Sager Creek Acquisition Corp., the likely new owner of bankrupt Allens Inc., says the reorganized company is financially sound, intends on keeping most of its employees and has a CEO on tap to run it, according to documents filed with the court.
Owned by two creditors of Siloam Springs-based Allens - Sankaty Advisors LLC and GB Credit Partners LLC - Sager Creek bid $124.78 million last week for the company at auction, in a deal with a total value of $159.88 million. Judge Ben Barry will have to approve the sale, and a hearing is scheduled for today.
The agreement was reached after an auction was held for the majority of Allens’ assets. The bidding started Feb. 3 and ran through 4:15 p.m. Thursday, according to other documents filed electronically late Sunday night. It involved four competing bidders and multiple rounds of bidding before a buyer was selected, according to documents.
Privately-held McCall Farms Inc., a South Carolina-based canned and frozen vegetable company, was named the backup bidder. If the deal with Sager Creek falls through within 25 days, Allens can designate McCall Farms as the new successful bidder.
In late October, Allens filed for Chapter 11 protection in U.S. Bankruptcy Court for the Western District of Arkansas. Court filings show that Allens owes its primary lenders $114.36 million and its secondary lenders $65.6 million. Chapter 11 allows a business to continue operating and reorganize its debts under court supervision.
Allens employs nearly 1,200 people across all of itsU.S. operation. In addition to its Siloam Springs plant and other Arkansas holdings, the company has operations in Georgia, North Carolina and Wisconsin.
Mark Weinsten, senior managing director for Boston-based FTL Consulting, a financial adviser to Sager Creek, said in a declaration filed with the court on Sunday,the company has “engaged a first-class, experienced chief executive officer” to run Allens after the deal closes. Weinsten and representatives of Sankaty Advisors and GB Credit Partners didn’t respond to requests for more information concerning the identity of the new CEO. Roderick L. Allen currently is the CEO.]
Sager Creek intends to “hire substantially all” of Allen’s employees, according to the declaration. The staff will provide operation stability and supplement Sager Creek’s knowledge of the business.
The filing indicates that Allens will be run as a “going concern” after the deal finalizes. A company classified as a going concern has the financial resources to continue operations.
Weinsten notes Sager has access to revolving credit of up to $80 million, a term loan of $32 million, $25.7 million in funding by affiliates of the Allens’ second lien lenders,and $2.5 million from a major supplier.
Charlyn Lusk, a spokesman for Sankay Advisors, said in an email Monday Allens was a well-established company and ready to move forward.
“Allens has strong brand awareness among millions of Americans and has great relationships in the marketplace with customers and the grower communities. With a strengthened balance sheet and renewed focus, we believe the company will be successful and create economic opportunities for its team members and the community,” Lusk wrote.
Sankaty Advisors manages more than $21 billion in assets and is a credit affiliate of Bain Capital LLC, which has over $70 billion in assets under management. GB Credit Partners is the investment management affiliate of Gordon Brothers Group, which originates, structures and invests in private-market debt.
New York-based Seneca Foods made a $148 million offer to buy Allens in December, a role known as the stalkinghorse bidder, but that bid amount was subject to fluctuations in the perceived value of the company. Allens considered a merger with Seneca Foods in September 2011, but the deal was abandoned.
According to transcripts of the auction filed on Monday, McCall’s bid was valued at $119.2 million and Seneca’s at $117 million.
Business, Pages 19 on 02/11/2014