State Thinks Agriprocessors Sale Near

Trustee says business is up.

Optimism about sale of Postville plant
TONY LEYS •Des Moines Register
 
State leaders say they are working aggressively to help attract a new, reputable owner for a bankrupt Postville meatpacking plant, and they are optimistic a sale will be announced soon.

Some locals have expressed skepticism about the state's efforts to help attract a qualified buyer.

The Agriprocessors plant used to be the main employer in the Postville region, with more than 800 workers. It has been limping along for a year, since federal immigration agents raided it in May 2008 and seized hundreds of employees who were in the country illegally.

The plant is in bankruptcy, and its employment is down more than half from its peak. Many residents fear it could close soon, devastating the economy of a town that has lost more than a third of its population and a county that has the second-highest unemployment rate in Iowa.

But Gov. Chet Culver and Iowa's economic-development chief said they have high hopes for a sale and rebirth of the business.

"The Department of Economic Development has been very engaged," Culver said in an interview last week. "We understand the importance of that facility, and we're doing everything we can to find a good fit there. ... Hopefully, we can keep that plant going because there's some important jobs there."

Mike Tramontina, director of the Iowa Department of Economic Development, said he has had recent, serious talks with potential buyers who appear to have the resources to turn the plant around. He declined to identify them or to say what the state would offer as incentives.

But he said he was optimistic that a sale would be announced soon. "The state is willing and anxious to assist a buyer for the Postville plant," he said.

The company's former leaders face criminal charges, including allegations of defrauding banks and taking advantage of immigrant workers and children. Despite its tainted reputation, Tramontina said his agency has talked with five or six reputable companies that have expressed interest in the plant.

"It's very clear to us that this is a potentially very profitable company operated like a real business," he said. "It does not have to be operated the way it was operated by the previous owners."

Tramontina noted that an unidentified investor recently bought out a $10 million line of credit from Agriprocessors' largest creditor, First Bank. He said that is an encouraging sign, indicating serious interest in the plant's future. However, he said he doesn't know the investor's identity.

Joseph Sarachek, the bankruptcy trustee temporarily controlling Agriprocessors, said the investor put up nearly $5 million to take over First Bank's line of credit and help the plant continue operations. He said the only reason to make such a move would be to try to buy the business.

A judge appointed Sarachek as trustee in November, after Agriprocessors declared bankruptcy and shut down. He said he planned to reopen the business, stabilize it and sell it as soon as possible. He restarted the poultry side, but his prediction that he would restart the more complicated beef side by spring did not pan out.

An Israeli food company offered $40 million for the plant, but dropped the offer in February. A March auction didn't bring a high enough bid to satisfy creditors.

Sarachek said Friday the business is gaining strength. He said it employs about 350 people and is selling all the chicken and deli meat it can produce. He said he still hopes to restart the beef line, which would be important to area cattle farmers.

Sarachek said he understands why townspeople would be nervous and impatient. He said the situation is extremely complicated, but he agreed with state officials' optimism.

"No one more than me would like to deliver good news," he said.

A Postville businessman said many residents are wary of getting their hopes up.

"I think people have become skeptical or a bit cynical. It's an 'I'll believe it when I see it' kind of attitude right now," said Greg Lage, manager of an animal-feed company called Prairie Agri-Enterprises.

Lage said Agriprocessors owes his company $205,000 for chicken feed, but he doubts he will see much money out of the bankruptcy case. He said many other local businesses are in the same boat.

He said he would welcome a reputable buyer for Agriprocessors. But if the new managers are like the old ones, he said, "we'd be better off without it."

The man who bought Agriprocessors $10 million line of credit.

Comments

[State of Postville III]

Does one want to get hopes up for more of the same old same old? Greg Lage said it very appropriately, that if the new folks are the old, we're better off without it. Would the State of Iowa vetters allow this to happen? Could they be fooled? The turkey plant folks should buy it since they were pushed out so to speak by Agri. Wouldn't that be justice!

[fair is fair]

the turkey plant wasn't pushed out, it would be doing fine if it hadn't burnt to the ground..

[State of Postville III]

There were problems between the two plants due to the lagoons and other issues because of their close proximity, land issues, right of way problems etc. Yes, IF the plant hadn't burned, they would be doing fine, BUT IT DID BURN!

[sage]

A Point of Law

I am not a legal person and have an open question:

Can AR, who filed for Agri bankruptcy, re-purchase Agriprocessors from an intermediate third party, who purchased the same at Bankruptcy Auction and be free of any legal obligation to pay of any remaining creditors not paid from the first sale.

[fair is fair]

Stae of Postville III
why so angry. You are crossing two points here. are you so angry with Agriprocessors, or the fact that the turkey plant DID BURN???

[sage]

Concerning the Turkey Plant Fire, the following are established facts, IMHO.

1. Fire Investigators suspected arson and the Janitorial Staff were initially investigated but found innocent.

2. So, if it was arson, someone else, to this day unknown, set the fire. I suspect the RCF, but have no proof.

3. The case is closed and is cold.

[State of Postville III]

FIF-Anger, yes, the differences between the two industries were known to all. Turkey plant was a humane employer. Many of Agri's workers would bail ou there and work at turkey. The city administration (mayor and PWD) were pro-Agri, and in many people's minds did not really try very hard to keep turkey in town. The results, Agri bought the land, and had their way with workers, town etc. You tell me why anger would not figure in the computation?

[eye for an eye]

The turkey plant brought the latino work force in before Agri did. Agri had russian, ukranian, and other nationalities and that is a fact. The fact that you may think the turkey plant only hired legal immigrants it a crock of sh-t. Why, because many of the workers left agri and went to turkey plant, so don't think the turkey plant was all it was cracked up to be. It was a respectable business, but it was still a business. The fire at the turkey plant started around noon, with security and possibley a few other people around. I don't think anybody in broad daylight was going to go inside a plant to start a fire, but I am not G-d, whom probably knows. I don't think this, but I will say it, ever come to think that maybe the turkey plants own people may have started the fire in efforts to relocate! Think about it!? However, in the court proceedings it may have been electrical. You wish to put all blame on Agri for every little thing that happens and think you are perfect! Ha-ha

[s]

turkeys were being transported from Northfield, Minnesota to Postville to be processed. The people buying the plant were from Minnesota, so decided to move the business there. Am sure the fire was accidental.

[State of Postville III]

Actually the point of the plant fire is mute. Cold case, case closed. One doesn't have to blame Agri for everything they do a good job of that themselves. No, we are not perfect but don't claim to be and do not have the pious "perfect" attitude. Tell the community why bills for goods and services were not paid--is that a blame game? Why were people treated badly for just trying to earn money to send home to relatives--is that a blame game? There is no limit to the amount of explaining and/or apologies that Agri needs to make to this entire community.

[eye for an eye]

my apologizes to State of Postville III. It should have been sage that I should have made comments in regards to the fire incident. Yes, it is upsetting on everyone that got screwed for money in this town from Agri. That is a fact, but the fire portion was not all fact.