WSJ -- Bumble Bee Foods LLC Files for Bankruptcy .................................................
Nov. 21, 2019
Bumble Bee Files for Bankruptcy With $925 Million Offer From Taiwan’s FCF
Taiwan seafood company FCF Fishery’s offer for canned tuna maker includes $275 million in cash
By Alexander Gladstone
Bumble Bee Foods LLC, one of the nation’s largest canned tuna providers, filed for bankruptcy protection Thursday with an agreement to sell its assets to Taiwan’s FCF Fishery Co. for roughly $925 million.
San Diego-based Bumble Bee, owned by London-based private-equity firm Lion Capital, said that a chapter 11 process will help facilitate the sale to FCF as well as “reduce its debt burden caused by recent and significant legal challenges.”
The Wall Street Journal reported last week that Bumble Bee was preparing to file for bankruptcy within days as it faces mounting legal expenses stemming from its involvement in a conspiracy to fix prices on canned tuna.
Bumble Bee pleaded guilty in 2017 and agreed to pay a $25 million fine for having formed a cartel with its two main competitors, Chicken of the Sea International and StarKist Co. The Justice Department subsequently indicted former Bumble Bee Chief Executive Christopher Lischewski for his alleged role in the conspiracy. Mr. Lischewski, who pleaded not guilty, took a leave of absence from Bumble Bee last year and is on trial in California federal court.
Chief Financial Officer Kent McNeil said in a declaration filed with the U.S. Bankruptcy Court in Wilmington, Del., Thursday that the $25 million criminal fine from the DOJ, as well as civil litigation from Bumble Bee’s customers and related legal expenses, resulted in the company’s default on its term loan and ultimately its decision to file for bankruptcy.
In addition to the hit from the antitrust probe, the company is facing class-action lawsuits from consumers, distributors and retailers over the conspiracy. Other consumers suing Bumble Bee have said it wrongfully labeled its tuna as being produced through “dolphin-safe” fishing methods. Bumble Bee has said its labeling was justified.
Bumble Bee has 41% of the U.S. canned tuna market and roughly 13% of the U.S. share of sales of canned “light meat” tuna, according to Mr. McNeil. It also has about 40% of U.S. sardine sales. But the company’s earnings have been hurt by an industry-wide slowdown as young consumers increasingly prefer fresh food and gravitate toward newer and more upscale brands.
FCF’s stalking horse bid, which will be tested at a bankruptcy auction, includes $275 million cash and $638.6 million of debt. The Taiwanese company has also agreed to pay the remaining $17 million Bumble Bee owes to the Justice Department.
The canned tuna seller is entering bankruptcy with up to $280 million in bankruptcy financing, provided by its existing lenders, so it can continue operating in chapter 11 pending completion of the sale.
Bumble Bee’s roots date back more than a century when the Columbia River Packers Association began fishing for tuna off the Oregon coast and established the Bumble Bee tuna brand.
The company has hired law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP, investment bank Houlihan Lokey Inc. and restructuring firm AlixPartners LLP to handle its chapter 11 case.
-- Josh Beckerman contributed to this article.
Write to Alexander Gladstone at alexander.gladstone@wsj.com
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