First it went bankrupt. Now it may get a bailout. The regional government of Galicia said March 14 that it stood ready to provide economic help to fishing company Pescanova, the latest big corporate casualty of the Spanish debt crisis.
The offer coincided with an extraordinary board meeting of Pescanova, called by some of its institutional shareholders. They are pushing for Pescanova's longtime president to explain how the company ended up with accounts that do not match the debt claims filed by its creditors.
Pescanova filed for bankruptcy protection on March 1 after failing in an effort to divest some assets to help meet its debt refinancing obligations, which this year amount to about 200 million euros, or $260 million. The company then announced in a separate filing that it had found "discrepancies" between its accounts and its actual bank debt, a gap that "could be significant."
Pescanova reported debt of 152 million euros, or $198 million, at the end of September 2012, which was eight times its annual operating profit. Its downfall shows that Spain's debt crisis has stretched well beyond the banks and construction companies that have been at the heart of the country's economic downturn. Although financial market pressure has eased on Spain, banks remain reluctant to lend to companies whose earnings have been hit by slumping consumer demand and a recession expected to last through this year.
Until recently, Pescanova was considered one of Spain's most successful food companies, with operations from Latin America to Africa. From its operational base in the northwestern port of Vigo, in the region of Galicia, it also headed an industry that remains among the country's leading employers as well as the biggest recipient of fisheries subsidies from the European Union.
The government in Madrid has thus far played down the troubles of Pescanova. After its bankruptcy filing, Agriculture Minister Miguel Arias Cañete, said he was confident that Pescanova would solve what he described as a temporary problem.
