HALIFAX – Cooke Aquaculture, the seafood company making a hostile move to control Canada’s largest shellfish and lobster producer, says it’s happy that target Clearwater Seafoods Income Fund has put into place a defence plan.
Halifax-based Clearwater announced a plan Monday that allows its board of trustees to pursue alternatives as it tries to fend off Cooke Aquaculture Inc., which announced an unsolicted takeover offer on Aug. 12.
The New Brunswick-based company plans to buy the remaining units of Clearwater that it doesn’t own for $3.50 each, valuing the income fund at about $97.1 million.
“We are pleased with the unitholder rights plan. It prevents insiders from buying more shares to block a potential bid,” Nell Halse, a vice-president at Cooke, wrote in an email.
Clearwater Fine Foods Inc. (CFFI), which holds 48.2 per cent of voting rights of the fund, has so far refused to sell any of its 4.6 per cent equity stake and has told the fund’s board that it does not believe the Cooke bid is a fair one.
The unitholder rights plan ensures that the fund’s unitholders are “treated fairly in the event that a take-over bid is made for the trust units of the fund.”
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“And that sufficient time and rights are available for the Fund’s board of trustees and all unitholders to fully evaluate any offer and pursue alternatives to maximize unitholder value.”
The rights plan allows unitholders to acquire units at an 80 per cent discount, if a triggering event occurs. That would happen if CFFI increases its stake or if another party acquires indirect or beneficial ownership of 20 per cent or more of the fund’s voting rights.
Cooke currently holds 20.2 per cent of the fund’s units and 10.9 per cent of voting rights of Clearwater Fine Foods.
The Cookes are a New Brunswick family that privately owns Cooke Aquaculture, which primarily farms salmon. Glenn Cooke is the CEO. Clearwater is best known for its lobsters and scallops.
The Clearwater defence plan is effective immediately, but will be voted on at a special meeting of unitholders in no more than six months. If it is approved, it will expire at the fund’s annual meeting in 2014.
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Clearwater previously announced, on the same day that the Cooke offer was made public, that it is seeking permission to buy back and cancell up to $5 million of its units and convertible debentures.
“Although not explicitly stated in their press release, we would hope that Clearwater has determined it is not in the best interests of unitholders to be buying back units at this time and is therefore not active with their issuer bid,” Halse wrote.
Clearwater said in a statement that its trustees are continuing to evaluate the unsolicited and non-binding proposal from Cooke Aquaculture, which would have no effect on Clearwater’s plans to convert to a corporate structure from an income fund by the end of the year.
Cooke said it is awaiting a response from the company.
Clearwater has 1,600 employees, about 20 vessels, seven plants and offices in Toronto, Europe, China, Japan, Europe and the United States.
Rival Cooke has salmon operations in New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland, Maine, Chile and Spain as well as sales people in major centers in the United States and Canada.
Through its wholly-owned subsidiaries, Cooke Aquaculture processes and sells more than 115 million pounds of Atlantic salmon and 35 million pounds of trout each year.
Clearwater units gained two per cent or five cents each to $2.45 in trading Monday, still well below the $3.50 per unit Cooke is offering.
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