Posted: Thursday, February 23, 2012 11:00 AM
Gary L. West/Capital Press
Peter Truitt stands in front of Truitt Brothers main processing plant Friday, June 3, 2011, on Front Street in Salem. Truitt Brothers announced June 3 it was moving is canned pear operations to a Del Monte Foods cannery in Yakima, Wash.
Truitt deal would make 'everyone 100 percent whole'
By DAN WHEAT
SALEM -- Truitt Brothers Inc., a fruit and vegetable processor in Salem, is offering $42.25 million for Snokist Growers, a Yakima, Wash., pear and apple processor that filed for bankruptcy in December.
Del Monte, of San Francisco, and National Fruit Product Co., Winchester, Va., are likely to bid for Snokist in U.S. bankruptcy court. But Truitt is "committed and will go all the way to the finish line," said Peter Truitt, president of Truitt Brothers.
"This is a good offer. It makes everyone 100 percent whole as of (Feb. 14)," Truitt said. "We're all in. We will see who wants it the most."
The successful bidder will get Snokist's Yakima processing plant.
Grower owners of the cooperative and secured and unsecured creditors will be paid in the agreement Truitt Brothers reached with the Snokist board of directors, Truitt said.
In the second year of operation Truitt Brothers would provide a contingent payment of $3 million to be allocated from earnings in future years to repay growers for equity they had in Snokist, he said.
Del Monte, National and any other bidders have until March 14 to submit bids to the U.S. bankruptcy court in Yakima, but they must top Truitt's offer by $100,000 and include an $800,000 breakup fee to reimburse Truitt for its costs, Truitt said.
Truitt Brothers could then counteroffer before the closing date set by the court for March 16, he said.
Snokist filed for Chapter 11 bankruptcy reorganization Dec. 7, blaming delayed clearance of food safety concerns by the Food and Drug Administration and a new lender's reluctance to cover losses.
Last June, Truitt Brothers closed the pear processing portion of its facilities in Salem and entered a one-year agreement to have Del Monte process its pears in Yakima.
Pacific Northwest processing pears have declined to under 130,000 tons while five processors had a combined capacity of 200,000 tons, Truitt said. "So none of us are operating at full capacity."
About 60 percent of Truitt Brothers' processing pears come from the Yakima area with the rest from Medford, Hood River and Wenatchee, Truitt said.
By acquiring Snokist, Truitt will have enough raw material to operate the Snokist plant efficiently, he said.
"We have not renewed our co-pack with Del Monte. They wanted us to renew in December for three to five years," Truitt said.
The other processors are Northwest Packing in Vancouver and Independent Foods in Sunnyside.