Sources inform ''Globes'' that that ten companies have bought the tender forms for Agrexco, Israel's agriculture produce exporter under the Carmel and Alesia brands. They include two large foreign firms: Irish-based Total Produce plc (LSE: TOT), which ships and markets fresh produce across Europe; and Paine & Partners, a US equity fund that specializes in leveraged buyouts with potential high returns.
Agrexco fell into financial difficulties after losing €33 million in 2010, bringing its total debt to €106 million. The company's annual turnover is around €500 million, but this was not enough to keep it out of trouble, and it obtained a stay of proceedings last month, which expires on Tuesday. Today is the deadline for filing bids to buy the company from trustee Adv. Shlomo Nass, who is handling the pricing and will notify the Tel Aviv District Court of the winner tomorrow.
If there are similar bids, Nass will likely hold an expedited pricing. The sale of Agrexco needs to be completed quickly because the court wants to operate the company with a positive cash flow, and because of growers' need to sign new contracts for next season's produce within two months.
Other bidders for Agrexco include a consortium headed by DS Apex Holdings Ltd. (TASE:DSAP) and a consortium being organized by Abraham Bigger.
Total Produce is a leading agricultural supplier in Ireland, the UK, Spain, Sweden, and the Czech Republic. The company also operates in South Africa and India. It has strategic partners in 19 countries, and has collaborated with Agrexco, and sees possible synergies in international cooperation with it.
Paine & Partners has extensive experience in agriculture and haulage.
All the bidders for Agrexco believe that the company has potential, but that past management failures resulted in losses. The government owns 30.3% of Agrexco and appoints most of its directors, the Agricultural Marketing Board owns 58.7%, and Tnuva Food Industries Ltd. owns 11%. Reasons for Agrexco's losses include overstaffing, superfluous terminals, and rising competition. A proposed recovery plan includes keeping only one terminal, reducing the US branch, consolidating European operations in the Netherlands and UK, and layoffs.
Agrexco exports agricultural produce to 2,500 customers in 80 countries, mainly in Europe. It buys produce from 2,200 growers in Israel and sells it abroad by consignment. It currently has 475 employees, including 332 in Israel, but plans to fire half of them as part of the recovery plan.
Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2011
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