Wilcox: Eurofresh Chapter 11 Reorg

Eurofresh chief increases offer for bankrupt grower



By David Wichner

ARIZONA DAILY STAR July 7, 2009

PHOENIX — Faced with competing bids, the founder of bankrupt Eurofresh Inc. and a group of the company’s se­cured creditors have sweetened their offer to recapitalize the hydroponic vegetable grower.

When it filed for Chapter 11 bankruptcy reorganization in April, Eurofresh said it had reached an agreement with a group of investors, including founder and chairman Johan van den Berg, to reorganize the company by essentially ex­changing $240 million in debt for new stock.

The group also would have infused the company with $12.5 million in new cash, $7.5 million of which would go to pay down $70 million in loans Eurofresh got in 2008 from a group of bank lenders.

During a hearing Monday, Eurofresh bankruptcy attorney Craig Hansen said the compa­ny has received two new offers — one from a New York-based private investment firm and another from a Eurofresh com­petitor partnered with an in­vestment firm.

Each of those offers initially included $22.5 million in added cash, but after negotiations the suitors bumped their cash of­fers to $33 million, Hansen said in a hearing before U. S. Bank­ruptcy Court Judge Charles G. Case II.

Hansen did not name the new suitors, and they have not been identified in case filings.

In response to the competing bids, the original investor group increased the cash part of its of­fer to $45 million, including $35 million toward paying down the $70 million in bank loans, Hansen told the judge.

Under the agreement with its founder and note-holders, Eu­rofresh can entertain “higher and better bids,”and the original group has the right to examine competing offers, he said.

But Hansen said it remains to be seen if the new suitors will be able to compete with the sweet­ened company- backed plan.

“We are indeed skeptical that they will play at the level the senior note-holders and the founder are playing at,” he said.

Because of seasonal cash flows, it is important that Eu­rofresh emerge from bankrupt­cy by late September or early October, Hansen said.

Meanwhile, Eurofresh attor­neys said the company is still negotiating with Southwest Gas Corp. and other utilities over payment of past utility bills and deposits to assure continued service.

Southwest Gas says the company owes $1.3 million in unpaid bills for natural-gas service and it has been negotiat­ing with Eurofresh on repayment and a deposit. The company uses natural gas to heat its massive greenhouse operations.

Company attorneys said ne­gotiations with Southwest Gas are moving toward resolving the issues, and Case set a hearing on the utility matters for July 17.

The judge tentatively set a hearing on the company’s dis­closure statement — a critical document that accompanies a Chapter 11 reorganization plan— for July28.

Eurofresh is continuing to op­erate and has the support of its major vendors and trade credi­tors, said Frank van Straalen, Eu­rofresh executive vice president of operations.

“We haven’t missed a beat,re­ally,” van Straalen said. “Most of our important vendors are on board with this.”

Eurofresh filed for Chapter 11 bankruptcy reorganization April 21 in Phoenix, blaming high debt levels, costly pest and disease in­festations and labor problems. Under Chapter 11, debtors are protected from legal actions while they work out a plan to re­pay creditors.

Contact assistant business editor David Wicher at 573-4181 or dwichner@azstarnet.com.