Bumble Bee Parent, Inc. – Interim DIP Financing Order Provides for $40mn New Money Term Loan, $187mn Roll-Up of Pre-Petition ABL Debt

November 25, 2019 – The Court hearing the Bumble Bee Parent cases issued an order authorizing the Debtors to (i) access $240.0mn of debtor-in-possession (“DIP”) financing and (ii) use cash collateral [Docket No. 68]. The approved DIP financing consists of (a) $40.0mn of what will ultimately be an $80.0mn, new money, multiple draw term loan (the “Term Loan DIP Facility”) to be provided by pre-petition lenders, of which $40.0m is to be made available on an interim basis and $40.0mn upon issuance of a final DIP order, and (b) a $200.0mn, asset-based revolving credit facility, provided by the Debtors’ pre-petition ABL Lenders that provides up to (i) $160.0mn of availability to the U.S. ABL borrower and (ii) $40.0mn of availability to the Canadian ABL Borrower (the "ABL DIP Facility"). The vast majority of the ABL DIP Facility will be used to roll-up ALL of the Debtors pre-petition ABL debt, which stands at $186.8mn. The balance of the ABL DIP Facility is likewise of a restricted nature, either to be used for specific expenses permitted by the Debtors' Chapter 11 budget or constituting part of a $10.0mn letter of credit facility, the latter inclusive of almost $6.0mn already accessed as at the Petition date.

The Debtors' DIP motion [Docket No. 12] stated, “The Debtors engaged in an extensive prepetition marketing process to obtain post-petition financing from potential third-party capital sources. The Debtors initially received only one proposal from a third-party lender that required the priming of the Prepetition Secured Lenders’ prepetition liens. The Debtors discussed the proposal with the Prepetition Secured Lenders, including the request to consent to be primed. The Prepetition Secured Lenders declined to consent to the priming because they believed their interests in the Prepetition Collateral would not have been adequately protected. Upon learning of the Prepetition Secured Lenders’ position, the prospective lender declined to further pursue the possibility of providing DIP financing to the Debtors. In any event, the third-party proposal did not offer DIP financing terms that were materially better than those offered by the DIP Lenders and did not provide enough liquidity to the Debtors to fund the Chapter 11 Cases and the Sale Process. These factors, among others, made the proposal an unfeasible alternative.

The Debtors’ then conducted a targeted marketing process seeking proposals to replace the Debtors’ Prepetition ABL Facility. After contacting eight additional institutions, the Debtors received two proposals that were subject to certain closing conditions and due diligence requirements. The Debtors reviewed the proposals with their advisors and determined that pursuing an alternative proposal to the ABL DIP Facility would likely delay the Sale Process, which could have jeopardized negotiations with the Stalking Horse Bidder and therefore the Debtors’ ability to maximize value for stakeholders. Accordingly, the Debtors determined to focus on negotiating the DIP Facilities with the Prepetition Secured Lenders on the best possible terms prior to commencing these Chapter 11 Cases.

Absent the DIP Facilities, the Debtors will likely lack sufficient liquidity—whether unencumbered cash on hand or generated from operations—to continue to efficiently operate their businesses or pursue the Sale Process. Access to liquidity is vital to preserving and maximizing the asset value of the Debtors’ estates, and its immediate availability is critical during the pendency of these Chapter 11 Cases. Without a swift injection of liquidity, the Debtors will likely suffer immediate and irreparable harm, and will likely lose the ability to preserve and maximize the value of their assets.

The DIP Facilities are appropriately sized for the Debtors to continue the smooth operation of their businesses and maintain essential business relationships during the projected course of the Chapter 11 Cases.”

Key Terms of DIP Facilities:

DIP ABL Facility 

• US Borrower: Bumble Bee Foods, LLC
• Canadian Borrower: Connors Bros. Clover Leaf Seafoods Company
• US Guarantors: Bumble Bee Holdings, Inc.; Bumble Bee Parent, Inc.; Bumble Bee Capital Corp. and Anova Food, LLC
• Canadian Guarantors: Clover Leaf Holdings Company; Connors Bros. Seafoods Company;Connors Bros. Holdings Company; K.C.R. Fisheries Ltd.; and 6162410 Canada Limited
• Foreign Guarantors: Coral Triangle Processors, LLC and Anova Technical Services, LLC
• DIP Lenders: Lenders party to the DIP ABL Agreement from time to time.
• Administrative Agent: Wells Fargo Capital Finance, LLC (in such capacity, the “ABL DIP Agent”)
• Commitment: Revolving loans and letter of credit obligations in an aggregate principal amount not to exceed $200 million, all of which shall be available on an interim basis (subject to the terms of the ABL DIP Agreement) with up to (i) $160 million available to the U.S. ABL Borrower, subject to a borrowing base limitation based on the U.S. ABL Borrower’s eligible accounts receivable, reserves, and inventory and (ii) $40 million available to the Canadian ABL Borrower, subject to a substantially similar borrowing base limitation with regard to the Canadian ABL Borrower’s assets; in each case subject to certain aggregate borrowing limits set forth in the Term Loan DIP Agreement.
• Interest Rates: L+450 (one month interest period), P+350; Default Rate: 2.00%
• Fees:  LC Fees: 12.5 bps fronting fee; LC commitment fee equal to margin. Additional fees pursuant to the Fee Letter.
• Term: The earliest of (i) May [__], 2020;15 (ii) the date of termination of Revolver Commitments during the continuance of an Event of Default, (iii) the closing date of a sale pursuant to Section 363 of the Bankruptcy Code of all or substantially all of the Loan Parties’ ABL Priority Collateral, (iv) the effective date of a confirmed Chapter 11 plan for the Loan Parties and (v) the date on which all obligations are paid in full (including, without limitation, cash collateralization of Letters of Credit but excluding contingent obligations not due and owing) and the commitments under the ABL DIP agreement have been terminated.

