National Post (National Edition)
Clearwater Seafoods deal a mark of Indigenous nations' growing clout.
This month, a group of protesters gathered underneath a giant metal lobster that graces the entrance of Clearwater Seafoods Inc.'s market in Bedford, N.S.
A press release explained their purpose: “Clearwater Seafoods' megafishery ... threatens Mi'kmaq livelihood fishing,” it stated in the first sentence.
But nothing is simple in Canada's Atlantic seafood industry — less than a week later, a coalition of Mi'kmaq First Nations announced it would buy Clearwater for about $537 million ($1 billion including debt), in a 5050 partnership with a British Columbia specialty food company, Premium Brands Holding Corp.
Chief Terry Paul, of Membertou First Nation in Nova Scotia, who is leading the Mi'kmaq coalition, described it as a “transformational opportunity for the Mi'kmaq to become significant participants in the commercial fishery,” and praised Clearwater's management expertise, infrastructure and global presence.
A spokeswoman for Clearwater said if the deal closes as expected in 2021, the new owners, who offered to pay $8.25 per share, a 60-percent premium to the 20-day stock's weighted average price, have no plans to make any operational changes other than taking the company private.
The deal is a major leap for Paul's Membertou Nation, which posted $67 million in revenue in 2019, with a diversified revenue stream from fishing, the Membertou Trade & Convention Centre on Cape Breton Island and a number of other businesses.
Clearwater, meanwhile, reported $114 million in EBITDA in 2019, from harvesting, processing and selling scallops, surf clams, lobster and numerous other species, making it among the largest seafood companies in Canada, and one of the only vertically integrated seafood companies.
“It's an incredibly positive story,” said Tabatha Bull, chief executive of the Canadian Council of Aboriginal Businesses, about the sale of Clearwater.
The Mi'kmaq coalition's investment to purchase 50 per cent of Clearwater would be funded with a $250-million loan from the First Nations Finance Authority, a non-profit organization that is guaranteed by the federal government.
Premium Brands also announced it was raising $200 million from shareholders plus $50 million from the Canada Pension Plan Investment Board to help finance its 50-per-cent investment in Clearwater.
Clearwater chairman Colin MacDonald described the deal as a great value for his shareholders that simultaneously advances “reconciliation in Canada.”
It also marks only the latest in a series of transactions between Chief Paul of Membertou and Clearwater.
In 2017, as part of the
Prime Minister Justin Trudeau government's reconciliation plan, it announced it would create a new licence to harvest 25 per cent of the nation's surf clams — a clam dredged from the ocean floor and sold as sushi in Asia — to an “Indigenous entity.”
Various Indigenous communities bid for the licence and in February 2018, the government awarded it to a First Nations Nova Scotia-based seafood processing company partnering with an Indigenous corporation. But within months, it cancelled the licence amid accusations of nepotism and abuse of process.
By March 2019, Clearwater, which for years held licences entitling it to the entire surf clam harvest, announced its own “landmark” deal: It would “voluntarily” partner with 14 First Nation communities, including Paul's Membertou, on the surf clam harvest, and through revenue-sharing agreements, send millions of dollars benefits to those communities.
“Nothing like this has been done in the industry before,” Ian Smith, chief executive of Clearwater told investors in 2019.
Christine Penney, vice-president of sustainability and public affairs at Clearwater, said the deal was essential to the buyout proposal.
“We feel that landmark agreement has been very successful,” said Penney. “Fair to say, it did pave the way for the current transaction, and certainly built the relationship between the parties.”
Indeed, the Mi'kmaq coalition's purchase of Clearwater is the culmination of a series of deals with Clearwater. Penney said around 2016 her company started processing, marketing and selling snow crab for Membertou First Nation. Later, they formed the partnership around surf clam, and in September, Clearwater worked out a deal to sell Membertou two of its eight offshore lobster licences for $25 million.
In a letter to his community, Paul praised the deal to buy Clearwater as historic: “For 13,000 years, the Mi'kmaq have sustainably fished the waters of Atlantic Canada, and today, on this truly transformational day, we are owners of a global leader in the fishery.”
Calls to other members of Mi'kmaq coalition were referred to his office, which did not return multiple requests for comment for this article.
In his letter, Paul said the deal would give Indigenous communities influence in the fishery industry.
