Final accord injects capital into ASI
Agreements to restructure ownership and bring additional capital into troubled Alaska Seafood International Inc. were finalized Jan. 5.
John Brady, ASI’s chief executive officer, and Bob Poe, executive director of the Alaska Industrial Development and Export Authority, announced that Taiwan-based Bank Sino Pac and Central Investment Holding Inc. have approved plans to inject additional capital into ASI.
"We’re very pleased with this agreement. We have not had the opportunity to exercise our business plan. A good deal of work remains, but we are progressing nicely with our production upgrades and implementing a marketing and sales program," Brady said.
The deal was initially negotiated last September, but several months of further talks were needed to iron out details, Poe said.
Under the agreement, Bank Sino Pac, which has made loans to the company, and AIDEA, which built facilities housing ASI’s production plant in South Anchorage, would become equity owners in the company. CIH, now an owner, would increase its holdings.
A shareholder group led by ASI founder Howard Benedict will see its interest in the company decreased, but with an option to buy back shares up to 15 percent of the company.
Poe said a new board of directors for the company is now being formed and a meeting is planned later this month to approve a business plan presented by ASI’s management team, led by Brady.
The company’s original business plan called for it to produce 10 million pounds of manufactured seafood products in its first year.
Greg Galik, spokesman for ASI, said the company has equipment installed for three production lines. A line that does precision cutting of four- and six-ounce portions, working with salmon, halibut, cod and pollock, is operational.
A second production line to do breading is installed, and was undergoing testing and start-up when the company had to cut back its work force last August. Equipment for a production line to make fish patties has also been delivered, Galik said.
As the company restarts operations, most likely in February, it will offer re-employment to workers who were laid off, he said.
Poe said the search is still on for another partner in ASI. If that happens, additional capitalization will be brought to the venture.
Meetings have been under way with an interested investor, an experienced seafood company, but the identify was not disclosed. Fifteen percent of the shares of the reorganized company are being held for a new investor.
A new partner would have the opportunity to increase its equity by buying shares held by AIDEA and possibly Bank Sino Pac, Poe said.
Under the restructuring, AIDEA contributes $6.5 million, primarily by foregoing lease payments on the buildings for two years, for an equity share of 25.4 percent.
Bank Sino Pac converts $8 million in current debt to equity and contributes an additional $2.5 million in capital, for an equity investment of $10.5 million for 22.2 percent of ASI’s shares.
Central Investment Holdings invests an additional $8 million in capital, in addition to $31 million invested so far, for 37.3 percent of the company’s shares.
The shareholder group led by Benedict has invested $4.1 million and will own 0.1 percent of shares. The group has an option to buy an additional 2.9 percent of shares within two months, and a second option to buy 11.8 percent of shares within six years.
ASI was just starting up production at the $125 million South Anchorage plant last spring when its major investor, Central Investment Holdings of Taiwan, said it would not make additional contributions of capital that were previously agreed to, and upon which ASI had based its start-up plans.
Short of working capital, the company had to cut staff and put its start-up plans on hold. Last summer AIDEA, the state development authority which owns the buildings ASI had leased, called in a separate commitment CIH had made to the authority to provide $5 million in capital if the venture experienced difficulties.