The Aleutian Pribilof Island Community Development Association (APICDA) claimed in a court filing Tuesday that Trident Seafoods ignored independent valuation of the two companies' False Pass processing facilities, and overspent on upgrades to the facility without APICDA's consent, a move that forced APICDA to spend more than double what it initially intended.
APICDA owns a minority stake in the facility via a subsidiary, APICDA Joint Ventures,
Trident purchased 75 percent of APICDA’s False Pass, Alaska-based seafood processing facility and fuel services operations in April 2018, with the agreement the seafood processing operations would undergo a multi-million-dollar expansion, with APICDA financing 25 percent of the cost.
APICDA claims the agreed-upon amount was $6 million (€5 million), but that Trident instead invested $14.4 million (€12.1 million) in the expansion.
APICDA claims it was not informed of the cost overruns, and that Trident’s demand for 25 percent of the payment prompted the group to sell its stake to Trident, an option the two groups agreed upon in the initial sale.
The two groups jointly retained an outside firm to evaluate the operations, which put the total value of the assets at $39 million (€32.7 million), APICDA alleged. APICDA claims its share after factoring in capital expenditures and liabilities is worth $5.7 million (€4.8 million).
Trident Seafoods CEO Joe Bundrant said in a statement sent to IntraFish that while APICDA did invoke terms of a contract between the groups requiring Trident to buy out its 25 percent share, the two disagree on the value of those holdings, particularly in a market landscape that has eroded since the original agreement.
“Overcapacity in salmon processing in the Aleutian Peninsula area in recent years has contributed to unfavorable operating conditions,” Bundrant stated, adding that despite “good faith efforts” on Trident’s part, APICDA chose to pursue litigation rather than continue negotiations.
In addition to the False Pass dispute, APICDA also alleged Trident refused a separate agreement to sell jointly held factory vessels, including the Farwest Leader, the Barbara J., and Golden Dawn.
Those vessels were acquired by Trident in October 2016 at “well below the actual market value” with the understanding that APICDA would be allowed to repurchase them at the sale price plus accrued interest through April 2018.
“APICDA reasonably and justifiably relied on Trident’s promises and changed its position to its detriment,” the group alleged.
In May, APICDA and harvesting group Aleutian Spray agreed to merge Aleutian Spray's Pacific cod freezer longline vessels Siberian Sea and U.S. Liberator, together with APICDA's two vessels Arctic Prowler and Ocean Prowler. Combined, the group will control around 23 percent of the overall Pacific cod quota in the Bering Sea.
Bundrant added that he expects Trident to prevail in its counter arguments in the case.