Eurofresh Farms files for 2nd bankruptcy

Top tomato producer intends to sell assets to rival, NatureSweet
2013-01-29T00:00:00Z 2014-07-02T12:04:50Z Eurofresh Farms files for 2nd bankruptcyDavid Wichner Arizona Daily Star Arizona Daily Star

Willcox-based tomato grower Eurofresh Farms has filed for Chapter 11 bankruptcy for the second time in four years, with the intention of selling its assets to a major rival.

Texas-based NatureSweet Ltd. has offered to buy substantially all of the assets of EuroFresh in a bankruptcy auction.

NatureSweet and Eurofresh are two of the leading producers of fresh tomatoes in North America. Eurofresh, which has more than 300 acres of greenhouses in Willcox and Snowflake, also is a leading U.S. grower of greenhouse cucumbers. San Antonio-based NatureSweet grows its tomatoes in central Mexico.

Under Chapter 11 of the bankruptcy code, mainly used by businesses, debtors are protected from legal actions like lawsuits and foreclosure while they develop a plan to repay creditors.

Eurofresh, which filed for bankruptcy Monday in Tucson, said the acquisition will take place through a special procedure that allows a company filing for bankruptcy to immediately market its assets to bidders, subject to approval of the U.S. Bankruptcy Court.

The company filed for Chapter 11 bankruptcy in April 2009 and emerged as a reorganized company eight months later with new financing and new investment from its founder. The latest bankruptcy, which was blamed on a slump in tomato prices, is not expected to affect Eurofresh's ability to operate, the company said.

Eurofresh was Southern Arizona's 44th-largest employer last year, reporting 1,006 full-time-equivalent employees in the Star 200 survey of the region's major employers.

In bankruptcy papers, Eurofresh said it had fallen into default on its biggest loans and that without an asset sale it would have to cease operations.

The company had not yet filed its total asset and debt figures, but it reported assets of between $10 million and $50 million, with liabilities of between $50 million and $100 million. Eurofresh estimated that no funds will be available to repay unsecured creditors, whose debts are not backed by collateral. The company has more than $11 million in unsecured debt, according to bankruptcy documents.

The company's biggest unsecured creditor is Southwest Gas Corp., which is owed $1.5 million, according to a list filed by the company. Other major unsecured creditors include Oklahoma-based John Christner Trucking, which is owed nearly $1.3 million; the Phoenix law firm Squire, Sanders & Dempsey LLP, owed $1.1 million; a California packaging company owed $989,000; and a fertilizer company owed about $770,000.

In its bankruptcy filing, Eurofresh said it hired the investment banking firm Piper Jaffray & Co. in March 2012 to solicit bids for the company. One potential buyer was nearing agreement in September but backed out, according to court documents.

After marketing the company further, NatureSweet emerged as the new high bidder through a company it formed to buy Eurofresh, Zona Acquisition Co. LLC.

Zona last week purchased essentially all of Eurofresh's senior secured debt, about $51 million worth, and on Sunday the company signed an agreement to buy the company, subject to higher offers, court documents show. Zona will submit a bid for $51.2 million, plus any money the company lends to Eurofresh and interest, fees, and costs, Eurofresh's filing said.

Eurofresh has proposed that if no other qualified bidders are found as of the day prior to the auction, it would cancel the auction and ask the court to approve the sale to Zona.

Neither Eurofresh executives nor officials of NatureSweet were available for comment Monday.

Bryant Ambelang, president and CEO of NatureSweet, said in prepared remarks that the acquisition would allow the company to offer new products while expanding its growing facilities.

Johan van den Berg, founder and CEO of Eurofresh Farms, said NatureSweet is a financially strong company that "will continue to invest in the business of growing and selling greenhouse tomatoes and cucumbers."

Eurofresh blamed the 2009 bankruptcy on excess debt and operating issues including high interest costs, reduced production due to a plant virus, high energy prices, high employee turnover and the resulting need to hire more expensive contract workers, and a Department of Justice immigration issue. The company said that after its 2009 bankruptcy, it resolved its operating issues, only to face a widespread pricing decline in the industry resulting from increased greenhouse acreage in the U.S. and Canada, increased tomato exports from Mexico, and extremely mild weather.

At a glance

Eurofresh Farms

• Headquartered in Willcox.

• Has more than 300 acres of greenhouses in Arizona, including 274 acres in Willcox.

• Employs more than 1,000 people in Southern Arizona.

• Website: eurofresh.com

NatureSweet Ltd.

• Headquartered in San Antonio.

• Grows tomatoes in greenhouses in central Mexico.

• Employs more than 5,000 workers.

• Website: naturesweet.com

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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