Troubled SD Northern Beef Packers plant sold

Dec 13, 2013

—Uncertainty exists about the plant’s future, buyer’s intentions

Two bidders entered. One bidder left.

Well, sure, both left, but only one left “victorious.”

Thursday, Dec. 5 saw the auctioning of the long-beleaguered Aberdeen, SD, Northern Beef Packers plant. Two groups participated in the auction—Wisconsin-based American Foods Group and California-based investment banking firm White Oak Global Advisors—and it was not the food-related participant that claimed the prize.

With a cash-and-credit bid of $44.3 million, White Oaks solidly bested American Food Group’s all-cash bid of $12.75 million, the minimum bid for the sale. There were no other participants and American Food Groups did not offer a counterbid. As of publishing, the bankruptcy sale has yet to be finalized. However, once the sale is approved, the White Oaks has a number of options. Generally speaking, the available options are to operate the plant, sell it as a unit, or sell the operation in parts.

Those options, and a lack of comment from White Oaks on its intentions, have spurred curiosity. What an investment group will do with one of the world’s most state-of-the-art beef packing plants has generated considerable speculation.

“My gut feeling is that somebody is going to come along and run it,” Herman Schumacher, part-owner of LDL Cattle Company in Ipswich, SD, told the Aberdeen News.

“Might be American Food group, being that they already have shown interest or maybe even White Oak will get the beef plant up and running. Regardless, I’m still very hopeful and optimistic that someone will be running it and, whenever that is, I will definitely be a customer.”

Schumacher wasn’t the only one expressing optimism about the purchase.

Jim Barringer, Executive Vice President of Aberdeen Development Corp. had similar sentiments.

“I hope that White Oak has the intention to start that plant back up as quickly as possible and employ all the good employees they previously had and start to slaughter all the fine beef that South Dakota has to offer,” he said, also speaking to the Aberdeen News.

“I’m excited about this transfer of ownership, and I am optimistic that things will work out well for everyone concerned.”

South Dakota Governor Dennis Daugaard said last Tuesday that he expects the new owners will open the plant and market it or sell it to a company that will open it rather than sell off the operation piece by piece. Both he and other sources pointed out opening it then selling it, or at least selling it as a whole would make the most financial sense.

Reportedly, White Oak— which was a creditor of the plant while it was still struggling to become financially stable—has invested $35-45 million in the plant. Rory King, an Aberdeen attorney for Northern Beef Packers, said the firm will want to maximize its return for the plant, so it wouldn’t make sense for White Oak to scrap the plant.

Northern Beef Packers’ CEO David Palmer, who still works at the plant, however, did not offer an opinion on what the new owners will do.

“Everyone has a guess, but it’s all speculation,” he said. He did however note last Tuesday that the group’s intentions for the plant might be known in the next couple of weeks. WLJ contacted White Oak at their San Francisco base seeking some official comment or projected timeline on comment, but was directed to the voicemail of the group’s general council. The call was not returned as of publishing. — Kerry Halladay, WLJ Editor