JUST two weeks after announcing that its white knight had defaulted on an asset purchase agreement, struggling Pennsylvania feed manufacturer Pennfield Corp. said it has struck a deal with Cargill, the nation's largest privately-held company.
Cargill agreed to purchase two of Pennfield's three feed mills for $8.5 million, according to the announcement.
Under terms of the agreement and pending approval of the U.S. Bankruptcy Court for the Eastern District of Pennsylvania, Cargill will acquire Pennfield's feed mills and associated assets in Mt. Joy and Martinsburg, Pa., which "represent a substantial majority of the company's operations." Cargill will not acquire the South Montrose, Pa., feed mill or a 165-acre farm Pennfield owns in York County, Pa.
Pennfield announced late last month that its previous suitor, start-up holding company Wellsource Nutrition, had defaulted on a court-approved $15.6 million acquisition and associated $2 million debtor-in-possession operating loan (Feedstuffs, Dec. 24, 2012).
Cargill, a more quantifiable entity than Wellsource, is expected to close on the feed mill deal sometime this month.
To facilitate the sale of assets, Pennfield filed Chapter 11 petitions with the bankruptcy court last August under Section 363, which allowed other interested parties to make offers on the company's assets (Feedstuffs, Oct. 8, 2012).
Pennfield told the Lancaster, Pa., Intelligencer Journal that Cargill was one of two firms to make an offer following the Wellsource default and that it had asked the court for a Jan. 17 hearing to approve the sale.
"We believe Cargill will be a good steward of the business going forward, building on Pennfield's superior product quality and our strong commitment to customer service," Pennfield president Arnie Sumner said. "We also are confident Cargill has the resources to close the sale quickly and efficiently."