The fish, the 350 million loans and the "headache" of the banks

The Avramar group (Nereus, Selontas, Andromaea, Perseas) has loan balances of EUR 350 million with the four systemic banks and has submitted two requests to its creditors: First, the provision of EUR 15 million in working capital and, second, a new agreement on lending rates. The banks have not said 'no' to both requests, but are in negotiations with the management to find the best possible solution.

The Avramar group was formed in 2018 by acquiring the leaders of the Greek fish farming industry from the banks and underwriting loans of more than €300 million. Interest rates when the transaction took place were fixed, but have now "turned" to floating with costs rising drastically due to the money market situation with high interest rates. 

In the past, when the banks had taken control of the problematic fish farms, they had also taken over the management for a long time, due to the non-serviceability of the loans, so that they were well versed in the peculiarities of the sector. They now want to exploit this expertise and are asking Avramar questions about the extent to which this working capital will help the group's growth or whether it will be 'burned' immediately?

Banks know from experience that whatever decision you make about fish, it will be proven right or wrong after 12-16 months, not after a short period of time. That's why they want to secure their money. In the first instance, it sounds like they will be doing a fish population count to see the true size of the stocks. They have also asked the main shareholders of Avramar to assist by putting in capital themselves.

Avramar's shareholders are New York-based Amerra Capital, which manages investment funds focused on fish and primary production, and the Abu Dhabi-based sovereign wealth fund Mubadala Investment Company. Greek banks rely on the strength of Mubadala, which has $280 billion of funds under management and investments in 50 countries.

The two partners envisioned and created in 2018 the largest conglomerate not only in Greece but across the Mediterranean, as the aforementioned companies also had subsidiaries in Spain. The group produces around 70,000 tons of fish annually. It is estimated that since 2018 to date they have invested around €200 million in Avramar (€90 million in banks for the transaction, acquisitions in Spain and over €50 million in working capital).

Apparently they also want to protect their investment, which is why the bankers tell BD that a solution will be found regarding Avramar's demands. They know, of course, that the industry is facing constrained consumption, at the same time that operating costs have increased and competition with Turkey is keeping prices low. The fact is that demand is gradually recovering.The group has an annual turnover of EUR 500 million and EBITDA of around EUR 45 million and there is an obvious need for a restructuring of interest rates on the EUR 350 million of loans that have so far been serviced normally. Needless to say, any difficulties in the group's liquidity would pose a systemic risk not only to the banks but also to suppliers, carriers, the State and employees.