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Connors Bros. Income Fund to Acquire Castleberry/Snow\’s Brands, Inc. and Assets of Sara Lee Shelf-Stable Meats Business

US$138 million transactions strengthen Connors Bros. as a leading North American branded seafood and canned protein products company Conference Call at 10:00 a.m. EST Thursday, December 23, 2004


TORONTO, ON, December 22, 2004 — Connors Bros. Income Fund (TSX: CBF.UN, the \”Fund\”) announced today that its subsidiary, Bumble Bee Seafoods, (\”Bumble Bee\”), has executed a US$93 million transaction agreement with Castleberry/Snow\’s Brands, Inc. (\”Castleberry\’s\”) pursuant to which a Bumble Bee subsidiary will merge into Castleberry\’s. The Fund also announced, in a separate transaction, that Bumble Bee has entered into a transaction agreement with Sara Lee Corporation and certain of its affiliates for the purchase of substantially all of the assets comprising Sara Lee\’s shelf-stable meats business, including a license for the use of the Bryan® brand for shelf-stable meats, (\”Sweet Sue/Bryan\”), for US$45 million. Through these two transactions (the \”Transactions\”), Bumble Bee will strengthen its position as one of North America\’s brand leaders in quality seafood and canned protein products.


The Transactions are expected to be immediately accretive to the Fund\’s distributable cash and the Fund anticipates that it will increase its annual cash distribution per unit by approximately 7% to C$1.50 from C$1.40 following the expected closing of the Transactions in January 2005. The Transactions and the increase in the annual cash distribution were unanimously approved by the Trustees of the Fund.


\”The addition of the Castleberry\’s and Sweet Sue/Bryan shelf-stable meat businesses to our portfolio will represent a substantial step forward towards our vision of becoming a brand leader in value-added seafood and canned protein products,\” explained Christopher Lischewski, President and CEO of Bumble Bee. \”We are acquiring a number of nationally leading brands and operations that have delivered stable earnings and consistent cash flow.\”


Added Douglas Young, Chairman of the Board of Trustees of the Fund, \”We are excited about the direction that the Management of Connors is taking the business with this announcement. The Board believes that the Transactions are in the best interest of the Fund, and that they provide significant value for our unitholders. We are pleased to be able to reward our unitholders with an increase in our cash distribution, while still demonstrating fiscal conservatism.\”


Castleberry\’s is a manufacturer and marketer of regionally prominent, shelf stable prepared foods. They have the leading national position in canned clams, clam juice, and hot dog chili sauce, the second largest national position for branded beef stew, and the number three brand position in the clam chowder category. Castleberry\’s sells products in every major market in the U.S. and generated revenues of US$134.5 million and EBITDA of US$12.1 million for the twelve months ended October 17, 2004.


The Sara Lee shelf-stable meats business consists of canned and pouched chicken, beef and pork products which are sold in the retail and foodservice marketplaces, primarily under the Sweet Sue® and Bryan® brands. The Sweet Sue brand is the national leader in the chicken and dumpling and chicken pouch categories, with regional strength in canned chicken breast and chicken broth products as well. The Bryan brand is a leader in canned meat products in several markets in the United States, and will be used under license from Sara Lee, which will continue to retain ownership of the brand to produce and sell frozen and refrigerated packaged meat products under the Bryan name. Management of Bumble Bee estimates the revenue and EBITDA for Sweet Sue/Bryan to be US$79.4 million and US$8.5 million for the twelve months ended October 2, 2004.


Castleberry\’s and Sweet Sue/Bryan will provide Bumble Bee with an immediate platform to enter into the canned meat market, with leading positions in several niche categories. Bumble Bee management believes the increased diversification across both canned seafood and meat products will enhance the stability of the Fund\’s cash flow and provide new growth opportunities.


\”The Transactions will allow Bumble Bee to continue to build an increasingly profitable branded food products company with attractive growth potential,\” added Mr. Lischewski. \”Castleberry\’s and Sweet Sue/Bryan\’s canned seafood and protein products are complementary to our product line, enabling the combined businesses to consolidate and strengthen our existing distribution networks and sales forces. The Transactions are immediately accretive to the Fund\’s distributable cash per unit, while allowing the Fund to maintain its conservative payout ratio. And the Transactions provide opportunities for further increases in cash flow through identifiable cost savings and an enhanced platform for future growth.\”


Management of Bumble Bee believes that significant synergies will be achieved, including reduction of general and administrative expenses, consolidation of distribution and storage facilities and enhanced purchasing power in packaging materials. Additional synergies are expected to be realized in sales and marketing expenses, as the companies utilize some of the same food brokers and similar sales forces. The Transactions will also permit Bumble Bee to solidify many of its existing customer relationships and increase distribution of its other product lines into certain geographic areas where it has not had a strong historical presence. Finally, Management foresees growing cash flow through new product and packaging initiatives and leveraging existing product and packaging with similar Castleberry\’s and Sweet Sue/Bryan products.

