Clearwaters Seafoods Income Fund reported that its distributions this year far exceeded the cash it generated and announced it's starting a "strategic review."
Its founders, John Risley and Colin MacDonald, may buy back the trust's units, the Canadian Press reported Wednesday, citing a comment from Stan Spavold, executive vice-president of their holding company, Clearwater Fine Foods Inc.
Clearwater Seafoods scallop ship Atlantic Leader in 2004, one of 22 company ships.
"It's the natural conclusion," he said.
CFFI already owns about 47 per cent of Clearwater Seafoods and is supporting the review.
The review, announced after the market closed on Tuesday, left investors yawning. Clearwater Seafood units fell six cents in morning TSX trading, but bounced back to end the day up 14 cents at $4.50. The units have ranged between $4.25 and $5.25 in the past year.
Tom Traves, chairman of the Clearwater fund's trustees, said they were confident in the business but the review was announced because of "the weak financial performance over the last nine months, the ongoing challenges facing the fund in maintaining distributions and the Canadian government's legislation to tax income trusts."
He said there was no guarantee the review would lead to a deal.
Clearwater said Tuesday that it generated $500,000 in
distributable cash in the nine months ended Sept. 30, and declared distributions of $23.7 million.
"We recognize that it will be a significant challenge to eliminate the net distributable cash shortfall position generated in the first nine months of the year," the company said.
It expects the fourth quarter to be strong but, even so, "we will pay out more than 100 per cent of our distributable cash generated in 2007."
Profit for the nine months ended Sept. 30 was $ 25.1 million, compared with $20.5 million in 2006. The $10-million gain in foreign exchange accounted for all of the increase, and offset a drop in profit from fishing.
Total sales in the nine months fell three per cent to $225 million this year from $231.6 million in 2006.
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