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December 19, 2019 – The Court hearing the Bumble Bee Foods cases issued an order approving (i) bidding procedures in respect of the sale of substantially all of the Debtors’ U.S. and Canadian Assets (the "Sale"), (ii) the Debtors' asset purchase agreement (the "Stalking Horse APA") with Tonos US LLC, as U.S. Buyer, Tonos 1 Operating Corp., as Canadian Buyer, Melissi 4 INC. as Equity Buyer (together, the “Stalking Horse Bidder”) and (iii) an auction/sale timetable culminating in a January 23rd auction and January 29th sale hearing.
Worth noting as to the order is (i) an extended timetable, with dates all shifted by 2-3 weeks and (ii) a $4.6mn reduction in the break-up fee agreed with stalking horse Tonos. A declaration filed in support of the bidding procedures [Docket No. 162] makes clear that both of these adjustments were made to encourage/facilitate further bidding as prompted by the Debtors' Official Committee of Unsecured Creditors (the "Committee") and the DOJ, that declaration stating: "the Bidding Procedures, which have been revised to reflect the Debtors’ consensual settlement of timing-related concerns raised by the DOJ and the Committee, establish a robust post-petition sale process that affords Potential Bidders sufficient time to prepare and submit Bids….I understand that the Stalking Horse Bidder has now agreed to a reduction in the amount of the Break-Up Fee from $27,750,00 to $23,125,000 (the 'Modified Break-Up Fee') in order to resolve objections raised informally by the Committee."
The Debtors' bidding procedures motion [Docket No. 31 which attached the APA at Exhibit B] stated, “The Company requests authority to enter into a stalking horse purchase agreement for the going concern sale of substantially all of its assets to affiliates of FCF Co., Ltd. (‘FCF’), one of the world’s largest seafood suppliers and the Debtors’ long-time tuna supplier. The stalking horse agreement with FCF provides for a purchase price of up to $930.6 million, preserves the Company’s business as a going concern, contemplates the employment of nearly all of the Company’s employees, and maintains a business partner to scores of vendors and customers who have done business with the Company worldwide for decades. As described below, the stalking horse agreement results from an extensive marketing process for a sale of the Company that started during the summer of 2019. To ensure the highest or otherwise best offer for the Company, the Debtors request this Court’s authority to continue the marketing process in these Chapter 11 Cases according to bidding procedures that provide for an auction and sale process of the Company in coordinated U.S. and Canadian restructuring proceedings.”
Key Terms of the Stalking Horse APA:
- Sellers: The Debtors, as U.S. Sellers; The CCAA Debtors, as Canadian Sellers; Clover Leaf Seafood S.à.r.l., as Equity Seller
- Buyers: Tonos US LLC, as U.S. Buyer; Tonos 1 Operating Corp., as Canadian Buyer; Melissi 4 INC. as Equity Buyer; FCF, as Guarantor
- Purchase Price: The consideration for the Purchased Assets and the Transferred Equity Interests shall be (i) an amount equal to the sum of (A) $925.6mn plus (B) the DIP Collared Increase Amount (the sum of (A) and (B) together, the “APA Purchase Price”), minus (C) the DOJ Settlement Liability Amount (the sum of the amounts set forth in the foregoing clauses (A)-(C) being the “Aggregate Purchase Price”), and (ii) the assumption by U.S. Buyer of the Closing Date Assumed U.S. Liabilities and the assumption by the Canadian Buyer of the Closing Date Assumed Canadian Liabilities (the “Aggregate Acquisition Consideration”). Payment of the APA Purchase Price shall be a joint and several obligation of each of the Buyers. The Aggregate Acquisition Consideration shall be allocated among the Purchased Assets and Transferred Equity Interests in accordance with Section 3.3 of the Stalking Horse APA.
- Break-Up Fee and Expense Reimbursement: The Sellers may be obligated to pay to the Buyer:
- a break-up fee in the amount of $23.125mn (reduced from $27.75mn, the “Break-Up Fee”); and/or
- all reasonable and documented out-of-pocket fees and expenses, including all such professional fees and expenses and travel expenses, incurred by Buyers up to the maximum amount of $2.5mn (the “Expense Reimbursement”, and together with the Break-Up Fee, the “Termination Fee”).
- There is also a minimum incremental bid requirement of $1.0mn for any further prospective bidder.
- Sale Objection Deadline: January 10, 2020
- Bid Deadline: January 20, 2020
- Determination of Qualified Bids: January 21, 2020
- Auction: January 23, 2020
- Sale Hearing: On or before January 29, 2020
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