AFTER securing bankruptcy court approval, Cargill announced that it had submitted the winning bid to acquire two feed mills from Lancaster, Pa.-based Pennfield Corp. for $9.8 million.
The deal is scheduled to be finalized Jan. 21, and with Cargill assuming ownership, the strange and often confusing tale of Pennfield's bankruptcy will find a measure of closure.
The asset purchase agreement, which was first reported earlier this month (Feedstuffs, Jan. 7), entails feed mills and assets located in Mt. Joy and Martinsburg, Pa., and was facilitated through Pennfield's voluntary Chapter 11 bankruptcy filings in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania.
Pennfield had filed under Chapter 11 to facilitate the sale of substantially all of its assets to a local investment group under the banner of Wellsource Nutrition. When that relatively unknown entity defaulted on the terms of the court-approved purchase agreement, Cargill stepped in to pick up the pieces.
Pennfield filed its preliminary bid with the court on Dec. 28, 2012, and the court allowed a simultaneous live auction to receive further bids during proceedings on Jan. 17 in an effort to generate the best value for the secured creditors involved in the bankruptcy. Cargill's bid was ultimately accepted.
"We are thrilled to add Pennfield's state-of-the-art facilities and knowledgeable employees to the Cargill family," said Rob Scheffer, group director for the company's Northeast region. "The deal not only expands our footprint in the region, but it also provides us with additional capabilities and opportunities to serve new customer segments and enhance our offerings for existing customers in the region."
Jennifer Horn, former Pennfield director of administration and a family member of the previous owners, will join Cargill as administrative team lead, responsible for overseeing customer and employee communications for the Pennfield operations. Horn said the outcome could not have been better for both employees and customers than becoming part of Cargill, a market leader and another family-owned organization.
Cargill's court-approved agreement did not involve acquiring the South Montrose, Pa., feed mill or a 165-acre farm Pennfield owns in York County, Pa. It is unclear, at present, what Pennfield plans to do with those facilities and associated assets that were not involved in the Cargill acquisition.
At $9.8 million, Cargill's winning bid was significantly smaller than the $15.6 million the court had accepted from Wellsource. The difference in bids and assets involved implies that some value still exists in the remaining Pennfield facilities and that it may be some time yet before the Pennfield saga finally draws to a close.