A Change of Guard

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Monday, 30 January 2012

Seafood spat leaves bitter taste

By Tom Brennan
Monday, 30 January 2012
The Phnom Penh Post

Nautisco Seafood Manufacturing Limited, the Kingdom’s bellwether seafood processor, is slated for a restructuring after its parent company claimed minority shareholder Leopard Capital had put Nautisco in “dire financial health”.

Leopard Capital, a leading private-equity firm in the Kingdom, yesterday criticised the move, saying representatives from majority shareholder Nautisco Inc never consulted Leopard prior to the request for restructuring.

“The decision to restructure occurred after Nautisco HK, an affiliate of Leopard Capital, took a number of actions under their leadership that placed Nautisco Seafood Manufacturing Limited under severe financial stress,” a statement released late on Friday by Nautisco Inc said.

Nautisco Inc claimed Leopard “took control of the board and management of Nautisco Seafood Manufacturing Limited” and put the company “in dire financial health through sophisticated financial structures that benefitted the minority partner with disrespect for fiduciary duties and conflicts of interest”.

The more than 700 employees working at Nautisco Seafood last June had dwindled to fewer than 20, Nautisco Inc’s statement claimed.

Nautisco Seafood, formed in 2008 by Canadian investors, processes shrimp at a 3,600-square-metre plant in Sihanoukville, according to its website. The company is widely recognised as one of the biggest seafood processors in the Kingdom.

Leopard Capital bought a 31 per cent stake in Nautisco Seafood in April 2010, and last January increased its holding to 38 per cent, the Post previously reported. At the time, Leopard declined to release the exact amount of its investment in Nautisco.

On December 19, majority shareholder Nautisco Inc had applied to the Court of First Instance of Phnom Penh Municipality for a “plan of compromise” that would allow for the restructuring of the company, according to Friday’s statement.

The Nautisco statement defined a plan of compromise as a legal process wherein the courts act as an unbiased third party to solve the dispute, and “protect the business while a sustainable business plan is developed”.

The court had ordered the plan of compromise in early January, and by mid-January had appointed an administrator to handle the proceedings, a legal representative of Nautisco Inc, who requested anonymity given that the case was ongoing, said yesterday.

The representative declined to comment further on the case, but he did claim that Leopard Capital had appealed the ruling.

Leopard Capital’s Scott Lewis yesterday in an email stressed that Leopard’s Nautisco HK was a minority shareholder and that the company’s executives had been appointed by Nautisco Inc.

He claimed that Nautisco HK “has provided most of the capital required to finance the operations of [Nautisco Seafood] since April 2010”.

Leopard Capital took issue with Nautisco’s push for a restructuring, he also said.

“The application for a plan of compromise was made by Nautisco Inc representatives without consulting Nautisco HK or its representatives.

“Nautisco HK continues to stand behind Nautisco Seafood Manufacturing and remains committed to building a world-class seafood processing business in Cambodia,” he said in the email.

He declined to confirm whether Leopard Capital had filed an appeal in the case.

Leopard Capital is now in the process of launching a separate seafood company, Leopard Seafood (Cambodia) Co Ltd, which will also operate out of Sihanoukville.

A number of job openings have been listed online as recently as this month.

Nao Thouk, director general of the Fisheries Administration, yesterday noted the importance of Nautisco Seafood to the Kingdom’s seafood processing industry. Nautisco has created jobs for Cambodians, exposed foreign markets to Cambodia’s fisheries, and he claimed it was the only fish-exporting company that complied with international processing and quality-control standards.

“So it’s very important that Nautisco not go out of business and support Cambodia,” Nao Thouk said.

Nautisco Seafood CEO Sam Peou could not be reached yesterday for comment.

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