To many in the industry, the Mi'kmaq coalition's purchase of Clearwater shows the growing economic clout held by Indigenous nations' around Canada.
Richard Williams, a former deputy minister of policy and priorities in the Nova Scotia government, and now a consultant to small, non-Indigenous independent fishermen, credited Clearwater with helping to build the international profile of the Atlantic seafood industry, and ensuring that Canada could obtain high value for its products.
“They have never focused on volume,” said Williams. “They have focused on selling the most high-quality products.”
He noted that Clearwater helped build a market by investing in airplanes, freezers and other equipment, so that it could fly lobsters that were pulled out of the Atlantic Ocean in the morning into Paris or other markets on the same day, ensuring freshness.
But Williams said that there's also concern among some small independent fishermen about the sale, specifically that the Mi'kmaq partnership with a B.C.based corporation is a precursor to further change of the Atlantic fisheries away from small, independent fishermen toward more corporate involvement.
In particular, Williams said there is concern about corporations partnering with Indigenous communities, who are not subject to the same rules as non-Indigenous fishermen, to expand their foothold in the industry — as Premium Brands is doing with the Mi'kmaq coalition.
Partnerships may provide a way to circumvent rules that prohibit fish processors from also fishing, and require owners of boats to also own fishing licences, he said.
“There's a lot of tension about this,” said Williams. “A lot of fishermen don't like, or don't trust Clearwater. They've seen it for years as antagonistic to their interests.”
Such concerns have risen among some non-Indigenous fishermen as the federal government seeks to increase Indigenous participation in the Atlantic fishing industry in the name of reconciliation.
Often, corporations that own equipment and understand the operations of fishing have partnered to help Indigenous communities enter the fishing industry, such as Clearwater's arrangements with Membertou on snow crab, surf clam and lobster before the latest deal.
Williams said processing plants require large upfront capital investment, and because rules generally restrict most processing companies' ability to harvest their own fish — Clearwater is a notable exception to this — there is a lot of risk around supply.
“In that kind of a circumstance, companies are going to want to have guaranteed security of supply in order to make investments,” he said. “We are seeing all across Canada that one of the ways they are achieving this is to make deals with First Nations.”
Meanwhile, the protesters, who organized under Solidarity Kjipuktuk/Halifax, an anti-capitalist group, said in their original press release that they understood that Paul's Membertou First Nation already had partnered with Clearwater to harvest lobsters and had no objection to this.
Their objection focused on Clearwater's environmental track record, lack of transparency and the industry consolidation of the Atlantic seafood industry, the press release said.
The protest, however, largely blended into the background in an industry that has been beset by recent violence and destruction — angry mobs have protested Indigenous fishing rights outside the normal season, and both a van belonging to an Indigenous leader and a lobster pound were burned down and thousands of lobsters were left to rot on the pavement.
In any case, Canada's seafood business is increasingly attracting corporate interest, fed in part by growing market demand in Asia for highvalue products.
Between 2008 and 2018, the value of international shipments from Atlantic Canada grew by about $2 billion to $4.5 billion, according to Statistics Canada.
Doug Cooper, an analyst with Beacon Securities, said the growing Asian market, which now represents 41 per cent of Clearwater's business, made the company an attractive investment.
“Our thesis has always been that the rising middle class in China and the preponderance to eat more protein in the form of seafood, will continue to drive demand,” Cooper said. “And that's played out over the past few years.”
He pointed out that the supply of wild seafood is finite, with conservation plans limiting the harvest in most mature markets. But demand is consistently growing.
To some fishermen and processors in the industry, the best part of the announcement of Clearwater's sale was that it didn't go to a foreign entity.
“The good news is the Mi'kmaq people are local, plus the Indigenous people are getting their foot in the business,” said Leo Muise, executive director of the Nova Scotia Seafood Alliance, which represents small independent seafood processors. “It's just a good thing — it stays local, the benefits stay local.”
Office (2011-20). Most recently she was the MLB senior vice president of baseball and softball development. She is the first woman hired to the general manager position by any of the professional men's sports teams in the North American major leagues. Born in Indianapolis to parents of Chinese descent, Ng also becomes the first Asian-American GM in the majors. Ng developed a working relationship with Marlins CEO Derek Jeter during her time with the Yankees.