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Pescanova files for protection from creditors as it seeks to renegotiate debt

Seafood manufacturer has liabilities of 1.5 billion euros, eight times its annual operating profit

Pescanova, the Spanish manufacturer of a leading brand of seafood of the same name, on Friday filed for pre-receivership, an option in Spanish bankruptcy legislation that allows for a period of time during which a company can try to renegotiate its debt with its creditors.

Pescanova had debt of 1.522 billion euros as of the end of September of last year, eight times its annual operating profit. Pre-receivership allows a company three months, extendable to four, to try to refinance its liabilities. The National Securities Commission (CNMV) on Friday suspended trading in Pescanova’s shares.

In a statement filed late Thursday with the CNMV, Pescanova said it would not be filing its earnings report for last year after its auditor threw into question the viability of the company as a going concern. It said it was either looking to sell salmon fish farms it owns in Chile or file for pre-receivership.

The company carried out a 125-million-euro rights issue in the summer of last year after embarking on an expansion drive that included fish farms for turbot, prawns and salmon. At the time it warned of the possible need to seek more funding that “could increase the group’s debt.”

Out of total debt, 459 million euros is owned to suppliers. Its creditors include the Bank of Spain’s Orderly Bank Restructuring Fund (FROB), which nationalized Banco NCG, the amalgam of two Galician savings banks that had lent hundreds of millions of euros to Pescanova.

The company declared an operating profit in the first nine months of last year of 127 million euros and a net profit of 24.9 million.