Connors Bros. Income Fund Announces Resumption of Monthly Distribution - Strategic Review of Meats Brands Underway



    TORONTO, Feb. 7 /CNW/ - Connors Bros. Income Fund (TSX: CBF.UN) (the
"Fund"), whose subsidiaries market consumer food products under brands such as
Bumble Bee(R), Clover Leaf(R), Brunswick(R), Castleberry's(R) and Sweet
Sue(R), today announced that it is resuming monthly distributions to unit
holders at an annualized rate of C$0.80 per unit, equating to a monthly
distribution of C$0.0667 per unit. The Fund announced that the first monthly
distribution will be paid on March 31, 2008 to unit holders of record on
February 29, 2008. Monthly distributions had been suspended in August 2007 as
a result of costs associated with a product recall at Castleberry's Food
Company, a subsidiary of Connors Bros. The resumption of monthly distributions
in March 2008 is consistent with the Fund's guidance that the distributions
would be suspended for 6 months.
    "We are pleased to resume monthly distributions after a six month
suspension," said Chris Lischewski, President and Chief Executive Officer of
the Fund's operating subsidiaries. "The cost of the product recall, which is
expected to be slightly higher than our initial estimate of US$35 million, is
largely behind us enabling the reinstatement of monthly distributions. The
company did an excellent job of managing through the recall and we are excited
to be able to focus all of our energies on running and growing our business. A
good indication of the health of our business is that we are able to confirm
the guidance we have provided in the last quarterly report, that 2007 full
year Adjusted EBITDA, excluding the cost of the recall, is expected to be up
about 5% versus the prior year. This performance demonstrates the resilience
of our core seafood business and our ability to deliver solid results despite
the distraction of the Castleberry's recall and the process of rebuilding the
meats business".
    "The re-instatement of distributions at an annualized rate of C$0.80 per
unit represents a reduction of C$0.55 per unit from the distribution level
prior to the recall, but will bring the estimated distribution payout ratio in
line with the Fund's targeted rate and enable the Company to invest in the
growth of its core seafood business," said Lischewski. "As we have stated
previously, our target for our distribution payout ratio (the percentage of
distributions to distributable cash) is in the mid-80's, yet for the past two
years, we have consistently paid out at a percentage in the low 90's, partly
due to the stronger Canadian dollar which results in a higher payout ratio as
we translate U.S. dollar distributable cash to Canadian dollars. We believe is
it prudent at this time to reinstate distributions at a level which is more
consistent with our targeted payout ratio. In addition, we are embarking on a
more aggressive consumer marketing campaign both in the U.S. and in Canada in
order to better support our strong Clover Leaf and Bumble Bee brand names, and
also invigorate the categories by communicating to consumers the health and
convenience benefits of our products. We estimate that the incremental spend
from this more aggressive marketing campaign will result in slightly lower
EBITDA in 2008 than 2007, but will lay the foundation for healthier growth
going forward. We will provide more guidance regarding the level of marketing
spending and estimated impact on 2008 results at our 2007 year-end investor
call in late March. "
    The Fund also announced that it was undertaking a specific strategic
review of its meats products and brands. "We are constantly evaluating our
portfolio of products and brands to ensure that they are consistent with our
strategy and operating strengths," Lischewski continued. "As a result of the
impact of the product recall, we believe it is appropriate to evaluate options
for the meats brands, which could include continuing to manufacture and market
those brands as we are today, or divesting those brands and products which are
non-strategic for us. These are strong brands with leading regional market
shares in their segments. However, we need to evaluate whether they are right
for the Company as we increase our marketing effort and focus on our core
seafood products and brands."
    "In conclusion, we are pleased to reinstate monthly distributions which
we know are important to our unit holders. The level of distribution takes
into account our targeted payout ratio (including the impact of the stronger
Canadian dollar), as well as the investment in an increased marketing campaign
in the U.S. and Canada which we believe will improve performance in the coming
years. We expect to complete the evaluation of strategic alternatives for our
meats business during 2008 and are placing increased emphasis on growing our
core seafood business which we believe will enhance unitholder value over the
coming years.

    Forward Looking Statements

    The statements contained in this news release that are forward-looking
are based on current expectations, and are subject to a number of
uncertainties and risks, and actual results may differ materially. These
uncertainties and risks include, but are not limited to: final determination
of the costs and expenses related to the Castleberry's recall, availability of
resources such as fish, meat and other raw materials, competitive pressures
and changes in market activity, risks associated with U.S. and international
sales and foreign exchange, and regulatory requirements. Further information
can be found in the disclosure documents filed by the Fund with the Canadian
securities regulatory authorities, available at www.sedar.com.

    Non-GAAP Measures

    EBITDA, adjusted EBITDA, and distributable cash are not recognized
measures and do not have standardized meanings under Canadian generally
accepted accounting principles. Accordingly, these measures may not be
comparable to similar measures presented by other issuers. Please refer to the
Fund's Management's Discussion and Analysis for the three and nine months
ended September 29, 2007, which is available at www.sedar.com, for additional
information concerning these measures and a reconciliation of these measures
to the relevant GAAP measure for the periods presented.

    About Connors Bros. Income Fund

    Connors Bros. Income Fund indirectly owns, through its subsidiaries, a
100% interest in Clover Leaf Seafoods, L.P. and Bumble Bee Foods, LLC.
Together, these two operating companies comprise North America's largest
branded seafood company, offering a full line of canned tuna, salmon, sardine
and specialty seafood products, marketed under leading brands including Bumble
Bee(R), Clover Leaf(R), Brunswick(R), Snow's(R) and Beach Cliff(R), as well as
a full-line of canned chicken and canned meat products in the U.S. under the
American Originals(TM), Castleberry's(R), and Sweet Sue(R) brand names. For
further information, please visit the Fund's website at www.connors.ca.
    %SEDAR: 00016892E




For further information:

For further information: Kent McNeil, Executive Vice President & Chief
Financial Officer, Connors Bros., Ltd., (858) 715-4076

Organization Profile

CONNORS BROS. INCOME FUND

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890