Auction to resolve Cagle's bankruptcy
April 2, 2012
by Meat&Poultry Staff
DALTON, Ga. – Cagle’s Inc. and Cagle’s Farms are likely to settle bankruptcy proceedings through a court-approved bidding and auction process, according to the National Chicken Council’s Washington Report. Cagle’s filed for Chapter 11 bankruptcy protection in October 2011.
JCG Foods, an affiliate of Koch Foods, is the proposed stalking horse bidder, which means that Cagle’s initially negotiated a purchase agreement with JCG Foods, according to a filing with the US Bankruptcy Court in the Northern District of Georgia. According to the deal, JCG has offered to pay $37 million for Cagle’s assets with adjustments for inventory, accounts payable and receivables, and other expenses. The purchase price, payable upon closing, will be $55 million in cash plus a promissory note for the balance. The declared value of Cagle’s debtor inventory and accounts receivable was roughly $43 million as of Jan. 28. JCG Foods has agreed to assume $7.7 million in payables and accrued expenses. A proposed fee of $1.8 million will be paid if JCG Foods is not the successful bidder.
Court approvals for submission of competing bids are expected May 4 and for an auction by May 10 if additional bids are received. Four companies have submitted written indications of interest, but the JCG Foods bid is considered to give the best financial return. Cagle’s assets include two processing plants, a feed mill, and a hatchery. The facility in Macon, Ga. was excluded from the sale.