Frozen fish from Pacific Andes. (Photo Credit: Pacific Andes)

Pacific Andes announces transition to spot purchase agreements

A series of transactions will significantly enhance the capital structure and deployment of capital of Pacific Andes International Holdings Limited and its subsidiaries, the firm announced.

As part of these transactions China Fishery Group Limited, one of the subsidiaries, has signed a term and revolving credit facility agreement for USD 650 million with an international bank consortium to finance the redemption of the senior notes of a total aggregate principal amount of USD 250,000,000 issued on 10 February 2010 and 10 January 2013 by Corporacion Pesquera Inca, S.A.C. due 2017.

Besides, that amount will be used to fund the acquisition of all issued shares in the capital of Copeinca ASA by CFG Investment S.A.C. pursuant to an internal group restructuring exercise; and the repayment or prepayment of the existing facilities of China Fishery; and the general corporate purposes of China Fishery.

According to the firm, with a maturity of four years, the new facility provides China Fishery with the opportunity to focus on consolidation and increasing the operational efficiency and effectiveness of its expanded operations.

In addition, the Group has announced the signing of a facility agreement for a 3.5 years term loan facility in the amount of USD 100 million with Malayan Banking Berhad, Hong Kong Branch. The new loan will be used for general working capital requirements of the Pacific Andes Group, including refinancing of the existing debts of Pacific Andes.

"The successful completion of our refinancing marks an important step in the enhancement of the capital structure of the Group. We have been able to reduce our average interest expense, effectively extend the maturity of our debt, and gain greater operating flexibility to deliver on our objectives. Our target is to achieve a debt to equity ratio of 75 per cent in the next three years," said Ng Joo Siang, Group Deputy Chairman and Managing Director.

Firm sources pointed out that China Fishery has also decided not to renew one Long Term Supply Agreement and to terminate the remaining three Long Term Supply Agreements under its Contract Supply Business.

"As we have been structuring our expanded Group for future growth and setting in place an improved capital structure, we have reviewed where we deploy our capital to best capture the opportunities before us. Transitioning to spot purchase of fish allows us to redeploy the significant capital tied up in pre-payments under the LSA’s towards reduction in China Fishery's gearing," stated Ng.

Accordingly, China Fishery will continue to purchase fishery products from suppliers at spot market. Under the agreement with the Suppliers, approximately USD 80 million will be returned to China Fishery by the end of April 2014, and the remaining balance of approximately USD 162 million will be returned by March 2016, either in kind as fish or, if mutually agreed, as cash.
 

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