquisition of Macduff has expanded the product range Clearwater can make available to its large and growing core customer base – especially in Asia and the Americas. The company sees opportunities to drive value in utilizing Macduff’s North Atlantic harvesting operations, integrated UK-based primary and secondary processing capabilities and expertise with land-based processing facilities in Scotland.
