ESSI settlement

TripleNine and the Port of Esbjerg have reached a settlement in the case concerning the use of the ESSI buildings in the Fishing Port.

 

Anker Mejnertz, Chairman of the Board of TripleNine, explains that an important element of the settlement is that the threat of having to demolish the buildings has now been removed.

 

The settlement comprises two other main elements:

 

1. Agreement of a reasonable rent and a broader usage A reasonable rent for the site and any buildings has now been agreed for the future - also in relation to any buyer of the buildings.

 

The existing lease states that the ESSI buildings must be used for processing edible fish, while the new agreement allows the buildings and associated site to be used for port-related purposes.

 

2. Agreement concerning start of use

The other main element in the settlement is that TripleNine will work to ensure that the site and buildings are put to use as soon as possible in accordance with the new usage clause, i.e. for port-related purposes.

 

This may be done by TripleNine using the buildings and site itself or by finding an interested buyer/tenant who fulfils the purpose.

 

Buildings and site are available for sale/rental

- We are satisfied with the settlement, Anker Mejnertz confirms. - After all, we fundamentally have the same interest as the Port in the site and buildings being put to sensible use and we will do everything we can to comply with our part of the settlement.

 

- The buildings and site have therefore already been offered for sale/rental and interested parties are welcome to contact Ejgil Knudsen, Managing Director of ESSI, for further information, says Anker Mejnertz.

 

- I hope that the Port will collaborate with us on a sale of the buildings and we would also be delighted if the Port were to refer an interested buyer/tenant to us, he adds.

 

Wish for a normalised relationship

- I am pleased that we can put this dispute behind us, Anker Mejnertz concludes. - As already mentioned, we and the Port are working towards the same goal, which was also stated in the arbitration case. We both want the site and buildings to be put to sensible use, so our wishes are fundamentally the same. Why therefore waste money on expensive valuations and further legal costs, which would be the result of continuing the arbitration case? By the settlement now reached, both parties have achieved what we actually wanted.

 

 

- My hope is now that the mistrust between the parties in recent years will soon be removed, so that we can establish a normalised, positive relationship with the Port of Esbjerg for the future, says Anker Mejnertz.

 

Happy with the settlement

Flemming Enevoldsen, Chairman of the Board of the Port of Esbjerg, agrees with these views.

 

- The last thing the Port wants is to get into conflict with our site tenants. Conversely, we also have a legitimate wish to ensure that the port areas are put to sensible use, particularly at a time when the port is developing rapidly and there is a genuine shortage of areas for the future activities, says Flemming Enevoldsen. - It has therefore always been important to us that the ESSI buildings and the associated site are put to use again quickly and are used for port-related activities.

 

- I can therefore only be satisfied with the settlement reached, which is the specific aim of both parties and we at the Port are keen to re-establish a good future working relationship with TripleNine, Flemming Enevoldsen concludes.

 

 

Background to ESSI

 

How it started - and ended.

 

In the 1980s, around 700,000 tons of industrial fish were landed in Esbjerg every year.

 

In the period 1985-1987, the prices of industrial fish were almost halved and the fishermen were also under political pressure. The focus was on the destruction of edible fish and after Denmark joined the EEC, herring could only be fished for consumption. Traditionally, large quantities of herring had been processed into fishmeal in Esbjerg.

 

The fishmeal factories in Esbjerg therefore initiated a strategic decision to diversify the suppliers' activities.

 

Extensive local support

In 1987, the fishermen decided to build a herring fillet factory. This initiative attracted great local interest and was financially supported by important circles in the town. The factory, which was named ESSI, was finished in spring 1988.

 

Suspension of payments

ESSI was in financial difficulties from the start. The prices of industrial fish had improved again and local suppliers showed minimal interest in herring fishing. The supplies from foreign vessels were also inadequate. By autumn 1989, the share capital of DKK 17 million had been lost.

 

In February 1990, ESSI merged with two North Jutland herring fillet factories (HirtshalsFiskeeksport and Danfisk, Skagen). The new name was ESSI Danfisk A/S. However, after a few months of operation, the company had to suspend payments.

 

Reconstruction

The fishmeal factory contributed DKK 10 million to the factory and a reconstruction was implemented, allowing 20 Esbjerg vessels to supply herring to the factory. The suppliers were closely tied to the factory financially, as they had to pay DKK 250,000 for a share certificate. In addition, reserve funds of a further DKK 500,000 were to be established.

 

In this way, a strong basis was established for ESSI and in 1994 the factory was able to repay the last instalments of the DKK 10 million loan made by the fishmeal factory in 1990.

 

Market under pressure

Through the 1990s, the herring market was under constant pressure. There were too many factories for too few fish and the earnings basis was poor. Virtually all Danish herring fillet factories achieved unsatisfactory financial results.

 

Nonetheless, supplying to ESSI must be said to have been a good investment for the fishermen. At times, the demand was so great that waiting lists of interested cutter owners had to be established.

 

Conflicts of interest

At the start of the new millennium, discussions were initiated about a new regulation method and ITQs - individually negotiable quotas. These discussions led to conflicts of interest between the shareholders, which combined with the poor market conditions brought the factory into financial difficulties again.

 

Many shareholders now cancelled their supply contracts. The board of directors, which previously consisted exclusively of shareholders, was expanded with external members, but this did not bring about agreement and financial stability.

 

Production stop

In 2003, the company was restructured and a new management was appointed. Although the financial result after the first year of operation was satisfactory, the following year ended with a huge deficit of about DKK 20 million. The subsequent years produced equally unsatisfactory results.

 

In March 2007, the fishmeal factory TripleNine acquired the ailing company ESSI. The buildings were valued at DKK 25 million and the equipment at DKK 17 million.

 

In March 2008, the company entered into an agreement with Skagerrak Fiskeeksport about a merger, with Skagerrak continuing the operation and the equipment in Esbjerg being dismantled.

 

The fishmeal factory TripleNine retained ownership of the now empty buildings.

 

Conflict and settlement

When it proved impossible to reach agreement with the Port of Esbjerg concerning use or sale of the buildings, the Port demanded clearance and return of the site, which TripleNine refused. The matter was then passed to settlement by arbitration.

 

The arbitration case started in spring 2011 and after initial negotiations, the parties have now reached a settlement.

 

 

 

ESSI buildings available for sale/rental

 

TripleNine wishes to find a tenant or buyer for the ESSI buildings as soon as possible, which is also the intention behind the settlement just reached with the Port of Esbjerg.

 

Ejgil Knudsen, Managing Director of ESSI A/S, is delighted that the conflict with the Port of Esbjerg has now been resolved, so that progress can be made.

 

- In the interim, we have had enquiries about sale or rental of the buildings, which have been difficult to handle while we were in dispute with the Port, he says.

 

 

- Now that a settlement has been reached in the case, we are able to enter into a constructive dialogue with potential buyers or tenants of the ESSI buildings. They are located by Tampenkaj, which has now been dredged to a water depth of 9.3 metres, explains Ejgil Knudsen.

 

 

- What used to be the fourth basin of the Fishing Port, has now been filled in right up to the old Krøjkaj, creating approx. 40,000 m2 of land immediately adjacent to the ESSI buildings. This should therefore be an attractive offer, with direct access to the quay and a large port area, he adds.

 

 

Managing Director Ejgil Knudsen here shows ESSI's large, light production hall, which together with storage spaces covers 6,209 m2. In addition, the buildings comprise 854 m2 of service rooms, etc., 580 m2 of offices, a 208 m2 basement and a 1.184 m2 un-insulated storage hall.