Beer company Damm wins battle for control of Pescanova

Damm’s proposal for the new board structure receives support of 70.8 percent of shareholder voting rights

Pescanova's expected new chairman Juan Manuel Urgoit arrives at a shareholders' meeting.
Pescanova's expected new chairman Juan Manuel Urgoit arrives at a shareholders' meeting.Salvador Sas (EFE)

Spanish beer manufacturer Damm has managed to garner sufficient shareholder support for its proposal for the new board of directors of failed fish processing company Pescanova, winning 70.8 percent of the voting rights cast.

It is now up to the new board to elect the chairman, whose is expected to be Juan Manuel Urgoiti, the former chairman of Galician bank Banco Gallego and an independent director of the global fashion retailer Inditex.

Pescanova is currently in the hands of the receivers with total liabilities of 3.674 billion euros, including 1.7 billion euros in financial debt. A number of former board members, including chairman Manuel Fernandez de Sousa face charges of false accounting. Fernández de Sousa may also be charged with insider trading.

Damm’s proposal calls for a board with seven members. The beer manufacturer has a 6.2 percent stake in Pescanova. It was supported by Luyxempart, which has a 5.8-percent holding in the seafood processor and by Iberfomento, which holds a 3.4-percent stake.

High Court Pablo Ruz has initiated proceedings to charge Damm’s chairman, Demetrio Carceller Arce with money-laundering and tax fraud.

If elected chairman, Urgoiti’s banking experience could prove an asset in expected negotiations with Pescanova’s creditor banks for a haircut in its debt, which the receivers estimate could be as much as 75 percent in order to ensure the future viability of Pescanova. Consultant KPMG is expected to present a viability plan for the company in October.

An alternative board structure was presented by the US fund Cartesian, which proposed that its members comprise of officials who had not been on the board when Pescanova’s financial problems started to come to light earlier this year.

Fernández de Sousa, who still holds 7 percent of Pescanova, declined to stand as a board member. “Aware that the worst possible scenario for Pescanova is a climate of tension and belligerence and in the light of the failure to reach a consensus on the two lists of [proposed board members presented], the former chairman of the seafood processing multinational has taken this decision in order to ensure the governability of the company,” sources close to Fernández de Sousa said.

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