Eurofresh endures Chap. 11
Judge OKs plan for hydroponic vegetable grower
By David Wichner
ARIZONA DAILY STAR 10/29/09
A judge on Wednesday approved the bankruptcy reorganization plan of Eurofresh Inc., a major hydroponic vegetable grower and one of Southern Arizona’s largest employers.
The ruling by U.S. Bankruptcy Judge Charles G. Case II in Phoenix paves the way for Eurofresh to emerge from bankruptcy reorganization in late November.
“It feels great,” Eurofresh CEO Dwight Ferguson said.
“Obviously, this has been a long process for the company and its employees. We’re excited to be in a position where wecanmoveforward.”
The company, which does business as Eurofresh Farms, employs about 1,500 workers at greenhouse operations spanning more than 300 acres near Willcox, with a smaller operation near Snowflake in eastern Arizona.
Eurofresh filed for Chapter 11 bankruptcy reorganization April 21, blaming costly pest and disease infestations, labor problems and high debt levels. Under Chapter 11, debtors are protected from legal actions while they work out a plan to repay creditors.
As part of its reorganization plan, the company had entered into a settlement with the majority of its existing debt holders to convert more than $200 million of debt into equity.
The agreement states that Eurofresh will receive $35 million in new capital to repay debt, ensure financial stability and invest in strategic capital expenditures. The new money comes from an investor group including company founder and chairman Johan van den Berg.
Two competing bids for the company emerged during the bankruptcy proceedings, but the investor group including the former founder later topped those tentative offers, which Ferguson said were never formalized.
In addition, Eurofresh reached agreement on claims by secured lenders and the U.S. Department of Labor, which had pressed a $6 million claim against the company for alleged labor-law violations.
Most recently, the company came to agreement with a group of lenders led by Silver Point Finance LLC and including Wells Fargo, which will continue a long-term credit agreement with the company.
Ferguson said he will stay on as CEO and he expects no major management changes, though a new board of directors will take over when the reorganized company emerges
Nov. 18. Ferguson said the company has continued to operate profitably, excluding reorganization expenses, and without layoffs throughout the bankruptcy process. The company is still working to improve production but is ahead of its plan, he added.
Eurofresh is also pushing new product and marketinginitiatives.
The company earlier this year rolled out a line of mini-cucumbers and bite-sized grape tomatoes, and launched a new “Fresh Idea” labeling program suggesting consumer uses for each product.
“They’ve been very active on the marketing side,” said Greg Johnson, editor of the produceindustry weekly newsletter The Packer in Lenexa, Kan.
“They’re not just sitting on a beefsteak tomato and saying, ‘this is what we got, take it,’ which seems to suggest they’re in a good business place.”
Greenhouse tomatoes are a high-value crop, accounting for about 35 to 40 percent of U.S. retail tomato sales worth an estimated $2.5 billion to $3 billion in 2008, Johnson said, adding that Eurofresh is a major domestic producer.
Eurofresh reported revenues of $177 million in 2008.
“They are considered a big player, especially in the U.S.,” Johnson said.
But like other U.S. growers, Eurofresh faces stiff competition from Canadian and Mexican greenhouse tomato producers, as well as prices that have flattened in the past few years, he said.
Contact Assistant Business Editor David Wichner at 573-4181 or dwichner@azstarnet.com
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