Australis Seafood in dispute between old and new owner for environmental charges

Joyvio claims that the transaction was unfair because the numbers reached were to harvest the salmon without regard to environmental standards and Quiroga denies this.
Woman controlling fish growth. Photo by: Adobe Stock.
Woman controlling fish growth. Photo by: Adobe Stock.

Australis Seafood is in dispute between its former owner, Isidoro Quiroga, and the current owners, Joyvio, over environmental permitting charges. Joyvio claims that the transaction was unfair because the numbers reached were to harvest the salmon without regard to environmental standards and Quiroga denies this.

This story begins at the end of 2018, the year in which the Chilean salmon company, Australis Seafoods, was sold by the businessman Isidoro Quiroga – who had 94.47% of the property – to the Chinese transnational Joyvio, a company that also owns Lenovo. The transaction finally took place at the end of July 2019 and was fixed at US$921 million.

Now the salmon company is facing sanctioning procedures – charges or "formulaciones de cargos" – by the Environmental Superintendency (SMA), for infractions related to overproduction in five fattening centers, and Joyvio accuses Quiroga of having concealed information in the transaction.

It all began, according to El Mercurio newspaper, when in June last year Australis Seafoods appointed Andrés Lyon as its new general manager. This manager, who has more than twenty-five years of experience in the industry, explained to the newspaper that when he arrived at the company he detected "strong inconsistencies and anomalies in the operation of the company, which I immediately reported to representatives of Joyvio Food".

These suspicions led Joyvio to request arbitration proceedings. The Arbitration and Mediation Center of the Santiago Chamber of Commerce (CCS) took charge of this which resulted in the Asian company taking legal action. Both the businessman Quiroga and his family are involved in this lawsuit, for which Quiroga's extradition from England, where he currently resides, is also being requested.

It happened before

According to Lyon, he found "excess production concerning the environmental permits that exist in the concessions". This is an "overproduction of between 20 and 80% in the five centers for which we were charged, which correspond to production cycles before the transaction. It was a systematic practice that began years before the sale of the company, and the period of review of the company, the due diligence."

He further explained to El Mercurio that the company has no risk of viability, but it does change the company's production capacity. "We have compliance programs to compensate for those tons of overproduction. There are 20 thousand tons. The company has produced in recent years, around 100 thousand tons per year, which incorporates that overproduction. After the findings, we have to extract 20 thousand for two years, 2023 and 2024. Today we have 96 concessions, and we have to make a flexibilization," he pointed out.

These facts would imply that the previous administration was already carrying out this type of action. Therefore, according to what Lyon stated to El Mercurio, after the documentary analysis, these acts would be in force for at least since 2016. These "generated an overproduction that causes strong contingencies to the company. Contingencies that the selling part knew about and did not declare."

For Quiroga is just a discourse of "victims"

Following these statements, Quiroga responded openly in a statement published by El Mercurio. In it, the businessman lamented how Joyvio's Australis "tries to solve its financial and business management problems."

Furthermore, he added that "Joyvio scandalously over-indebted itself to buy Australis, on the basis of retirement expectations that were impossible for any company to fulfill. And then they failed when they had to adapt to the new regulatory conditions. The debt pressure was so high that Shaopeng Chen, Joyvio's chairman, decided not to listen to the warnings of the Chilean executives and ordered the company to continue producing as usual. This is taking its toll on them".

Finally, he explained to El Mercurio that "the discourse that they would have been victims of a swindle, which they would have realized only four years after the purchase, is only for the Chilean public".

About Australis Seafood

Australis Seafoods has come to occupy a leading position in the Chilean salmon industry. This is thanks to the entrepreneurial vision with extensive experience in the business. The company is vertically integrated, in the fish farming, as well as frozen and canned products.

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