Taiwan-based Fong Chun Formosa (FCF) Fishery Company is in line to purchase Bumble Bee Foods, after an auction for Bumble Bee scheduled for 21 January was canceled due to a lack of bidders.
FCF will pay between USD 926.6 million and USD 930.6 million (EUR 835.3 million and 838.9 million) for Bumble Bee, according to court documents. It will also take on nearly all Bumble Bee’s liabilities, including USD 17 million (EUR 15.3 million) still due under the DOJ Agreement, and the offer of future employment for their employees.
In November, FCF became the stalking-horse bidder for Bumble Bee. Since then, despite more than expressions of interest received by financial advisors Houlihan Lokey Capital, including 10 that submitted indications of interest (IOI).
“Despite the comprehensive pre-and post-petition marketing and due diligence process, the bid deadline under the bidding procedures occurred on 20 January, 2020 without any of the IOI parties, preliminary interested parties or any other third party submitting a Qualified Bid for … the company assets,” Houlihan Lokey Senior Vice President Matthew Braun said in a declaration supporting the FCF bid.
With FCF registered as the only official bidder, a sale hearing has been scheduled for Thursday, 23 January, in which any objections to the sale will be heard and a final decision may be made by US Bankruptcy Court Judge Laurie Silverstein, who is presiding over the case.
In its own court filing supporting its sale to FCF, Bumble Bee said, “the lack of qualified bids only confirms the fullness of the process and the price the debtors have obtained in the stalking horse [asset purchase agreement].”
“The Special Restructuring Committee, in consultation with Houlihan Lokey and the secured lenders, determined that the final bid submitted by the stalking horse bidder represented the highest or best offer received as a result of the sale process, and directed the company to proceed with negotiating definitive terms of a purchase agreement,” Bumble Bee said. “[We] now seek approval of the sale as the only option to achieve the substantial recoveries for stakeholders generated by the sale process.”
FCF’s bid, which is an 8.3 multiple of Bumble Bee’s adjusted EBITDA for the 12 months ending in September 2019, is not enough to satisfy all of Bumble Bee’s debts, but it “does provide a meaningful recovery,” Bumble Bee said.
“[It] represents a fair price for the debtors’ assets under the circumstances,” Bumble Bee said.
Separately, Judge Silverstein issued a ruling on 21 January approving Bumble Bee’s petition to pay out bonuses under its Key Employee Incentive Program (KEIP) and its Annual Incentive Plan (AIP), which had been challenged by the company’s creditors. However, Silverstein ordered Bumble Bee to withhold bonuses from three executives specifically called out by creditors for alleged connections to the price-fixing scandal that resulted in guilty pleas from the company and its former CEO Chris Lischewski in criminal cases. The judge will make a decision on those payments at the 23 January hearing.