UPDATE 3-Spain's Pescanova seeks insolvency amid boardroom fight

Fri Apr 5, 2013 3:08pm EDT

* Boardroom disagreements, distrust lead to stalemate

* Auditors replaced; 2012 results expected on Friday

* Pescanova has up to 2.8 bln euros debt -sources (Adds Spanish regulatory demands)

By Carlos Ruano and Tomás Cobos

MADRID, April 5 (Reuters) - Spain's Pescanova, one of the world's largest fishing companies, is filing for insolvency after a month of boardroom battles ended in stalemate and put the future of the debt-laden group at risk.

Negotiations with creditors are deadlocked and the group is at odds with its auditors amid an atmosphere of mistrust and management infighting, sources told Reuters.

"It's a boat that's drifting, but it hasn't sunk," a banking source told Reuters.

Thursday's day-long board meeting ended early on Friday without agreement as shareholders locked horns over the role of the company's chairman and main owner, Manuel Fernandez, with many wanting him to step down, a source present at the meeting said.

Pescanova, which catches, processes and packages fish on factory ships, is the latest in a raft of Spanish companies forced to the wall in a prolonged recession and credit crunch.

The group made a net profit of 25 million euros ($32.13 million) in the nine months to the end of September 2012, but has debts of at least 1.5 billion euros after massive expansion.

Financial sources put the borrowings at closer to 2.8 billion euros.

AUDITORS SUSPENDED

The company suspended its auditors, BDO, and has said it will hire forensic auditors to examine its accounts after reporting discrepancies in its books on March 12, a day after the market regulator said it would investigate the fishing firm over possible market abuse.

Spanish stock market regulator CNMV threatened to sanction the company on Friday after it failed to provide requested information on the state of its accounts. Pescanova has yet to present audited 2012 results.

Several sources close to the company told Reuters that BDO's refusal to approve the accounts sparked tensions between board members and among shareholders, leading to a breakdown in talks.

Another source with knowledge of the company said Pescanova would soon file a legal complaint against BDO. A source close to the company said it was already in talks with Deloitte and PriceWaterhouseCoopers for a new audit.

Pescanova kicked off talks with creditors in early March after it failed to present 2012 results by an end of February deadline and had three to four months to find a solution.

Credits disputed the company's statement on Friday that the failure to reach a debt restructuring deal triggered the insolvency move.

"Not being able to reach an agreement with creditors is just an excuse, because they didn't even sit down with us and they have never given us what we needed to refinance their debt," said a source at one of Pescanova's lenders.

MARKET ABUSE

A source close to Pescanova's board said mutual distrust between the company and its auditors and fights between executives had resulted in "an unmanageable situation that led to this decision that could mean an intervention and possibly haircuts".

Pescanova said it hoped to find a solution with creditors to guarantee the rights and interests of its workers, creditors and shareholders and assure the continued management of Pescanova.

The company, which has been operating for more than 50 years, employs 10,000 people around the world, including around 1,500 in Spain's northwestern region of Galicia, home to Prime Minister Mariano Rajoy.

The group's creditors, according to a banking source, include Spain's biggest banks, Sabadell, Caixabank , Popular, Santander, BBVA and Bankia.

Trading in Pescanova's stock, much of it held by retail investors, has been suspended since March 12. The share price fell 74 percent to 5.91 euros over the 12 months up to the suspension.

($1 = 0.7780 euros) (Additional reporting by Jesus Aguado and Paul Day; Writing by Clare Kane; Editing by Julien Toyer and Leslie Adler)

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