Details on pending sale of Agriprocessors emerge

by Bryan Salvage
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IOWA CITY, Iowa — Following months of uncertainty regarding the Agriprocessors kosher slaughterhouse in Postville, Iowa, which was the site of a massive raid by immigration agents last year, the president of a Canadian plastics plant and two others filed court documents on June 23 to buy the facility, according to The Associated Press. However, the sale would be subject to the approval of a bankruptcy court. Three months ago, a previous attempt to auction the plant failed.

"If no one else bids on it and the judge approves the sale, they own Agriprocessors," said bankruptcy trustee Joe Sarachek. "Other buyers are certainly free to come in and bid more."

Once the nation's largest supplier of kosher meat, Agriprocessors is the largest employer in Postville, a community that once had more than 2,000 residents but has seen its population dwindle and many businesses fail since the plant ran into trouble.

Top managers and the company were indicted months after 389 people were arrested in a May 12, 2008 immigration raid. Nearly six months later, Agriprocessors filed for bankruptcy and the court began seeking a buyer. An Israeli company came forward with a $40 million bid, but later rescinded it and the plant was put up for auction.

Hershey Friedman, president of Montreal-based Polystar Packaging, and two partners bought out the secured credit of two of the company's major creditors, Mr. Sarachek said. Mr. Friedman and the other two buyers do not own any slaughterhouses in the U.S. or Canada.

The lines of credit were valued at $21 million, but Mr. Sarachek said SHF Industries paid less. The loans were a sticking point in the auction, as potential buyers could not agree with the creditors on a price. The creditors were not expected to get back the entire sums of the loans, and most of the auction process was spent determining what buyers would pay for them.

Although Mr. Sarachek did not disclose how much SHF Industries paid for the lines of credit, he said the company can be valued at slightly more than $25 million.

Mr. Sarachek added the two other partners, Daniel Hirsch and Mitch Kirschner, work in Mr. Friedman's U.S. operations. Mr. Sarachek said Mr. Hirsh is Mr. Friedman's son-in-law.

The pending sale would include all of Agriprocessors' assets in New York, Florida and Iowa, which so far have served as collateral for the two loans. Mr. Sarachek said any equipment that was leased by the company would have to be negotiated after the sale. A date hasn't been set for the bankruptcy court to consider the sale.

It would make sense for Mr. Friedman to buy the meatpacking plant, as Polystar Packaging is one of the top 15 manufacturers of meat and poultry packaging, said Kevin Huntsman, a vice-president and plastics specialist at Kansas City-based commodities consulting firm Mastio and Co.

The Local Pride meatpacking plant in Gordon, Neb., another Agriprocessors asset, is not a part of the sale and will be sold separately.

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