Blacks Harbour prepares for probable sale of Connors Bros.

Blacks Harbour's Mayor Terry James hopes for the best as new owners appear likely to take over North America's last remaining sardine cannery. "There's no panic, but there is an underlying concern, and we are all just kind of standing back holding our breath and wait and see what we have to deal with," she says about news that FCF Co. Ltd., a seafood processor and distributor in Kaohsiung City, Taiwan, might acquire the Connors Bros. operation in her village.
"This community is built on realism and by realists and, once you know what the situation is, you can conduct yourself accordingly, you know? You deal with it as it comes. So hopefully the transition will be seamless and unremarkable," she says.
The enterprise that Patrick and Lewis Connors established in the 1880s has changed hands at least three times over her 16 years as mayor, James says. The company owns the municipal water supply, but she believes that a long‑term agreement already in place will protect her community's interest.
Bumble Bee Parent Inc. and four affiliated companies filed for Chapter 11 bankruptcy in the U.S. on November 21 and announced an asset purchase agreement with FCF. In Canada, Bumble Bee affiliates Connors Bros. Clover Leaf Seafoods (CBCLS) and related companies commenced restructuring proceedings after a judge in Ontario granted an order under the Companies' Creditors Arrangement Act.
Canadian operations employ about 650 people, including approximately 600 in New Brunswick, primarily at the 250,000‑square‑foot Connors Bros. cannery in Blacks Harbour, according to a monitor's report filed with the Ontario Superior Court of Justice. The Canadian operations make money for the Bumble Bee Group, with reported net revenues of $293.7 million for the fiscal year ended December 31, 2018, and $230.2 million this year to October 26. However, Bumble Bee faces serious debt burden in the United States, much of it stemming from a $25‑million criminal fine in 2017 for conspiracy to fix the price of shelf‑stable tuna fish and class action lawsuits from retailers, distributors and consumers since then. The company lists its liabilities at $500 million to $1 billion.
FCF, a broker between fishing boats and processors, supplies Bumble Bee with most of its tuna. The Taiwanese company already has a passive interest in the Bumble Bee Group, including CBCLS, through its 23% ownership of Big Catch 1 LP Cayman, which owns Bumble Bee Holdco S.C.A. Luxembourg, the ultimate owner of Bumble Bee Parent in the U.S. and Clover Leaf Holdings Company, which owns CBCLS, in Canada, according to a corporate organizational chart included with the American Chapter 11 filings.
According to filed documents, the financial burden related to legal problems in the U.S. could put Bumble Bee in breach of agreements with lenders on how much financial leverage the company can carry. Talks with lenders and an attempt at a negotiated sale failed, so FCF filed a "stalking horse" bid. This means anyone else wanting Bumble Bee must offer more than the $925 million FCF is ready to pay, according to the documents.
"I've wondered what Patrick and Lewis Connors would be thinking about what's going on today. I've often thought that -- you know, an industry they built with their bare hands," the mayor muses. The company went from the Connors family to the McLeans then George Weston, Clover Leaf and other owners more recently, growing as smaller sardine canneries along the Canadian and American sides of the Bay of Fundy shut down.
"Each time employment continued, everything remained relatively stable. There were some new management practices or whatever implemented but, for the most part, people see little to no change, and I would think that would be the case this time," James says.
Bumble Bee President and Chief Executive Officer Jan Tharp hopes the transaction with FCF will close within 60 to 90 days, according to a news release. "It is our clear intent that all U.S. and Canadian operations continue uninterrupted. Employees will get paid, our customer partners can count on us to continue delivering outstanding brands and services, and vendors will be paid in the ordinary course of business," she said.
The 25‑year water agreement allows the village 100,000 imperial gallons a day. Some smaller industries can drill their own wells, easing some of the pressure, but Blacks Harbour could use more water, James says.
Blacks Harbour is strategically located for fisheries, and major local employers aside from Connors Bros. include Cooke Aquaculture. Smaller enterprises processing sea cucumbers, shrimp and lobster operate from Blacks Harbour. Blacks Harbour needs more housing, the mayor says, but she agrees that more people would require more water from the municipality.