Bankrupt seafood canner Bumble Bee Foods won court approval Thursday to sell itself to its main tuna supplier Taiwan-based FCF Fishery, which agreed to pay about $930 million (€841 million) for the the canned tuna company.
The deal requires the buyer to assume responsibility for a plea agreement Bumble Bee signed with federal prosecutors in relation to a price fixing scandal involving Bumble Bee and rivals Chicken of the Sea and Starkist.
US Bankruptcy Judge Laurie Silverstein said Thursday she would approve the deal going forward, marking a new era for Bumble Bee. The judged said, however, the approval was conditioned on the submission of a final edited sale order, which the parties are expected to deliver to the court.
The company calls itself the largest tuna supplier in the Western Pacific. It discussed a bid for about $925 million (€835 million), comprising of $275 million (€248 million) of equity and $650 million (€587 million) of debt, one of the Bloomberg's sources said. The proposal calls for paying down part of Bumble Bee’s existing first-lien debt.
FCF had already owned a 25 percent stake in Bumble Bee, prior to the reorganization bid, which is one of the largest to rock the sector in years.
Silverstein approved the payment plan between Bumble Bee and FCF that would allow Bumble Bee to pay FCF just over $43 million (€38 million) by January 31. This would allow Bumble Bee to both honor its tuna supply agreement with FCF and "minimize the costs, distraction, and risks that would be attendant to contested proceedings."
A shareholder for Bumble Bee's stalking horse bidder FCF Fishery told a Delaware Bankruptcy court Tuesday FCF should be able to weather inheriting all of Bumble Bee's former debts, which will amount to $650 million (€586.4 million).
“It has been a challenging time, but we believe strongly in the company, the executive leadership team, the employees, customer partners and vendors,” said FCF president Max Chou.
“FCF values our 30-year business relationship, whereby we have consistently supplied Bumble Bee with sustainable and socially-responsible fishery products. We have undertaken a thorough and prudent review of the initiative and are excited to help position Bumble Bee for long-term success."
In December, Bumble Bee Canadian division Clover Leaf Holdings filed for bankruptcy protection at the Ontario Superior Court of Justice, following the similar move by parent company in the United States.
Why did the company file for bankruptcy?
Sources familiar with the matter said legal costs stemming from the company's tuna price-fixing and class-action lawsuits were behind the company's financial woes.
In 2017, Bumble Bee agreed to plead guilty to a one-count violation of the Sherman Antitrust Act for its role in a conspiracy to fix the prices of packaged seafood sold in the United States, and pay a fine of $25 million (€21.1 million).Thai Union struck a deal with the DOJ in 2017, and Starkist plead guilty in October 2018.
The company has also been fighting a class-action suit brought against the tuna giants by retailers, consumers and others claiming damages from the alleged conspiracy to set canned seafood prices. Yet another class-action suit was brought against the "Big Three" tuna companies in May, alleging the dolphin-safe labels used by the companies are misleading and fraudulent.
The company sent a statement that did not directly address the verdict, but instead repeated the exact announcement it made following the announcement the company had filed for Chapter 11 bankruptcy in a Delaware court.
Lischewski is now fighting to overturn the verdict, last week filing a motion for judgment of acquittal.
A defendant can ask a judge to acquit on the charges, but the move is considered a long shot because judges are reluctant to interfere with a jury's decision.