Fish processor Shetland Catch has responded to mounting losses due to cut-throat competition from Norwegian rivals by taking one of them on board as an investor in order to shore up its capital base.

Accounts obtained by The Herald show that Shetland Catch, one of the islands' most important employers, with around 112 people on its books, made a second consecutive pre-tax loss last year.

Despite a turnover of some £55m, it booked a pre-tax loss of £3.9m in the year to March, only £300,000 better than the year before.

Shetland Catch has struggled to absorb the rising price of fish as it faces aggressive competition from Norwegian processors. The cost of sales rose from 82% to 87% last year.

As a result, the company ended its financial year on March 31, 2007, with negative current assets and after the year end raised a total of £2.7m from new and existing shareholders.

Its owners include the Lerwick Port Authority, the Shetland pelagic (open seas) fishing fleet and its own staff.

It took new investor, Norwegian company Austevoll Seafood, on board as well.

It also refinanced its debts to Norwegian bank DnB NOR, on more advantageous terms. Its net debt at the end of March 2007 amounted to £23.7m.

Shetland Catch did not respond to a request for comment.