Hope on the horizon that Sunland peanut plant in Portales may be sold to a California firm that has made an offer to purchase Sunland's assets.
While West Texas and eastern New Mexico peanut producers may end up on the short end of the stick initially, there may be hope on the horizon if the now defunct Sunland peanut plant in Portales is sold to a California firm that has made an offer to purchase Sunland's assets.
While officials say it's too early to know all the details about the offer, court appointed Sunland trustee Clarke Coll has asked federal bankruptcy officials in Albuquerque to approve an $18.5 million offer from Ready Roast Nut Company of Hughson, California, to purchase all of Sunland's remaining assets, including the plant and property in New Mexico.
Sunland Inc. filed for bankruptcy late last year after struggling over debt accumulation company officials say was aggravated by a lengthy shutdown in 2012. Suspension of operations at the plant were ordered after the Federal Drug Administration (FDA) inspections indicated products from the plant may have been associated with a salmonella outbreak that caused 41 illnesses in 20 states. The company was the largest organic peanut butter processor in the nation and produced both organic and non-organic products at the Portales facility.
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The incident developed at a critical time for Eastern New Mexico and Western Texas Valencia peanut farmers. A healthy and abundant crop of peanuts was being harvested about the time the plant was closed, leaving many peanut growers in a quandary.
“This all happened at a really bad time for us,” Texas peanut grower Brent Nelson of Sudan told Farm Press shortly after the plant was closed. “Our peanut harvest was one of the best we have had, and not just for me but for most peanut farmers across the region. We depended on the Portales plant and don’t have a lot of good options for selling our crop.”
While it is unclear whether Ready Roast would resume operations in New Mexico, peanut growers who regularly sold their crop to Sunland are hopeful the plant will be re-opened again.
Coll reports Ready Roast offered the best proposal of several he has received and says his decision to recommend the sale to the court was based upon the quality of that bid.
Shortly after Sunland declared Chapter 7 bankruptcy, attorneys for the peanut giant estimated total company assets at about $50 million dollars, which included peanut inventory stored at the plant and at off-plant facilities.
But attorneys for Sunland's major creditors expressed concern over the asset valuation, prompting one of them, Sunland's largest wholesale buyer, Costco, to plead with bankruptcy officials to turn over raw peanut inventories to satisfy an investment they made when Sunland's problems unfolded. Costco officials say the investment was designed to keep the peanut plant fluid. The court subsequently awarded those inventories, valued at just over $12 million.
Bankruptcy court officials say Sunland still owes creditors CoBank and Production Credit Association an estimated $14 million.
According to the court's trustee, Ready Roast has signed a purchase agreement to acquire the remaining assets of Sunland, but officials say it is doubtful the deal would leave ample funds to pay off the dozens of growers who provided the peanuts to Sunland. Coll said he is hopeful, however, that growers will receive a reduced payment if the sale is approved by the court.
Calls to court officials and attorneys representing Sunland have not yet been returned.
City officials in Portales, who provided some economic development funds to Sunland in hopes of saving jobs for local residents, are hopeful the plant can be re-opened and former plant workers can return to work. City officials say they have not been in contact with Ready Roast or bankruptcy officials.