Connors Bros. Income Fund announces suspension of distribution - Cost of recall estimated to be US$35 million

    TORONTO, Aug. 7 /CNW/ - Connors Bros. Income Fund today announced that
based on the potential financial impact of the Castleberry's recall, its Board
of Trustees has approved a suspension of the monthly distribution paid to
unitholders effective immediately. Notwithstanding the suspension, the
distribution of CAD$0.1125 per unit announced on July 20, 2007 is expected to
be paid on August 31, 2007 to unitholders of record at the close of business
on July 31, 2007, subject to the approval of a waiver of certain senior debt
covenants currently being considered by the debt holders of the Fund's
operating subsidiaries.
    The Fund previously reported that one of its subsidiaries, Castleberry's
Food Company, had voluntarily recalled all of the canned products manufactured
on one of its production lines in its Augusta, Georgia factory. Castleberry's
is working with the U.S. Food and Drug Administration (FDA), the United States
Department of Agriculture (USDA), and the Centers for Disease Control and
Prevention (CDC) to investigate possible contamination of these products with
Clostridium botulinum, a bacterium which can cause botulism, a
life-threatening illness. To date there have been two incidents of botulism
involving four individuals which may be linked to Castleberry's product.
Fortunately, these individuals are expected to recover fully.
    The company has estimated the cost of the recall, net of insurance
proceeds, to be US$35 million. A charge for this amount will be recognized in
the fiscal quarter ended June 30, 2007. In order to pay for the cost of the
recall, the Fund is suspending distributions effective immediately.
    "While the products involved in the recall represent just 4% of our
annual revenue, the cost to successfully recall these products is
significant," said Chris Lischewski, President and Chief Executive Officer of
the Fund's operating subsidiaries. "We believe the $35 million estimate is
comprehensive in covering the known cost elements at this time including
product recall, destruction, effectiveness checks, quality inspections,
consumer reimbursement, professional services, factory shutdown and start-up
costs. The estimated cost of these items is $40 million, but we do have $5
million of product recall insurance that we expect to recover, resulting in a
net expense of $35 million. There are other insurance policies which we may
also utilize during the course of the recall, and we will diligently pursue
incremental recovery under these policies."
    Lischewski said, "We know how important the monthly distributions are to
our unitholders. While suspending distributions is not a step that we want to
take, it is the only practical way to pay for the cost of the recall. If the
cost estimate we have developed for the recall is accurate, we anticipate
resuming monthly distributions in six months."
    The company continues discussions with its senior debt holders regarding
the terms of a waiver of two financial covenants which would allow the company
to maintain compliance with its credit agreement and make the distribution on
August 31, 2007. The company expects to obtain approval to this waiver, which
requires the approval of the majority of the interests of debt holders before
becoming effective, by August 14, 2007.
    Lischewski continued, "The recall is a very unfortunate event as we take
great pride in the quality of our products and the trust we have built up over
time with our retail customers, consumers, and investors. We have responded
swiftly to this event and have focused all of our efforts on ensuring the
health and safety of our consumers. Importantly, we are confident that we will
successfully handle all aspects of the recall, and emerge a stronger company
in the near future.
    While this is a significant financial event for the company and our
investors, our underlying business is solid and is performing well with our
core seafood business delivering year on year increases in both shipments and
margins. Consumers continue to show their strong preference for Bumble Bee and
Clover Leaf seafood products as our increasing 2007 year-to-date market shares
indicate, and successful new product launches in both the U.S. and Canada are
solidifying our position as the category leader in product innovation. We look
forward to sharing more details on the performance of the business in our
second quarter earnings release next week. "
    The company will host a conference call on Tuesday, August 7, 2007 at
11:30am ET. Chris Lischewski, President and Chief Executive Officer, and Kent
McNeil, Executive Vice President and Chief Financial Officer, will make a
brief statement regarding the financial impact of the recall on Connors Bros.,
and will answer questions at that time. To access the call, please dial
1-416-644-3433 or 1-800-814-4890. A replay of the conference call will be
available until midnight August 21, 2007. To access the replay, call
1-416-640-1917 or 1-877-289-8525, followed by passcode 21243265#.
    Further details on the products involved in the recall and procedures to
be followed are available on Castleberry's website
( Consumer inquiries should be directed to
Castleberry's consumer hotline at 1-800-203-4412.
    Connors Bros. Income Fund is an unincorporated open-ended trust
established under the laws of the Province of Ontario that 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. The company offers a full line of
canned tuna, salmon, sardine and specialty seafood products, marketed under
leading brands including Clover Leaf(R), Bumble Bee(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 Castleberry's(R), Sweet Sue(R), and
Bryan(R) brand names. 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: availability of
resource, 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 Connors Bros. Income Fund with the Canadian securities
regulatory authorities, available at
    %SEDAR: 00016892E

For further information:

For further information: Kent McNeil, Executive Vice President and Chief
Financial Officer, Connors Bros., Ltd., (858) 715-4076;; Media
Contact: Della Sweetman, Fleishman-Hillard, (619) 200-0436; Doug McGraw,
Fleishman-Hillard, (212) 453-2202

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