Court wrangling continues as StarKist fights to cut $100M fine
San Francisco, CA — In the latest revelation that came during the U.S. District Court of Northern California hearing to discuss StarKist’s fine for pleading guilty to fixing the prices of canned tuna it sold in the United States between 2011 and 2013, StarKist counsel Niall Lynch acknowledged the company did not have the money to commit to expanding production of pouched tuna products in American Samoa.
Multiple fishing news media outlets, including Seafood Source and Undercurrent News are reporting that StarKist has already decided that it probably can't go forward with its plant expansion in American Samoa because it doesn't have the money. According to a recent court filing in its federal price-fixing case, StarKist has little cash on hand, and has postponed a planned $77 million expansion of its tuna processing facility in American Samoa
According to Seafood Source, Pittsburgh, Pennsylvania-based StarKist has been pushing for a reduced fine of $50 million while representatives of the U.S. Department of Justice’s Antitrust Division argue the company can afford to pay $100 million. U.S. District Court Judge Edward M. Chen will resume hearings on the matter in August, after the two sides sparred for hours over the state of StarKist’s finances without coming to a compromise.
The details released in a court transcript on June 18, 2019, reveal a mixed picture of the company’s financial situation. StarKist appears to be paying down its debt – it had S290 million worth of debt in 2011 but, that figure was reduced by S140 million. Its outstanding debt appears composed entirely of a USD 150 million loan it renegotiated with a consortium of lenders led by South Korea-based KEB Hana Bank in October 2018. In its projections – barring changes caused by the imposition of the criminal fine – the company expected to lower its total debt to S50 million by 2024.
In addition to its core holdings, the company also holds investments in Indian packaging technology firm TechPack valued at $155 million and in Silver Bay Seafoods, a salmon supplier based in Seattle, Washington, U.S.A., worth an estimated $12 million.
The TechPack holding became a central piece of the argument presented by the DOJ in the June 12 hearing, as its estimated worth exceeds the highest possible fine StarKist could receive in the case. That led Chen to order StarKist to explore a sale of its holding in TechPack.
Canned tuna sales are declining in the U.S., and while pouched tuna products are showing promise and increasing popularity, they only represent 16.2 percent of the company’s current sales by value, Lynch said.
In agreeing to a hearing in August, Lynch pushed for a rapid resolution to the case.
“As long as there is continued uncertainty as to what this fine will be, it will cause the company to have to restrict itself in terms of its ability to be competitive, to compete, to innovate, to produce new products because it doesn't know if it has the money,” he said.