Iceland Bank Freezes Fish Deal

Just two weeks ago, Canada's Clearwater Seafoods got the go-ahead from shareholders to go private. At that point, which seems so long ago now, nobody knew how bad the banking crisis really was or that banks in Iceland (Iceland!) would be among the hardest hit.

Now Clearwater says the deal is "delayed" because control of Iceland's Glitnir Bank, which had agreed to take part in the financing, has been seized by the national government.

Glitnir was to provide about 10 percent of the financing for the deal. Iceland's big banks, including Glitnir, are carrying foreign debts equivalent to 12 times the country's entire economy. When investors stopped buying debt, the government stepped in to finance the institutions.

Clearwater says it still has hopes for the deal to close at the end of the month. Shareholders aren't so sure, and have sent shares down nearly 40 percent since the news broke on Wednesday. (Clearwater is actually an "income trust" with publicly traded "units" that aren't technically shares of stock.)

And the trouble might not stop with Clearwater. Canada's Financial Post today quotes John Sackton, publisher of Seafood.com, saying that "Almost every major deal that's happened in the seafood industry has involved Glitnir. Glitnir in my view was sort of the glue that held a lot of these consortiums together." A headline on his site says the Clearwater deal "may collapse."

In a news summary at Seafoodnews.com, a sister site, Sackton writes that "It is not just the collapse of the Icelandic banks that is hurting the seafood industry, but a huge contraction in credit, with companies now fearful of selling to customers who may not have enough credit to make their normal purchases."

The Post describes how Clearwater's two principal owners "founded the business in 1976 with a pickup truck and lobster to sell" and turned it into "an innovative harvester and international distributor of Argentine scallops, Arctic surf clams and Canadian cold water shrimp."