Clearwater reports first quarter 2009 results and update on financing initiatives



    /NOT FOR DISTRIBUTION TO UNITED STATES OR FOR DISSEMINATION IN THE UNITED
    STATES/

    HALIFAX, May 15 /CNW/ - (TSX:CLR.UN, CLR.DB, CLR.DB.A):

    
    -   Sales increased by 24% or $13.9 million over the first quarter of
        2008 to $71 million

    -   Gross profit margins increased by 70% or $4.6 million over first
        quarter of 2008 to $11.1 million

    -   Earnings before interest, taxes, depreciation and amortization
        ("EBITDA"), excluding foreign exchange losses and one time and
        unusual adjustments, increased by 34% or $2.2 million over the first
        quarter of 2008 to $8.6 million

    -   Management successful in selling $8 million of non-core quotas after
        quarter-end and used proceeds along with cash on hand to repay
        $10.7 million of long-term debt in advance of refinancing in June.

    -   Secured $8.3 million short-term bridge facility from Export
        Development Canada.

    -   Management remains highly confident that refinancing will be
        completed prior to the maturity of the existing term loans on June
        8th.
    

    Today, Clearwater Seafoods Limited Partnership ("Clearwater") reported
its first quarter 2009 results.
    Clearwater reported sales of $71 million and gross margins of $11.1
million for the first quarter of 2009, improvements of $13.9 million and $4.6
million over the respective periods in 2008. With the launch of the new clam
vessel and the finalization of a new shrimp joint venture, both of which
happened in the second quarter of 2008, Clearwater's operating results have
continued to show improvement. These and other positive factors such as an
improved foreign exchange environment for exporters resulted in a 24% increase
in sales, a 70% increase in gross margins and a 34% increase in EBITDA before
foreign exchange losses and one time and unusual adjustments, in 2009.
    Clearwater reported normalized EBITDA of $8.6 million in the first
quarter of 2009 versus $6.4 million the same period of 2008 (for calculation
of normalized EBITDA refer to the Definitions and Reconciliations section of
the 2009 first quarter MD&A). The improvements are a result of higher sales
and gross profits offset by higher SG&A costs as the business returns to more
normal operations.
    Normalized cash flows were $2.6 million in the first quarter of 2009
versus $2 million the same period of 2008 with the increase attributable to
higher EBITDA partially offset by higher interest costs (for calculation of
normalized cash flows refer to the Definitions and Reconciliations section of
the 2009 first quarter MD&A).
    The business experienced higher costs in the first quarter of 2009 as it
sold down inventories harvested in 2008 when fuel costs were higher. In
addition, challenging weather conditions in late 2008 and early 2009 impacted
catch rates and the related catching costs per pound. However, late in the
first quarter of 2009 weather conditions began to improve and we saw a
corresponding improvement in catch rates and harvesting costs per pound. In
addition, fuel costs remain substantially lower than the costs in 2008. These
factors should result in lower harvest costs going forward in 2009.
    Clearwater remains highly confident that it will complete the refinancing
of its senior debt facilities prior to maturity on June 8, 2009. As of April
4, 2009 Clearwater had approximately CDN $86.8 million of long-term notes to
be refinanced. In addition, in December 2008 Clearwater arranged with its
foreign exchange lenders to restructure certain of its foreign exchange
contracts to match its foreign currency receipts with a short-term loan, $14.4
million of which remained outstanding as of April 4, 2009. Therefore, after
taking into account the term notes and foreign exchange facilities outstanding
at April 4, 2009 of $101.2 million, the $10.7 million in principal payments
made after quarter-end as noted in the following paragraph and $8.3 million in
new funds from Export Development Canada noted subsequent to that, the total
debt facilities that Clearwater is planning to refinance total approximately
CDN$99 million.
    Subsequent to quarter end Clearwater was successful in selling $8 million
of non-core groundfish quotas. Clearwater used the proceeds from these sales
plus cash on hand to make principal payments totaling approximately $10.7
million on the facilities noted above thus reducing the amount to be
refinanced in June.
    In addition, subsequent to quarter-end Clearwater obtained an $8.3
million short-term bridge facility from Export Development Canada. This
facility has similar terms and conditions to the amortizing facility
Clearwater has in place with its foreign exchange lenders and will provide
Clearwater with additional flexibility in managing its working capital needs
until the refinancing is complete in June.
    The sale of these non-core quotas, the early debt repayment and creating
additional working capital lines from the EDC facility are all part of
Clearwater's focused strategy for maintaining liquidity which includes tightly
managing its working capital, limiting capital spending, liquidating under
performing assets, selling non-core assets, limiting distributions and
maximizing the amount of cash on hand.
    Clearwater's sales and gross profit margins continue to strengthen now
that the fishing fleet is operating without disruption and despite soft
markets that result from the global economic slow down, improving trends
Clearwater has seen over the past two quarters. Clearwater remains highly
confident that it will complete its debt refinancing and this, combined with
the improving operations will enable Clearwater to maintain strong liquidity
to operate the business. The credit markets remain volatile and challenging,
therefore, while management expects to be successful in refinancing this debt
there is no guarantee that it will be able to do so in the current markets.
Clearwater anticipates that its new debt covenants will include restrictions
on future distributions, restrictions on capital expenditures as well as some
agreed reductions in principal.
    Over the next several years Clearwater will be focused on reducing its
leverage. This will come from a combination of improved earnings levels, which
will improve trailing EBITDA levels, and from using the positive cash flow of
the business to reduce debt. Clearwater believes that over time this approach
will provide for a lower cost of capital by restoring access to a greater
variety of debt sources.

