Sealord hooks up with Chile partner

By IRENE CHAPPLE



Fishing giant Sealord, whose merger negotiations with Sanford collapsed six weeks ago, has signed a joint venture with a Chilean fishing company to create the fourth-largest distributor in Spain.

The Nelson-based company - New Zealand's largest - has also linked with Talleys, at present fishing 2000 tonnes of Sealord quota, in its attempts to streamline the struggling industry.

The deal with Chilean company Friosur, still in its formative stage, will create a new company called Europacifico. It would have turnover of $100 million, Sealord chief executive Doug McKay said.

Such cost-cutting ventures - whether with foreign or domestic companies - were vital for the industry's future, he said.

McKay, who spoke to the Business Herald during last week's Seafood Week conference, said the fishing industry was at a crossroads.

The industry and Ministry of Fisheries had been focused on getting fishing species into the quota management system, which was introduced in 1986.

All major species and many smaller species would be in the system by October this year.

McKay said the industry now needed to focus on value creation.

"Seafood has been going nowhere. In terms of pure value ... I'm looking to work with industry competition in New Zealand, to collaborate and rationalise and look at joint ventures to to reduce cost."

The proposed merger of Sealord, whose ownership is split between a Japanese company and the Treaty of Waitangi Fisheries Commission, and listed company Sanford was the "ultimate collaboration".

Sanford called off the negotiations and did not make the reason public.

However, industry sources have said there was disagreement over shareholdings the various interests would have held in the new entity.

Mr McKay would not detail why the negotiations collapsed but said Sealord "is ready to engage with Sanford at any time ... There is not even a close second option".

However, he placed little hope in the negotiations being rejuvenated and was focused on doing deals with others in the industry.

Fishing profits have been hit by the high New Zealand dollar, rising fuel costs and last year's slump in global sales.

Aquaculture, previously seen as a great hope of the industry, has been embroiled in red tape since a moratorium was put on new marine farms in November 2001.

McKay, a former Goodman Fielder and Carter Holt Harvey executive, took the top job at Sealord 18 months ago with no previous experience in the industry.

He has since been a high-profile advocate for change and had negotiated the deal with Sanford over several months.

McKay said the industry was moving away from an adversarial approach. "It's a change ... but the guys who are savvy commercial realists will sit down and work on the commercial returns."


SEALORD PROFILE

Owned by the Treaty of Waitangi Fisheries Commission and Japanese company Nissui.

Has revenue around $650 million, and earnings before interest and tax of more than $50 million.

Employs 1600 staff.