Clearwater announces legal action in light of DFO decision on Arctic surf clam

HALIFAX, Feb. 22, 2018 /CNW/ – Clearwater Seafoods Incorporated (TSX: CLR) (the “Company” or “Clearwater”) confirms that the Department of Fisheries and Oceans Canada announced today that Five Nations Clam Company is the recipient of a licence to harvest 25% of the total allowable catch (“TAC”) for Arctic surf clams to be effective January 1, 2018. Clearwater had agreed to be the operational partner with thirteen Mi’kmaq bands from Nova Scotia in their proposal for the licence which was not successful.

We are disappointed in this outcome.

The Minister’s decision will mean that middle class jobs are lost and valuable full time jobs are converted to temporary seasonal work in the Canadian fishery.

Clearwater purchased licences and quota to participate in this fishery.  We have invested hundreds of millions to develop the fishery and the market, including $156 million of investments in the last three years.  In this decision to expropriate investment value and undermine the good faith capital investment decisions of the private sector, the Minister has destabilized the investment climate in the Canadian fisheries and the Canadian natural resource sector.

Prior to the Minister’s announcement in September 2017 of his intent to expand participation in this fishery, Clearwater and the Nova Scotia Mi’kmaq communities had proposed a commercial arrangement to expand indigenous participation consistent with government goals. With his decision today, the Minister has disregarded the Nova Scotia Mi’kmaq led initiative to independently participate in this fishery.

Clearwater will be pursuing legal options to address this failure in public policy and abuse of power by the Minister.

Regrettably, Clearwater will be required to move expeditiously to make adjustments to our business in order to maintain shareholder value, reduce the overcapacity that has been created by this decision, and protect the value of the hundreds of remaining jobs related to this fishery in coastal communities of Atlantic Canada.

Clearwater has previously held three licences covering 100% of the TAC for arctic surf clams. In 2016, Clearwater’s revenue from Arctic surf clam sales was $91.9 million, which represented approximately 15% of the Company’s total revenue in 2016 ($74.2 million and 16.6% for the 39 weeks ended September 30, 2017). While the loss of direct access to 25% of the TAC for this species is expected to impact Clearwater’s operations and financial performance, the extent of that impact is not ascertainable at this time. The Company will continue to explore strategies to mitigate any negative impacts of this decision.

About Clearwater
Clearwater is one of North America’s largest vertically-integrated seafood companies and the largest holder of shellfish licenses and quotas in Canada. It is recognized globally for its superior quality, food safety, diversity of species and reliable worldwide delivery of premium wild, eco-certified seafood, including scallops, lobster, langoustine, clams, whelk, coldwater shrimp and crabs.

Since its founding in 1976, Clearwater has invested in science, people and technological innovation as well as resource ownership and management to sustain and grow its seafood resource. This commitment has allowed it to remain a leader in the global seafood market and in sustainable seafood excellence.

SOURCE Clearwater Seafoods Incorporated