Seneca Foods Corp. has made a $148 million offer to buy bankrupt frozen- and canned-food company Allens Inc., setting the initial bid for the company’s assets in a future auction.
According to a release Tuesday, Seneca Foods has entered into an asset purchase agreement to acquire all of Allens’ assets, subject to some working capital adjustments and the assumption of certain liabilities. Siloam Springs based Allens had considered a merger with Seneca Foods in September 2011, but the deal never went through.
In late October, Allens filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Western District of Arkansas. Chapter 11 allows for a business to continue operating and reorganize its debts under court supervision. Court filings show that Allens owes its primary lenders $114.36 million and its secondary lenders $65.6 million, and has between $100 million and $500 million in assets.
In a filing late Tuesday, U.S. Bankruptcy Judge Ben Barry scheduled a hearing for Jan. 6 to consider authorizing the bidding procedure, establish a date for the sale hearing and designate Seneca Foods as the “stalking horse” bidder. The stalking-horse bidder makes the first offer for assets, setting the bar so other bids won’t be significantly below market value. Once the stalking-horse bid is made, other suitors may make competing bids.
Attorneys representing secondary lenders objected Tuesday to a request to set the hearing as early as Thursday, saying it wasn’t sufficient notice and noting no emergency exists to justify setting the hearing so quickly. Those objections also will be considered at the hearing in January, according to court filings.
In a statement Tuesday, Seneca Foods said if its bid is successful, Allens’ assets will fit with the company’s long-term growth plans of expanding its line of canned vegetables to include sweet potatoes and Southern vegetables and broadening its dry beans and spinach offerings. Calls requesting further comment from Seneca Foods were not returned Tuesday afternoon.
Shares of Marion, N.Y.-based Seneca Foods, one of the nation’s largest processors of canned fruits and vegetables, closed at $30.17, up 13 cents or less than 1 percent, in trading Tuesday on the Nasdaq exchange. Shares have traded as low as $27.46 and as high as $36.33 over the past year.
In May, Seneca Foods reported net earnings of $41.4 million, or $3.57 per share for fiscal year 2013, compared with $11.3 million, or 92 cents a share for 2012. More than $33 million came from a net income tax benefit, according to the company’s annual report. Net revenue for 2013 was up 1.5 percent to $1.28 billion. Core canned fruit and vegetable sales made up nearly 78 percent of sales.
“We are pleased to reach this agreement with Seneca and to begin a court-supervised sales process intended to maximize the value of Allens,” Jonathan Hickman, chief restructuring officer of Allens, said in a release. “We are encouraged by the interest Allens has received and are committed to an outcome that provides the most value for our creditors.”
In November filings, Allens’ attorneys said three parties had expressed an interest in acting as the stalking-horse bidder.
Seneca Foods has plants in California, Idaho, Illinois, Minnesota, New York, Pennsylvania, Washington and Wisconsin. Its brands include Libby’s, Libby’s Frozen, Aunt Nellie’s and Seneca Snacks. The company employs more than 10,000 regular and seasonal employees, according to its annual report.
Allens employs nearly 1,200 people across all of its U.S. operations, according to a court filing. In addition to its Siloam Springs plant and other Arkansas holdings, the company has operations in Georgia, North Carolina and Wisconsin.
In a separate action, Allens is also trying to sell its facility in Montezuma, Ga., which makes frozen, breaded vegetable products and Southern style frozen vegetables.
Allens was established in 1926 and is a key player in the economy of Siloam Springs, on Benton County’s border with Oklahoma. Allens is the third largest employer in that area, behind McKee Foods Corp .,the maker of Little Debbie snack cakes, and poultry processor Simmons Foods Inc., according to the area Chamber of Commerce.
Alvarez & Marsal, which specializes in turnaround and interim management, is serving as Allen’s company’s chief restructuring officer. Lazard Middle Market, a multinational advisory and asset management firm, is its investment banker. The company’s legal advisers are GreenBerg Traurig, LLP of New York and Mitchell, Williams, Selig, Gates & Woodyard of Little Rock.
Business, Pages 25 on 12/18/2013
Print Headline: N.Y. firm bids $148 million for Allens