by Lance Turner
Posted 12/17/2013 07:47 am
Updated 9 months ago
Seneca Foods Corp. of Marion, N.Y., said Tuesday that it has entered into an asset purchase agreement to acquire "substantially all the operating assets" of Allens Inc. of Siloam Springs, the privately held canning company that filed Chapter 11 bankruptcy in October.
The deal is worth $148 million.
In a news release, Seneca said its purchase agreement will serve as the "stalking-horse bid" in the auction process, meaning Seneca has the opportunity to match any other bids Allens might receive. Allens will have to seek bankruptcy court approval of Seneca's purchase agreement as the stalking horse bid and other bid procedures.
Seneca said that if it's successful, Allens' assets will fit with its "long-term growth objective" to expand its canned vegetable offerings to include sweet potatoes and southern vegetables and broaden its offerings of dry beans and spinach.
Jonathan Hickman, Allens' chief restructuring officer, said the company was happy to reach a deal with Seneca.
"We are encouraged by the interest Allens has received and are committed to an outcome that provides the most value for our creditors," Hickman said in a news release (PDF). "I would also like to thank our talented employees – the interest we are seeing in our business is a direct reflection of their continued hard work and dedication."
The Sale Process
In November, Arkansas Business reported that Allens bankruptcy filings showed nearly 60 companies were considering buying the 87-year-old cannery, and that Allens wanted to appoint one of at least three potential buyers as a "stalking horse" bidder. The filing didn't name the companies that wanted to be named stalking horse bidder.
Monday evening, Allens filed revised documents in the Western District U.S. Bankruptcy Court to set terms for the auction and to name Seneca as the stalking horse bidder. Allens said it "has received interest from several financial and strategic bidders, many of whom are expected to be active participants in the auction."
Allens' stalking horse contract with Seneca says Allens will reimburse Seneca Foods up to $1.5 million for expenses in connection with the bid. The contract also includes a $5 million break-up fee.
The deadline for other companies to submit bids for Allens is 4 p.m. Jan. 14. The auction is scheduled for 10 a.m. Jan. 21 at the Mitchell Williams law firm in
A hearing to approve the sale is scheduled for Jan. 24 in bankruptcy court.
Allens said it will continue to operate its business normally while the sales process continues.
$280 Million in Debt
This is the not the first time the two companies have worked toward a deal. In July 2011, Seneca and Allens attempted a merger under which Allens would have become a subsidiary of Seneca Foods. But the two parties ended merger talks in September without explanation.
Allens faces about $280 million in debt, including $178 million of secured debt and another $101.9 million in debt to unsecured creditors. In bankruptcy filings, Allens claims assets of between $100 million and $500 million and the number of creditors at between 1,000 and 5,000. A more detailed filing is due later.
Allens, founded in 1926 as Allen Canning Co., sells products under a number of brand names, including Allens, Princella, Freshlike and Royal Prince.
Seneca Foods is a processor of canned fruits and vegetables whose products are sold under the Libby's, Blue Boy, Aunt Nellie's Farm Kitchen, Stokely's, READ, Seneca Farms and Seneca labels. Seneca also produces canned and frozen vegetables sold by General Mills under the Green Giant label. Seneca stock is traded on the Nasdaq Global Stock Market.
(Mark Friedman contributed to this report.)