    
    Colin MacDonald
    Chairman and Chief Executive Officer
    Clearwater Seafoods Limited Partnership
    May 15, 2009
    


    Financial Statements and Management's Discussion and Analysis Documents

    For an analysis of Clearwater and Clearwater Seafoods Income Fund's first
quarter results, please see the Management's Discussion and Analysis and the
2009 first quarter financial statements. These documents can be found in the
disclosure documents filed by Clearwater Seafoods Income Fund with the
securities regulatory authorities available at www.sedar.com or at its website
(www.clearwater.ca).

    
    -------------------------------------------------------------------------

    Key Financial Figures ($000's except unit amounts)
    -------------------------------------------------------------------------

    Clearwater                                            13 weeks ended
                                                        April 4,    March 29,
                                                           2009         2008
                                                                (as restated)
    -------------------------------------------------------------------------

    Sales                                               $71,012      $57,114
    Net earnings (loss)                                 $17,876     ($21,711)

    Basic earnings (loss) per unit                        $0.35       ($0.42)
    -------------------------------------------------------------------------

    Normalized EBITDA(1)                                 $8,645       $6,471
    Normalized cash flows(1)                             $2,676       $1,969

    Weighted average units outstanding at period-end
    Limited Partnership Units                        51,126,912   51,626,912
    Fully diluted                                    62,323,941   62,824,111
    -------------------------------------------------------------------------
    (1) Please see the Management's Discussion and Analysis for a
        reconciliation of these amounts to the financial statements.
    

    The Fund does not consolidate the results of Clearwater's operations but
rather accounts for the investment using the equity method. Due to the limited
amount of information that this would provide on the underlying operations of
Clearwater, the financial highlights of Clearwater are included above.

    About Clearwater

    Clearwater is recognized for its consistent quality, wide diversity and
reliable delivery of premium seafood, including scallops, lobster, clams,
coldwater shrimp, crab and ground fish.
    Since its founding in 1976, Clearwater has invested in science, people,
technology, resource ownership and resource management to preserve and grow
its seafood resource. This commitment has allowed it to remain a leader in the
global seafood market.

    %SEDAR: 00018023E




For further information:

For further information: Robert Wight, Chief Financial Officer,
Clearwater, (902) 457-2369; Tyrone Cotie, Director of Corporate Finance and
Investor Relations, Clearwater, (902) 457-8181


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