Pescanova chairman sold seven percent of company before crisis broke

Manuel Fernández de Sousa, the chairman of Pescanova, sold shares equivalent to seven percent of the stricken company throughout the months of December, January and February before the financial problems afflicting the seafood processor came to light.

In a statement filed Monday with the National Securities Commission, Pescanova said Fernández de Sousa sold some 1.986 million shares in the fish-processing company through the companies Inverpesca and Sociedad Anónima de Desarrollo y Control, reducing his stake to 7.45 percent. The statement said the company chairman made “significant” losses from the sale.

The CNMV is probing irregularities in transactions in Pescanova’s shares, which could indicate insider trading. The company has filed for voluntary bankruptcy.

Pescanova’s statement said Fernández de Sousa had sold the shares because he was “concerned about the liquidity situation of the group” and because of the problems the company was having in obtaining funding. It said the proceeds from the sale of the shares went to “resolve the urgent liquidity problems” the company was having.

Trading in Pescanova’s shares by the CNMV has been suspended since March 12. The share price has fallen 58 percent since the start of the year.

Pescanova, which on Monday formally filed a request for protection from its creditors in a commercial court in Pontevedra, has admitted operating two sets of accounts and that its debt levels may be more than double the amount officially declared. The CNMV gave Pescanova until Monday to clarify the extent of the hole in its books.

In a parallel development, the auditors of Pescanova, BDO, denied allegations made by the company that it had failed to do its job properly and argued that there were no grounds for the board of the seafood processor’s decision on April 5 to dispense with its services.

In a letter addressed to Fernández de Sousa dated April 12 and filed on Monday with the CNMV, BDO said it had asked Pescanova for more information when the company informed the CNMV of “discrepancies” between the debt declared in its accounts and that claimed by its creditor banks. BDO’s letter reiterated the request for more information.