Siloam Springs plant to close, 238 jobs end

The Del Monte Foods vegetable production plant in Siloam Springs closed Wednesday after the facility was sold to McCall Farms.
The Del Monte Foods vegetable production plant in Siloam Springs closed Wednesday after the facility was sold to McCall Farms.

An Arkansas vegetable production plant employing more than 230 workers is closing after owner Del Monte Foods said it's selling its subsidiary Sager Creek Vegetable to McCall Farms Inc.

Sager Creek Vegetable is what remains of longtime Siloam Springs-based vegetable company Allens Canning, also known as Allens Inc., which filed for bankruptcy protection in late 2013. The full terms of the sale of Sager Creek to McCall Farms, including the sale price, were not released.

In the transaction, Del Monte sold the Sager Creek brands to McCall Farms but retained several physical locations in Arkansas.

In a news release Wednesday, California-based Del Monte Foods said that as part of the sale, the Siloam Springs production operation on Reading Road in Siloam Springs, which employs 238, will close immediately. Other operations in Siloam Springs, including Sager Creek's regional and sales offices will remain open, according to a Del Monte spokesman. Del Monte's distribution centers in Springdale and on Kenwood and Jefferson streets in Siloam Springs also will stay open and will support the needs of Del Monte and its retail customers.

Del Monte still owns the Siloam Springs production plant but sold the equipment in the facility to McCall Farms, according to a Del Monte spokesman. There are no current plans for the plant.

Del Monte will still act as point of contact for Sager Creek customers though early 2018, according to the company. Both Del Monte and McCall Farms said they would work together during the transition period.

"The Sager Creek brands do not align with the long-term business strategies and growth opportunities for Del Monte Foods," David Meyers, chief operating officer for Del Monte Foods, said in a statement.

Wayne Mays, president and CEO of the Siloam Springs Chamber of Commerce, said Wednesday that he was sad to see the plant close after its being a fixture in the city's economy for decades. But he said the city's other employers need skilled workers like those who worked at the Sager Creek plant. He said top employers like Simmons Foods, La-Z-Boy and McKee Foods would likely find places for the displaced workers.

Mays also said that since many of the workers at Sager Creek were drawn from the entire region, including Oklahoma and other parts of Arkansas, the economic impact of the job losses would be somewhat dispersed.

Siloam Springs sits in northwestern Benton County on the border with Oklahoma and had an estimated population of 16,448 as of July 2016, according to the U.S. Census Bureau. Benton County has a preliminary unemployment rate of 3 percent as of July, according to data from the U.S. Department of Labor.

The sale of Sager Creek to McCall Farms focuses on the retail and food service brands owned by Sager Creek, which include Allens, Veg-All, Allens Popeye, Princella, Freshlike and Trappey's.

"Leading brands like Allens fit perfectly with our heritage of making authentic, southern-style vegetables that can be served as a meal, side-dish, or used as a key cooking ingredient," Woody Swink, co-president of South Carolina-based McCall Farms, said in a statement.

Privately held McCall Farms is a producer of canned fruits and vegetables. The company employs more than 1,000 and has corporate offices in Effingham, S.C. Its brands include Glory Foods, Margaret Holmes, Peanut Patch and Bruce's Yams.

In a February 2014 auction, McCall Farms placed a bid of $119.2 million to buy most of Allens Inc's assets after the Arkansas company declared bankruptcy. McCall Farms was bested by Sager Creek Acquisition Corp., owned by investment funds Sankaty Advisors LLC and GB Credit Partners LLC, two of Allens former creditors. Sager Creek bought Allens for $123.8 million.

New York-based Seneca Foods' bid came in third at $117 million. Allens considered a merger with Seneca in September 2011, but the deal was abandoned.

At the time of auction, the total value of the Allens sale, along with debt and other considerations, was just shy of $160 million, according to court filings.

When Allens Inc. filed for Chapter 11 bankruptcy protection in October 2013, it owed its primary lenders $114.36 million and its secondary lenders $65.6 million, according to documents.

The bankruptcy has since been shifted to Chapter 7 and is still ongoing. Allens Inc. was renamed Sager Creek Vegetable Co. in July 2014. Allens was founded in 1926.

In early 2015, California-based Del Monte Foods Inc. bought all the assets of Sager Creek for $75 million in cash.

Business on 09/21/2017

Upcoming Events