Lawyers seek lifeline for horse mackerel business
China Fisheries International Limited (CFIL) has requested approval to provide a last minute bailout to a Namibian fishing company, but local banks are refusing to provide an extension loan to the bankrupt Walvis Bay fishing company, according to undercurrent news.
According to the news source, Brandberg Namibia currently owes CFIL US$1.3 million and another PA firm, Premium Choice, US$275,000.
“Historically, Brandberg Namibia has funded payments under quota license agreements using term loans from Standard Bank Namibia,” said CFIL lawyers in the documents.
Without the lifeline Brandberg Namibia Investments could lose its last remaining fishing vessel and be unable to pay off debts it owes to CFIL. According to court documents filed on July 12 in a New York court, Brandberg Namibia owns one fishing vessel it uses for horse mackerel fishing.
From the banks’ perspective, Brandberg Namibia’s relatively small fishing operation is threatened by CFIL’s own ongoing restructuring under Chapter 11 bankruptcy protection because, as a firm affiliated with CFIL and the Pacific Andes group, CFIL could theoretically call in Brandberg Namibia’s debts at any time.
However, “Standard Bank Namibia has conditioned the extension of such credit on agreement by Brandberg Namibia, CFIL, and Premium Choice to subordinate intercompany payables owed by Brandberg Namibia to CFIL and Premium Choice to all amounts owed.”
This year Brandberg hopes to catch 20,000-30,000 metric tons of the fish off the Namibian coast. To sustain its fishing operation the company requires extensions of credit from local banks in Namibia, but currently local banks are unwilling to provide the credit the firm needs.
“Pursuant to the loan agreement, dated 2 February, Standard Bank Namibia provided Brandberg Namibia with a quota loan in the approximate amount of US$2 million to finance its initial purchase of quota for the 2017 fishing season. The principal amount outstanding under the existing quota loan is approximately US$680,000,” lawyers said.
Without the subordination agreement, Brandberg Namibia will be unable to obtain the loans to make payments it needs to make for fish quotas. The current tranche of payments were due 14 July and without fish quota, Brandberg Namibia “would cease to generate revenue” and suffer losses of up to US$3 million.
“[The firm] would be forced to minimize expenses most likely by eliminating all but its most essential staff and terminating the charter for its sole remaining fishing vessel,” lawyers said, “significantly decreasing the likelihood that Brandberg Namibia would ever be capable of satisfying its intercompany payable to CFIL. Swift execution of the subordination agreement is necessary,” CFIL lawyers added.