TROUBLED South Dakota beef processor Northern Beef Packers is now looking for a new owner rather than attempting reorganization.
During a bankruptcy hearing last week, the company said it had retained mergers and acquisitions specialist Lincoln International to find a stalking-horse bidder for the $115 million facility, which was completed last fall.
In court filings, White Oak Global Advisors called for a quick sale. The firm, which loaned Northern Beef $35 million last September, said the debtor is not operating and has no cash with which to repay its sizable outstanding liabilities.
Northern Beef, owned primarily by a Korean investment group, reported liabilities of $138.8 million against just $79.3 million in assets.
On July 19, the company filed for Chapter 11 protection, having laid off most of its workforce and suspended operations at the 1,500-head-per day facility. Despite operating since October, the plant has never run at its full capacity.
A hearing in late July was postponed due to concerns over White Oak's proposed financing plan. In the interim, the focus shifted from getting the firm back on its feet to simply finding a buyer for the plant. Filings showed that Northern Beef owed more than $128 million in secured debt on top of nearly $9 million in unsecured claims, including employee wages that were not paid in the final weeks of operation.
Originally conceived as part of South Dakota's Certified Beef Initiative, the plant was built as an avenue for local ranchers to sell a premium-brand product. The road from its 2006 conception to its 2012 completion was a lengthy and hard-fought process fraught with numerous delays and financing issues.
During an appearance on a local radio program Aug. 12, South Dakota Gov. Dennis Daugaard said he expected that the plant would be acquired by an established packer, given that the facility is already permitted and constructed.
Former Northern Beef employees told the Aberdeen News that representatives of National Beef, the fourth-largest U.S. beef processor, had toured the plant in late June.