Salmon farming centre belonging to Invermar. (Photo: Invermar)
Invermar’s rating reduced
Monday, November 04, 2013, 23:40 (GMT + 9)
Risk rating firm Humphreys reduced the solvency from Invertec Pesquera Mar de Chiloé (Invermar) to ' Category B-' with an 'Under Observation' trend. This decision means that its equity securities qualify in the 'Second Class Category.'
The rating firm explained that the trend is rated as 'Stable' "since in the short term it is not considered likely that the solvency rating changes to an investment degree."
According to Humphreys, its decision is based on a reduction in the production projections. In this regard, it indicated that while the company decided to discontinue some products such as Pacific salmon and rainbow trout, which have now presented negative returns on a long-term perspective means less likelihood to generate higher flows.
It also took into account that in 2012 Invermar obtained deficits, which caused a severe adverse impact on the company's assets that is unlikely to be reversed this year.
During the past fiscal year, the company managed to increase sales from USD 124 million to USD 147 million, but also recorded losses for USD 58 million.
To complement this, the rating includes adverse factors such as the company's exposure to the exchange rate, the fluctuations themselves in the price of the marketed products, the concentration of sales in a few customers, the agglomeration of the farms in some regions and the risks that are specific to the nature of this activity.
Furthermore, Invermar would not have sufficient resources to inject more capital into the business because they have almost no cash flow and has a debt with financial institutions exceeding USD 150 million, and banks are reluctant to provide loans.
Currently, Invermar has 12 creditor banks and continues seeking a partner, after the sale failure to the Canadian Cooke Aquaculture.
According to some market sources consulted by Estrategia, the company would be working only with the capital provided by the fish being harvested.
The same sources stated that it is still complex to find groups willing to take over Invermar.
In July, after several months’ negotiations, Invermar announced that the contract by which Salmones Cupquelán would acquire 54.07 per cent of the national fishing firm was not “effective.”
According to the essential fact submitted to the Superintendency of Securities and Insurance (SVS), Invermar explained that the sale did not take place because "within the terms agreed by the parties, all of the precedent conditions on which the contract depended" were not met.
The transaction, valued at approximately USD 20 million, in addition depended on Invermar’s creditor banks, Diario Financiero reported.
- Agreement between Invermar and Salmones Cupquelán collapses
By Analia Murias