First Nations chief calls $1-billion Clearwater deal a 'generational acquisition'
Published Monday, November 9, 2020 8:54PM AST Last Updated Tuesday, November 10, 2020 7:26PM AST
HALIFAX -- The Mi'kmaq chief behind a blockbuster deal to buy Atlantic Canada's largest seafood firm says it will create wealth for generations, though critics warn it could also reignite tensions with the non-Indigenous lobster fishery.
Premium Brands Holdings Corp. and a group of Mi'kmaq First Nations announced late Monday they are partnering to buy Clearwater Seafoods for $1 billion -- the largest potential investment in the seafood industry by a Canadian Indigenous group.
On Tuesday, reaction differed sharply between Indigenous leaders and inshore, non-Indigenous fishing groups.
Membertou First Nation Chief Terry Paul said the acquisition would create an enduring legacy for Mi'kmaq communities.
"Acquiring Clearwater will have lasting positive impacts on the economics of our Mi'kmaq communities," he said in an interview. "This is a generational acquisition that would be felt across our communities for the next seven generations."
Paul said the long-term plan is to integrate Mi'kmaq workers into the seafood company.
He said through attrition and retirement of existing workers, Clearwater could expand its Indigenous workforce.
Yet the deal immediately raised questions about the potential effect on the region's "moderate livelihood" fishery.
Tensions over the treaty rights-based fishery boiled over earlier this fall after the Sipekne'katik First Nation opened a self-regulated fishery in St. Marys Bay outside of the federally regulated season.
There has been violent opposition to the treaty rights-based fishery, including boat burnings, the destruction of a lobster pound and an alleged assault against an Indigenous chief.
Rick Williams, research director for the Canadian Council of Professional Fish Harvesters, expressed concern that the deal could rekindle tensions between Indigenous and non-Indigenous fishers.
"It makes it a whole lot more difficult to find our way through this," said Williams, author of the book "A Future of the Fishery: Crisis and Renewal in Canada's Neglected Fishing Industry."
The chief of Membertou First Nation said the Clearwater purchase is "strictly a commercial transaction" that won't impact efforts to establish a moderate livelihood fishery.
"Our investment in the commercial offshore fishery is completely separate from our commercial inshore and moderate livelihood fisheries," Paul said.
"We are still incredibly committed to our other fisheries ΓÇª this deal does not impact the processes and discussions taking place in the livelihood fishery."
However, for some, the Clearwater deal also raises the spectre of increasing fisheries privatization.
Williams said the seafood company has a history of conflict with owners of smaller, family-owned fishing enterprises. While the company has pushed for a more corporate fisheries model, inshore fishing groups have urged Ottawa to maintain harvesting in local communities.
"Many smaller boat owners see Clearwater as a group trying to get access to their owner-operator fishery," he said.
"Now that Clearwater is perceived to be a First Nations-owned company, that adds to the mistrust about the expansion of Indigenous fisheries. It will add to fears that a large company can buy up lobster licences through First Nations that they weren't able to buy as a company."
A spokesman for one of the small-boat fisheries off southwest Nova Scotia echoed that view.
"Those resources never should have been privatized and corporatized by Clearwater in the first place," said Colin Sproul, president of the Bay of Fundy Inshore Fishermen's Association, referring to the sprawling lobster fishing area 41, which extends from the Georges Bank to the Laurentian Channel off Cape Breton.
Sproul said last summer his organization approached the Mi'kmaq Rights Initiative negotiating office, which conducts talks on behalf of Mi'kmaq communities, to urge it to form a partnership with non-Indigenous, inshore harvesters to pressure Ottawa buy the offshore licences owned by Clearwater.
He said the proposal would have allowed the smaller non-Indigenous fishers to move into the offshore and opened up the closer-to-shore areas to at least 70 inshore Indigenous boats.
Instead, Sproul said the agreement will be seen as a side deal that benefits relatively few and damages non-Indigenous fishing communities and fishing families.
The Clearwater deal comes eight months after the Halifax-based company said it was exploring a possible sale.
The Mi'kmaq First Nations coalition, led by the Membertou First Nation, and Premium holdings will each acquire half ownership of Clearwater through the new partnership FNC Holdings Ltd.
The Mi'kmaw coalition will invest $250 million, financed by a 30-year loan from the First Nations Finance Authority.
Premium Brands said it will raise $250 million of new equity capital from a $200-million bought deal public offering and a $50-million concurrent private placement with CPP Investments.
The $1-billion sale -- including debt -- would see Clearwater shareholders receive $8.25 per share, which represents a 60.2 per cent premium to the average volume-weighted average price for the 20-day period preceding the strategic review announcement on March 5.
The transaction has received unanimous approval of Clearwater's board and is subject to approval by Clearwater shareholders in January. The sale is expected to close in the first half of 2021.
The Mi'kmaq expect to hold Clearwater's Canadian fishing licences within a fully Mi'kmaq-owned partnership. Paqtnkek, Pictou Landing, Potlotek, Sipekne'katik, and We'koqma'q have confirmed their intention to participate with Membertou and Miawpukek in the investment.
Christine Penney, vice-president of sustainability and public affairs at Clearwater, said the seafood company is expected to continue under the existing Clearwater brand and operationally "will look very much as it does today."
Clearwater is a vertically integrated seafood company, with fishing operations, processing facilities and a sales and marketing team.
The company fishes a variety of seafood, including scallops, lobster, clams and crab in Canada, Argentina and the U.K, with sales in 48 countries around the world.
Clearwater has about 2,000 employees globally, with 1,500 based in Canada.
This report by The Canadian Press was first published Nov. 10, 2020.