Posted: Thursday, May 10, 2012 11:00 AM
Del Monte's primary bidding rival, Truitt Brothers, drops out
By DAN WHEAT
YAKIMA, Wash. -- A U.S. Bankruptcy Court judge has approved the sale of all assets of Snokist Growers of Yakima to Del Monte Foods of San Francisco and Pacific Coast Producers, Modesto, Calif., for $27.7 million.
Judge Frank Kurtz orally approved the sale May 7 and will hear a motion for a final order on May 14.
Del Monte bid on the fixed assets and Pacific Coast Producers on the inventory. Pacific Coast Producers has done marketing and distribution for Snokist.
The main rival, Truitt Brothers Inc. of Salem, Ore., could not secure financing for a revised bid and dropped out, said Peter Truitt, company president.
"It's very disappointing. Ultimately, we were very close. We had several banks willing to step up and take portions of the debt but another bank came in and put a stop to everything," Truitt said.
That left one of the creditors, Community Bank, as the next top rival with a bid of $9.7 million for the processing plant and bins. Independent Foods, a Snokist competitor in Sunnyside, bid $3.5 million for certain assets. Others bid lesser amounts for bins and vehicles.
Kurtz set those aside in favor of the Del Monte-Pacific Coast Producers bid.
Del Monte issued a statement saying it is pleased and looks forward to "continuing to grow its business for the mutual benefit of the Yakima community, our growers and our business."
Del Monte will evaluate operations in coming weeks, said Chrissy Stengel, Del Monte spokeswoman.
It is not known what will happen to Snokist's 600 employees. The cooperative's 150 grower members are not part of the deal and may sell their fruit to Del Monte or other processors.
Snokist, a grower-owned cooperative that processes apples and pears in Yakima, 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.
Snokist listed assets of $69.5 million and debts of $49.5 million.
Del Monte owns a plant in Yakima where it packs dark sweet cherries and Bartlett pears.
After Snokist rejected Del Monte's initial bid in January of $11.5 million, Del Monte teamed with Pacific Coast Producers, at Snokist's request.
Del Monte-Pacific Coast Producers and Truitt Brothers each bid slightly more than $42 million subject to downward adjustment based on Snokist's actual accounts receivable and inventory value.
At a March 16 hearing, the court extended the process 45 days to give Truitt Brothers more time to secure financing. The court approved amended bid procedures.
Last June, Truitt Brothers closed its pear processing facilities in Salem and entered a one-year agreement for Del Monte to process its pears in Yakima.
About 60 percent of Truitt Brothers' processing pears come from the Yakima area with the rest from Medford, Hood River and Wenatchee, Truitt said.
The Pacific Northwest pear processing had declined to under 130,000 tons with five processors with a combined capacity of 200,000 tons, Truitt said.
Truitt did not renew its contract with Del Monte, opting to bid for the Snokist plant.
Now Truitt Brothers may contract with another processor or reopen its cannery in Salem, Truitt said.
Independent Foods in Sunnyside and Northwest Packing in Vancouver are the only other pear processors left in the Northwest.
The Del Monte-Pacific Coast Producers deal may cover what Snokist's secured creditors, mainly banks, are owed but there might not be much left for unsecured creditors, that is member-growers, Truitt said.