ELLSWORTH, Maine — The head of a Massachusetts-based lobster wholesale firm acknowledged Wednesday that the company has been bouncing checks recently in Maine but said that its cash flow problems have been fixed.
Antonio Bussone, president of Live Lobster in Chelsea, Mass., said that as of last Friday all outstanding checks to Maine fishermen have been honored.
“The number [of bounced checks] was not that many,” Bussone said without saying how many were returned due to insufficient funds. “It did happen. Everything has been good since [Friday].”
Bussone, whose company started up its first lobster-processing operation this past summer in the former Stinson Seafood sardine cannery in Prospect Harbor, said the processing operation is “flat out,” churning out about 20,000 pounds of processed lobster each day with only one shift.
Bussone did not delve into details but said Live Lobster has had to adjust to the different financial operating procedures of the processing business. Before it acquired the plant from Bumble Bee Foods earlier this year, Live Lobster functioned solely as a lobster dealer and distributor, flying live lobsters to Europe and the West Coast within days of the lobster being caught, he said.
Now, with frozen lobster products in the mix, the company trucks its processed lobster across country, a process that takes weeks before the customer gets the delivery. This creates different demands and expectations for inventory and payment, he said, which in turn requires different types of bank financing.
“We’re new to this,” Bussone said. “We’re learning a lot.”
Sea Fax, a food industry credit reporting and collection agency, published a story Monday for its members and subscribers about the trouble Live Lobster has had in paying its bills. The Sea Fax report indicated that Live Lobster does have a line of credit with bank TD Banknorth but that it had not been able to verify the status of the account with bank officials.
Bussone said Live Lobster has ironed out its payment problems with the bank and with its suppliers and is in good standing with the bank.
“We have challenges, and we’ve been saying that all along,” Bussone said. “We don’t have a big cushion.”
According to Maine’s Department of Marine Resources, Maine’s approximately 6,000 licensed commercial lobstermen were paid more than $313 million for the lobsters they caught in 2010.
Lt. Tim Cote of the Hancock County Sheriff’s Department said Wednesday that the department had received some complaints about the bounced checks but that none of the complaints are under investigation.
“The [bounced checks] we got complaints about were taken care of last week by Live Lobster,” Cote said.
He added that, to his knowledge, the Sheriff’s Department has not received any more complaints about any checks that still may not have not been honored by the bank.
How many fishermen or other entities were issued checks from Live Lobster that were returned due to insufficient funds was not clear Wednesday.
One Stonington lobsterman who sells to Live Lobster and asked not to be identified said Wednesday that about a week’s worth of checks written to him by the company bounced before they finally were honored last Friday. He said that before they cleared he was looking at a significant financial loss.
“It was in the thousands [of dollars],” he said.
The fisherman said that even though he now has been paid, he still has concerns about doing business with Live Lobster. He said he hopes to talk to Bussone about the problem on Dec. 10 at a local Christmas party for fishermen who supply lobster to Live Lobster. He said Bussone is expected to attend the event.
“It’s hard to get your trust back up,” he said. “The fellows [who work] in the stern live day to day, check to check. It just has a big snowball effect. This can’t happen.”
Others working in the lobster industry in Stonington and Phippsburg said Wednesday that Live Lobster’s cash flow problem has been common knowledge for more than a week in those towns, where Live Lobster has buying stations and many residents earn their living from Maine’s lobster industry. They said that lobstermen who had started selling their catch to Live Lobster in order to take advantage of higher prices the firm was paying have switched back to other dealers because of the bounced checks.
Live Lobster, which operates in Maine as Lobster Web LLC, also has buying stations in Rockland and Spruce Head in addition to those in Phippsburg and Stonington. The company employs between 80 and 90 people at its distribution facilities in Maine and Massachusetts, not including its new processing facility.
In the Gouldsboro village of Prospect Harbor, where Live Lobster sells bait and processes lobster into raw meat and boxed tails, it has 70 employees working full time, seven days a week, to fill orders through the end of the year, according to Bussone. He said he hopes to hire an additional 40 to 50 people next summer so the plant can implement a second shift of workers during each workday.
Bussone said people who have had trouble cashing Live Lobster checks should not be concerned that the problem will persist. He said the company has invested “a tremendous amount of money” in expanding its Maine operations and plans to be in business in the state for the long haul.
Live Lobster has been receiving financial assistance from state and federal agencies in the months leading up to its cash flow problems.
According to Eve Wilkinson, Gouldsboro town manager, Live Lobster received federal Community Development Block Grant funding last month, more than a year after it first sought the town’s approval for the funding. The company received a $200,000 grant and a $200,000 loan to put toward the plant’s renovation and equipment costs.
Gouldsboro selectmen had balked at endorsing Live Lobster’s grant application, which the program requires, because it was concerned about intervening in the area’s competitive lobster dealer market. Dana Rice, chairman of Gouldsboro’s Board of Selectmen and a lobster dealer, abstained from voting on the measure because of his competitive relationship with Live Lobster.
A message left with the Finance Authority of Maine, which earlier this year loaned $750,000 to Live Lobster to help fund renovations at the former sardine cannery, was not returned Wednesday afternoon.
Follow BDN reporter Bill Trotter (@billtrotter) on Twitter.