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Framherji Consolidates Pelagic Position |
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Archives -
2007 Archive
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Written by B. Tyril
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Monday, 21 May 2007 |
Retreating from the saithe business while keeping its major whitefish assets, Framherji acquired a high performing vessel to become a serious player in the pelagic sector — remaining one of the most versatile enterprises in the Faroe fishing industry.
By purchasing, in 2006, the combined purse seiner/pelagic trawler Krúnborg TN 265 — now Fagraberg FD 265 — Framherji once again “rocked the boat” of the Faroese fishing industry. At an unconfirmed total 350 million dkk (47m eur / 32m gbp), the deal provoked a few heated comments — it happened only a year after Framherji had purchased fillet freezer trawler Vesturvón VN 200 including an additional package of four pair trawlers, which were later sold, and an onshore processing facility.
Framherji managing director Anfinn Olsen knew what he was doing. With interests in an array of businesses, Framherji ranks as one of the most versatile enterprises in the Faroese fishing industry. By selling most of its shares in the four pair trawlers, Framherji opted to withdraw from the saithe business, focusing on fewer species.
“It’s simple maths,” said Mr Olsen. “To harness the potential of our pelagic fishing activities more fully — for instance, by becoming more effective in herring and blue whiting — we needed an additional ship. Fagraberg is the perfect vessel to complement Högaberg because Fagraberg has the required muscle to pull blue whiting in volumes while Högaberg on the other hand is more suited for capelin.
When it comes to herring, they can now work as a team pair trawling when appropriate. It’s a combination that makes sense. With regard to the saithe fishery, we decided to sell the four trawlers to Maru Seafood yet keep a 25-percent interest. In this way we could free up assets and make way for a priority investment.”
Mr Olsen together with his wife, Elisabeth Eldevig Olsen, owns two-thirds of the shares of Framherji while the Icelandic fishing company Samherji owns one-third. Referring to a long tradition of shared interests, Mr Olsen argues that maintaining good cooperation between Faroe and Iceland is only natural.
“There’s always been a lot of Faroese people in Iceland and our cultures are very close,” he said. “We have a shared history, our fishing vessels are very similar, the species we hunt are much the same and our seafood markets likewise overlap. Of course we should cooperate.”
Dismissing speculations that Framherji’s acquisitions in 2005 and 2006 would have to be financed by its northwestern cousin, Mr Olsen explained with regard to the latter of the two deals, which in fact was considerably larger than the earlier: “There were a few things involved… In addition to the purchase of Fagraberg itself, we had to make some arrangements in the aquaculture business; all in all, were looking at, say, a loan worth 410 million [55m eur / 37m gbp]. If you assume the interest rate to be something like 6 percent, which is well above what we would be negotiating… and say the loan has a repayment period of 15 years, which is not very long… With a calculation like that, you arrive at the annual repayment sum of 50 million [6.7m eur / 4.6m gbp] inclusive of interest. Now, the consensus is that such a schedule would not be a too heavy burden on our fleet of four profitable fishing vessels in any normal circumstances. So, it’s quite simple — there’s no need to look for financing from abroad, as the deal was deemed economically and financially viable.”
Considerations behind Mr Olsen’s financial projection take into account the 466 gross tonnage longliner Stapin FD 32, the smallest of the vessels and the least costly to operate, which brings in some 15m dkk per year; the 2,056gt combined purse seiner/pelagic trawler Högaberg FD 110, hauling in 50m to 75m dkk; the 2,114gt Vesturvón earns some 100m dkk; and the 2,832gt Fagraberg takes in 80m to 100m dkk—roughly a total 250m to 300m dkk per year.
In aquaculture, Framherji released salmon smolt in 2005 and will harvest some 2,000 metric tons during the first half of 2007; another 1,600 mt are due for harvesting in the second half of the year. As to the company’s experiment with halibut farming, that project has been terminated.
“Halibut need more time to grow than salmon and trout but at present that means you’ll bump into some issues, so we quit it.”
After recent rearrangements, Framherji’s fishing vessels are all registered in Fuglafjörður with a new investment unit, Fram Invest — a major shareholder in the venture company Notio — has its offices at Toftir.
Link to pdf presentation...
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