EuroFresh Inc. officials want to keep the company operating pending its sale to NatureSweet, and have indicated in bankruptcy documents they want to pay Perishable Agricultural Commodity Act creditors as soon as possible.
Along with its bankruptcy filing on Jan. 27, Eurofresh filed a number of motions requesting permission to continue paying employees and operating expenses such as utility bills and shipping costs.
The Willcox, Ariz., greenhouse giant also filed a motion asking Judge Eileen Hollowell to allow it to pay produce suppliers who have PACA claims. Eurofresh estimates they owed about $600,000 in PACA claims, incurred before they filed for bankruptcy protection.
The bankruptcy petition states Eurofresh has debts of between $50 million and $100 million, with assets of between $10 million and $50 million. Attorneys representing Eurofresh did not immediately respond to calls for comment on Jan. 29.
Motions in the case were presented Jan. 28 in Tucson, Ariz. As of noon Central time Jan. 29, the judge had not posted any orders regarding the motions.
One motion on the schedule seeks permission to sell the company and its assets to NatureSweet Ltd., San Antonio.
The sale price, according to the motion, is $51.1 million. It would include the 318 acres of EuroFresh tomato/cucumber greenhouses, as well as the company’s other real and intellectual property.
“The purchase agreement provides that the purchaser will offer to employ all employees, provided that the purchaser will not be obligated to retain employees after the closing date,” the motion states.
Motions from Eurofresh detail the company’s financial troubles, which date back to at least 2009 when it filed for Chapter 11 bankruptcy debt reorganization.
That reorganization was necessary because of a “highly leveraged balance sheet,” high interest costs, reduced production volumes because of a plant disease, and high energy prices in 2005, 2006 and 2008, according to the motion. Another factor cited for financial problems was higher employee costs related to immigration issues.
“The debtor emerged from Chapter 11 in Nov. 2009 with a lower level of debt and new ownership comprised of its pre-petition bondholders and Johan van den Berg who invested new capital,” according to the motion.
Eurofresh Inc. owns a total of 318 acres of greenhouses, including these in Willcox, Ariz. “Over the next two years, the debtor resolved its operating issues only to face a widespread pricing decline in the industry resulting from increased greenhouse acreage in the U.S. and Canada, increased ‘shade’ tomatoes crossing the border from Mexico, and extremely mild weather,” according to the motion.
Eurofresh officials state in the motion that the company, which specializes in growing tomatoes and cucumbers, has been in default since late 2010. In 2012 they began looking for a buyer.
In the summer of 2012 Eurofresh representatives contacted 54 potential bidders. They negotiated confidentiality agreements with 31 of them.
Eurofresh narrowed the field to eight and had “detailed calls and meetings,” which resulted in four entities submitting bids. Ultimately those four bidders declined to continue the process, according to Eurofresh court filings.
In September 2012 another bid from a “confidential strategic party” looked like it was going to work out. However, in November 2012 that party sent a letter terminating its intent, Eurofresh officials said in court documents.
Comments (1) Leave a comment