JBS acquires bankrupt Greeley lamb-packing plant

GREELEY — Meatpacking giant JBS USA Inc. and its subsidiary Swift Beef purchased the Mountain States Rosen lamb-processing plant in Greeley late last month in a bankruptcy action, upending an attempt to keep the plant running as an independent. JBS won an early July auction for the plant at 920 N. Seventh Ave. with a winning bid of $14.25 million against the stalking-horse offer of $10 million from a subsidiary controlled by Mountain States. JBS intends to convert the plant for beef processing at a later point. Rosen’s parent company filed in Wyoming bankruptcy court in April, saying it had been in conversations to restructure $18.18 million in debt from CoBank, a Colorado financial institution that primarily handles agricultural financing. According to affidavits filed in the case, those negotiations fell apart, and widespread job losses caused by the coronavirus pandemic led to a steep drop in sales for high-priced proteins such as lamb. That drop was particularly acute this spring, when lamb sales usually spike during the Easter and Passover season. The Mountain States subsidiary, called Greeley FAB LLC, was supposed to win the bankruptcy auction and, using refinancing, keep the plant and its 222 employees working. FAB and Mountain States petitioned the court to vacate JBS’ victory, claiming in filings that while its bid was lower, JBS’ plan to stop lamb processing there is not in the interests of the debtor or the greater lamb industry. Mountain States estimates that it controls 20% of the U.S. lamb market and counts grocers Safeway and Kroger Co. (NYSE: KR) among its primary customers. The two also argued that a multi-million dollar Paycheck Protection Program loan that was received after the stalking-horse bid was submitted should count towards its offer. However, while the court said it was worried about the impact to local jobs and the broader implications for the lamb industry, it found that Mountain States had a fiduciary duty to maximize the revenues from its asset sale, nor that the possibility of the PPP loan being forgiven was relevant. “Had (the impact on the industry) been of such measurable value to be included in the bid, FAB should have insisted so at (the outset of the auction),” the court’s opinion reads.
Source: BizWest

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