Transaction at a glance

ConnorsBros. Castleberry Sweet Sue/Bryan(2)

Revenue              C$852.8                US$134.5               US$79.4

EBITDA(1)          C$94.4                  US$12.1                 US$8.5

Market               #1 Albacore       #1 Clams      #1 Chicken Pouch


Source:              #1 Salmon        #1 Hot Dog Chili       #1 Chicken

AC Nielsen

Dumplings         #1 Sardines    #2 Beef Stew     #1 Turkey/Ham

Pouch                 #1 Specialty         #3 Clam                 Chowder


(1) In case of Connors Bros., excludes impact of inventory step-up, mark-to-market losses and restructuring charges, in total $20.2 million.

(2) Sweet Sue/Bryan operates currently as a small division within a large conglomerate, and as such the financials are not audited and may not include certain corporate charges allocated by its parent.



Canada\’s Largest Consumer Products Income Fund

Connors Bros. Income Fund is Canada\’s largest consumer products income fund, with pro-forma revenue of C$852.8 million and adjusted EBITDA of C$94.4 million for the twelve-month period ended September 25, 2004. Clover Leaf? is the brand leader of seafood products in Canada, while Bumble Bee? is the leading brand of canned albacore tuna, salmon, and specialty seafood in the United States. Castleberry\’s maintains several leading product lines, including the number one national ranking in canned minced and chopped clams (80% share), clam juice (73%), and hot dog chili (56%). The combined business will also have the number two national position in beef stew, and the number three national brand position in clam chowder. The Sweet Sue and Bryan brands add several leading product lines to the combined business\’ portfolio, including the number one national ranking in chicken and dumplings (48% share), chicken pouch (59%), and turkey/ham pouch products (100%).


The Transactions

Under the terms of the Castleberry\’s agreement, a subsidiary of Bumble Bee will merge with Castleberry/Snow\’s Brands, Inc. for US$93 million in cash consideration plus the assumption of certain liabilities, subject to a customary post-closing working capital adjustment and a post-closing adjustment for income taxes relating to periods prior to closing. Under the Sara Lee transaction agreement, Bumble Bee will acquire the assets of Sara Lee\’s shelf-stable meats business, including a license for the use of the Bryan brand name for shelf-stable meat products, for US$45 million in cash consideration plus the assumption of certain liabilities, subject to a customary post-closing working capital adjustment. Following the Transactions, the Fund will continue to own indirectly a majority interest in Bumble Bee.


The Transactions will be funded through a combination of debt and proceeds of an equity offering under a prospectus to be filed with Canadian securities regulatory authorities. The offering will be led by CIBC World Markets Inc.


Investor & Analyst Conference Call

Connors Bros. Income Fund will host a joint Investor/Analyst Conference Call with Christopher Lischewski, at 10:00 a.m. EST on Thursday, December 23, 2004. To participate, please call (416) 640-4127 in Toronto or toll free at (800) 814-8460. A playback of this call will be available until midnight on December 29, 2004, and can be accessed by calling (416) 640-1917 or (877) 289-8525, passcode 21105365#.


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: 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 securities regulatory authorities, available at www.sedar.com.


References in this press release to \”EBITDA\” are to earnings before interest, income taxes, depreciation and amortization, after giving effect to foreign currency gains or losses. Management of the Fund believes that, in addition to net earnings. EBITDA is a useful complementary measure of cash available for distribution prior to debt service, capital expenditures and income taxes. However, EBITDA is not a recognized measure under Canadian or U.S. GAAP and does not have a standardized meaning prescribed by Canadian or U.S. GAAP. Investors are cautioned that EBITDA should not be construed as an alternative to net earnings determined in accordance with Canadian or U.S. GAAP, as an indicator of performance of the Connors or Bumble Bee businesses or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Fund\’s method of calculating EBITDA may differ from the methods used by other entities and, accordingly, its EBITDA may not be comparable to similarly titled measures used by other entities.


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