BASE withdraws right of first refusal on Carlos Rafael vessels, clearing way for sale to Blue Harvest

The Buyers and Sellers Exchange (BASE) of New Bedford, Massachusetts, U.S.A., announced on 9 January that it has withdrawn its right of first refusal to ships owned by Carlos Rafael – a.k.a. the “Codfather” – that were pending a sale to Blue Harvest.

According to the SouthCoast Today, Blue Harvest had signed a purchase and sale agreement for Rafael’s groundfish vessels, but that agreement was subject to a 30-day Right of First Refusal period. BASE, owned by brothers Richard and Raymond Canastra, had initially stopped the sale but eventually decided to withdraw that right.

BASE requested, and received, the right of first refusal to Rafael’s vessels back in 2018 from Northeast Fishery Sector Inc. Rafael pleaded guilty in 2017 to falsifying fish quotas, tax evasion, and conspiracy. He later settled a civil case with NOAA that required him to permanently stop all commercial fishing except for scalloping by 31 December, 2019, and to cease scalloping by 31 March, 2020.

In addition, he has been required to sell all limited access federal fishing permits and vessels he owns and controls.

According to National Fisherman, Blue Harvest was planning to buy 15 of Rafael’s boats for USD 19.3 million (EUR 17.3 million) before BASE blocked the sale and made its own offer, before ultimately withdrawing the offer and the right of first refusal.

The release from BASE states the goal was to keep Rafael’s assets in the hands of “independent fishermen.”

“The size of the Rafael packaged deal with Blue Harvest has been far outside the financial capabilities of not just independent fishermen but most any other corporation that has been historically involved in the groundfish harvesting sector to date. For this reason, BASE felt a responsibility to exercise its right of first refusal,” the exchange wrote. “BASE saw this as an opportunity to more broadly distribute these permits and vessels among independent fishermen who share a mutual interest in this natural resource. BASE intended to sell some of these permits to fishermen involved in the northeast groundfish fishery. Other permits would have been set aside to establish a permit bank. This was intended to significantly benefit New Bedford long-term.”

Despite the efforts, the finances for BASE’s efforts were withdrawn, with the exchange citing potential litigation from Blue Harvest, and new information about the quality of steel on the vessels, as the reason.

“Unfortunately, the folks that encouraged BASE to move forward have now withdrawn their commitments due to Blue Harvest’s litigation,” the exchange wrote. “While BASE expected to win in court, Blue Harvest would, of course, appeal the decision thereby making it uncomfortable for prospective buyers to move forward until after the appeal had completed. To make matters worse, the survey of the steel found the vessels to be in much worse condition than expected. These developments made obtaining sufficient financing impossible.”

With the exchange’s withdrawal, all signs point to Blue Harvest moving forward with the deal, according to National Fisherman.

Photo courtesy of Flickr user Neal Wellons