A lawsuit filed by Pacific Seafood Group to halt the sale of the Global Seafoods North America processing facility to Silver Bay Seafoods has been dropped after a settlement was agreed to by all parties. According to court documents filed on March 8, both Pacific and Global agreed to have the lawsuit dismissed without prejudice.
According to court documents filed in the Oregon Circuit Court for Clackamas County in November, Pacific Seafood Group, which owns and operates Pacific Seafood in Kodiak, filed an injunction to stop the sale of the Global Seafoods cannery, 800 Marine Way, to Silver Bay Seafoods.
Pacific said that Global granted it a right of first refusal when it entered into a “Line of Credit Promissory Note & Security Agreement” in February, 2018. This agreement gave Pacific the right to “have the first and last opportunity to purchase” Global Seafoods’ assets for “substantially the same price or on substantially the same terms as any other offer.”
Pacific also said that Global and Silver Bay came to a purchase agreement in November and that, on Nov. 26 it notified Global that it would exercise its rights under the ROFR to purchase the facility on “substantially the same terms as the purchase offer.”
In response, both Global and Silver Bay said that they did not enter into a purchase agreement until December — several weeks after the injection was filed — and that any terms negotiated prior to that were non-binding and, therefore, not subject to the ROFR.
According to Global Seafoods North America CEO and President Oleg Nikitenko, who was named as a defendant in the lawsuit, the suit was dropped after Pacific reached an agreement to sell the first right of refusal to Silver Bay.
“In February, Pacific Seafood approached us and asked us if we can settle this issue,” Nikitenko said on Thursday. “They wanted to withdraw the case, because they didn’t have any interest in buying the (Global Seafoods) Kodiak facility.”
Nikitenko did not disclose any further details of the settlement. Neither representatives from Silver Bay or Pacific immediately responded to requests for comment.
According to Nikitenko, Silver Bay has formally agreed to purchase the Global processing facility. Nikitenko added that the details of this new agreement are not the same as those that were discussed by the two firms in December.
“There were some adjustments to the agreement that I cannot disclose right now,” Nikitenko said.
Nikitenko noted that he will not be taking a job at Silver Bay, which was one of the elements of the original purchase agreement between Global and Silver Bay.
“Silver Bay has an excellent future in Kodiak,” he added.
While Nikitenko said that Global will continue to operate as a seafood distribution company, he lamented the loss of its processing facility, calling it the “last small, independent processor to leave Kodiak.” He noted that 2019 marks Global’s twentieth year in Kodiak.
“Kodiak has become a town of big competitors, which is probably the same trend across the state –– big consolidation,” Nikitenko said. “In 1999, when we came to Kodiak, there used to be nine different canneries, which has shrunk to, I think, five now.”
While he would have liked to have kept Global running, Nikitenko acknowledged the reality of the impacts that the international seafood market is having on the industry.
“It’s a general trend in Alaska, and Kodiak is no exception,” he said. “It’s become more difficult for a small, independent processor to survive.
“For example, if you want to supply seafood to a big grocery store, they will not deal with you –– because you have very limited product and relatively small volume. If you have one facility, you don’t have much of a future to survive.”
However, Nikitenko said that he intends to keep on shipping Alaskan seafood.
“We have big plans for our website. Our e-commerce business,” he said. “We’re going to operate in Washington and will be shipping seafood across the country.”