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."