“Firm” bids for creamery due next Wednesday; buyer by end of month?

Cooperative owners “in the hunt” for an accepted offer on bankrupt plant

Originally published in the "5-14-09" issue.

To say that the bankruptcy proceedings in the case of Humboldt Creamery are moving fast, is an understatement.

Just over three weeks from when it officially filed for bankruptcy protection under Chapter 11, “firm” bids from potential buyers are due to the bankruptcy court by Wednesday.

Chief Executive Officer LenMayer, who actually is acting on behalf of CoBank, the debtor in this case, said by Friday “expressions of interest” are due and that by May 20 “firm” bidsmust be in. Ten days later, on May 30, the debtor will ask the bankruptcy court for approval on the selected buyer.

“On or before July 10, the court will approve the sale and the transaction must close on or before July 25,” explained Mayer, who said on Tuesday that there are at least “12 legitimate outfits” who have expressed interest in the 80-year-old company.

The bankruptcy protection was forced by the resignation of former CEO Rich Ghilarducci in February and the discovery that the company’s books were off by at least $50 million. Mayer said that some of those that have been reviewing the company’s financials and or visiting the Fernbridge plant may partner together to make a bid.

“A good dozen seem like they have the where withal to close a transaction,” he said. “They have a legitimate interest in the business.”

Meanwhile, Humboldt Creamery Co-op Board Vice-Chair Dennis Leonardi said producers who thought they owned the plant and now have had to come to the realization that the banks own it, are still attempting to put together a competitive bid.

“We want to be in the hunt,” he said late Tuesday.

Calls to many of the potential buyers by The Enterprise were not returned.

The firm of Duff & Phelps is handling the sale transaction and Mayer has previously said the business is worth between $25 and $60 million.

“Ultimately, it’s worth whatever the successful bidder is willing to pay,” he noted.

As to which company is the best fit for the creamery and the producers, if members are not able to buy it back, Mayer said he’s confident there’s a right match out there.

“Very early on, my goal was to get the creamery in a position where it could be a successful conduit for entering the local milk into the marketplace; that stakeholders such as creditors, investors and vendors would come out of it with something reasonable and continue to do business with the creamery; and that employees would continue to have a place to work,” said Mayer. “At this point, I’m pretty darn confident that will be achieved.”

Mayer said a “well capitalized organization that knows how to run a successful business and take good care of its customers, suppliers and all stakeholders” is out there.

He also noted that the dairymen might put together a financial package in which they own all or perhaps just a part of the creamery.

“Either one of those is possible and either one is a pretty reasonable outcome for most of the stakeholders,” he said.

Reflecting on the past 11 weeks, Mayer said the company has “settled down” quite a bit and is operating currently in a “way more normal mode.

“We’re paying producers, creditors and we’re much more comfortable,” he said. “We’re taking good care of our customers.”

As to the criminal investigation by the FBI into the alleged fraud committed by Ghilarducci, Mayer said he has not received any information from the agency.