Eurofresh Farms in Wilcox, AZ, and its subsidiary, Eurofresh Produce LTD, announced April 21 that they had reached an agreement with a group of investors to recapitalize the company. As part of the negotiated settlement, Eurofresh filed a voluntary petition for protection under chapter 11 of the U.S. bankruptcy code that will allow the company to implement a plan of reorganization, according to a company press release.
Doing business as Eurofresh Farms, the company is "one of southern Arizona's largest employers and the leading year-round producer and marketer of greenhouse tomatoes in the United States," the release stated.
"This reorganization will enable Eurofresh to continue to operate profitably and effectively with minimal disruption to our business," Dwight Ferguson, chief executive officer, said in the release. "The restructuring also will enable us to dramatically improve our capital structure and become a more financially healthy company, so that we can continue to invest in and support our long-term business objective."
The investment group includes Johan van den Berg, founder and current chairman of Eurofresh.
Mr. Ferguson told The Produce News April 22 that the announcement of the reorganization and recapitalization is a positive story "certainly ... from a Eurofresh standpoint." For Eurofresh customers and suppliers and "for all 1,600 Eurofresh employees, it is good news in that it puts us, certainly, on a much stronger foundation to build on going forward."
Eurofresh "grew very rapidly in the early part of this decade, adding several greenhouses in a relatively short period of time," Mr. Ferguson said. "We'd like again to be in a situation where we can expand the business. We would like again to have the option to expand if it makes sense. But of course, expansion is really not a viable option in a capital-intensive business when you are highly leveraged. So de-levering the balance sheet will certainly give us more options going forward."
In spite of "some of the economic-related challenges," he said, the company is "actually seeing good demand and good sales." The company has introduced some new products recently, "and sales are actually pretty good despite what is gong on in the broader economy. Our new grape [tomato] line is performing well, and we introduced a beefsteak-on-the-vine which is performing very well."
The company expects to submit its reorganization plan in May and complete its financial reorganization during the third quarter of 2009, according to the release.
Alvarez & Marsal - Corporate Finance is serving as the company's investment banker and financial advisor in connection with the recapitalization. Eurofresh operates greenhouse operations in Wilcox and nearby Snowflake, AZ, totaling more than 318 acres. Products include branded tomatoes, cucumbers and peppers.