Siloam Springs-based Sager Creek Vegetable Company, formerly known as Allens Inc., now belongs to Del Monte Foods Inc.
California-based Del Monte Foods, a subsidiary of Del Monte Pacific, purchased the vegetable company in a $75 million cash deal, with no assumption of debt. The sale includes the company's assets -- land, plants, equipment, intellectual property and inventory, including its brands Veg-all, Freshline, Popeye, Princella, Trappey's and Allens.
"This acquisition provides Del Monte the opportunity to expand on Sager Creek's Foodservice business platform and new retail product offerings while driving significant operating synergies in our network of vegetable production facilities," Nils Lommerin, CEO of Del Monte Foods, said in a statement.
In response to email questions Wednesday, Del Monte Foods said no decisions had been made concerning closing any of the Sager Creek plants or workforce reductions as a result of the acquisition. Del Monte Foods said Sager Creek's operations are being reviewed and that those decisions will be made at a later date.
The purchase was funded with Del Monte's revolving credit facility. Sager Creek's annual revenue is about $250 million, according to the release.
Allens was established in 1926 and is a key player in the economy of Siloam Springs, a town 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.
Allens filed for Chapter 11 bankruptcy protection in late October 2013. It has since been shifted to Chapter 7.
In July, Allens Inc. was renamed Sager Creek Vegetable Co. by its new owners. Sager Creek employs about 600 full-time workers across its U.S. operations. In addition to its Siloam Springs plant, the company has operations in North Carolina and Wisconsin.
Sager Creek has been facing cash flow problems and was exploring options, including a possible sale, for months, according to filings and comments made in the United States Bankruptcy Court for the Western District of Arkansas regarding Sager Creek's purchase of Allens. In response to questions in January, Sager Creek said it hired New York-based Jefferies, an investment-banking firm, to explore strategic alternatives and partnerships to best position the company.
Chris Kiser, CEO of Sager Creek, said in an interview outside the plant Wednesday that there are no plans to close the Siloam Springs operation or the company's headquarters and that he was unaware of any restructuring plans. He said he would be leaving his post and was being replaced by Mike Zelkind, the company's new president and chief operations officer.
"It's actually a really good outcome for Sager Creek Vegetable Co.," Kiser said of the sale. "Del Monte is a great company -- their experiences and resources give opportunities to retain, continue to grow and restore it to the path [Allens] was on prior to the bankruptcy."
Wayne Mays, president and CEO of the Siloam Springs Chamber of Commerce, said he is hopeful the sale will work out for the best for Sager Creek employees who call the area home. He said the fact that Del Monte, a major player in the vegetable sector, seems to see value in Sager Creek's operation is a good sign the company will keep the plant open and the workers employed.
Steve Halbrook, professor and head of the Agricultural Economics and Agribusiness Department at the Dale Bumpers College of Agricultural, Food and Life Sciences, said in an email that there are several reasons Del Monte might have been attracted to Sager Creek.
He said if Sager Creek's facilities are in good shape, Del Monte could use them to expand its geographic reach; Del Monte could use existing Sager Creek operations to expand its distribution network; and the acquisition provides access to brands that could improve Del Monte's product mix and enhance its customer base.
Sager Creek Acquisition Corp., owned by investment funds Sankaty Advisors LLC and GB Credit Partners LLC, two of Allens former creditors, bought bankrupt Allens at auction in February 2014 with a winning bid of $123.8 million. At the time, the total value of the deal, including debt and other considerations, was pegged at just less than $160 million.
According to transcripts of the auction, privately held McCall Farms Inc., a South Carolina-based canned and frozen vegetable company, placed a bid valued at $119.2 million, and New York-based Seneca Foods' bid came in at $117 million.
Del Monte Pacific bought Del Monte Foods in February 2012 for $1.7 billion. Del Monte Pacific and its subsidiaries are not affiliated with other Del Monte companies, including Fresh Del Monte Produce Inc., Del Monte Canada, Del Monte Asia Pte Ltd and their affiliates.
Del Monte Foods employs 2,400 full-time workers and 5,400 seasonal workers and has 11 production facilities and three company-owned distribution centers around the U.S., including California, Illinois, Indiana, Michigan and Texas. Its products include branded and private-label canned fruit, vegetables and tomato products.
Earlier this month, three creditors of Allens Inc., who sold the company fresh vegetables, settled claims with Sager Creek for a little less than $12 million. There was $11.8 million available under commitments from the Allens sale order to pay off the outstanding claims, but not a projected $1.6 million in accrued interest and attorney fees.
Information for this article was contributed by Tina Parker of the Northwest Arkansas Democrat-Gazette
Business on 03/12/2015