DIP Term Loan Facility

• US Borrower: Bumble Bee Foods, LLC
• US Guarantors: Bumble Bee Holdings, Inc.; Bumble Bee Parent, Inc.; Bumble Bee Capital Corp. and Anova Food, LLC
• Canadian Guarantors: Clover Leaf Holdings Company; Connors Bros. Seafoods Company;Connors Bros. Holdings Company; K.C.R. Fisheries Ltd.; and 6162410 Canada Limited
• Foreign Guarantors: Coral Triangle Processors, LLC and Anova Technical Services, LLC
• DIP Lenders:  Lenders party to the Term DIP Loan Agreement from time to time.
  
• Administrative Agent: Brookfield Principal Credit LLC (in such capacity, the “Term Loan DIP Agent”)
• Commitment: Loans to be advanced in an aggregate principal amount not to exceed $80 million, $40 million of which shall be drawn on the date of the closing of the Term Loan DIP Facility, $40 million of which shall be drawn upon entry of the Final Order and funded into a blocked collateral account with subsequent withdrawals from such account subject to certain requirements set forth in the Term Loan DIP Facilities.
• Interest Rates: Interest Rate: L+1050 (one month interest period), P+950; Default Rate: 2.00%
• Fees:  Exit Fee: 2.00%. Additional fess pursuant to the Fee Letter.
• Term: The earliest of (i) the date that is six months after the Closing Date,14 (ii) the effective date of any plan for the reorganization of the Borrower or any other Debtor under Chapter 11 of the Bankruptcy Code, (iii) the consummation of a sale or other disposition of all or substantially all of the assets of the Debtors under section 363 of the Bankruptcy Code, (iv) the date of acceleration of the Loans and the termination of any unused Commitments with respect to the DIP Term Facility and (v) the date that is thirty-five (35) days after the Petition Date, unless the Final Order has been entered on or prior to such date.

Pre-Petition Capital Structure

As of December 31, 2018, the Debtors reported total assets of approximately $1.0bn and total liabilities of approximately $1.0bn. As of the Petition Date, the obligations outstanding under the Debtors’ pre-petition secured facilities are estimated at no less than the following amounts:   

About the Debtors

The Debtors are headquartered in San Diego, California and conduct operations in various other domestic and international locations. The Debtors, together with their non-Debtor affiliates based in Canada, comprise one of North America’s largest branded shelf-stable seafood providers. The Debtors, together with their non-Debtor affiliates (collectively, the “Company”), offer a full line of canned and pouched tuna, salmon, sardines, and specialty seafood products marketed in the United States under leading brands including Bumble Bee, Brunswick, Sweet Sue, Snow’s, Beach Cliff, and Wild Selections and marketed in Canada primarily under the Clover Leaf brand. Due to the quality, nutritional value, and affordability of the Company’s products, this diverse product line-up is sold by virtually every major United States and Canadian food retailer and in all major food channels, including supermarkets, mass merchandisers, drug stores, warehouse clubs, and dollar stores. Over the last century, the Debtors, their affiliates, and their predecessor companies have been leaders in the shelf-stable seafood industry, and their brands enjoy nearly 90% consumer awareness levels in the United States and Canada.

According to the Debtors, "Bumble Bee’s full line of high-quality seafood and specialty protein products are marketed in the U.S. under leading brands including Bumble Bee®, Brunswick®, Snow’s®, Wild Selections®?and Beach Cliff®, and in Canada under the Clover Leaf®?brand. For more information on Bumble Bee, visit?www.BumbleBee.com. Join fans of Bumble Bee and healthy living at? www.facebook.com/BumbleBeeSeafoods?and follow us on Twitter?@BumbleBeeFoods, on Pinterest?www.pinterest.com/BumbleBeeFoods?and Instagram?@BumbleBeeFoods."

The Debtors's parent company is Clover Leaf Seafoods Company, a leading marketer of canned seafood in Canada. Headquartered in Markham, Ontario, it sells canned, shelf-stable, and frozen goods under the Clover Leaf and Brunswick brands. The company's products include tuna, salmon, oysters, mussels, clams, shrimp, crab, lobster and sardines. Clover Leaf Seafoods is in turn owned owned by British private-equity firm Lion Capital LLP.

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