SIOUX FALLS, S.D. (AP) — A San Francisco-based investment banking firm on Thursday submitted the winning $44.3 million credit-and-cash bid for an idled South Dakota plant during a bankruptcy court auction in Sioux Falls.
White Oak Global Advisors will be the new owner of Northern Beef Packers, which filed for bankruptcy in July because it lacked money to buy cattle for slaughter. White Oak's bid includes $39.5 million in credit and $4.8 million in cash to satisfy prior liens.
Wisconsin-based American Foods Group was the only other bidder. The beef processing company submitted the $12.75 million minimum opening bid, which was all cash, but did not counter White Oak's offer.
American Foods Group representatives declined comment after the auction.
The Northern Beef plant opened on a limited basis in 2012 but struggled to ramp up production and had to lay off its employees.
White Oak, which extended Northern Beef a loan of up to $35 million last September, was automatically deemed a qualified bidder.
The cash portion of White Oak's bid includes $3.31 million to pay off a lien to construction contractor Scott Olson Digging, $1.04 million to pay Brown County back taxes, up to $400,000 to pay a financial firm hired by Northern Beef and the required $100,000 as a cash minimum.
Judge Charles Nail reminded White Oak of ongoing adversary proceedings in the bankruptcy case that could affect the exact amount of the credit portion of White Oak's bid. The investment firm must request an extension of the sale closing date as those proceedings play out.
Nail asked if White Oak was willing to put up more cash if the adversary proceedings lowered the amount, but attorney Stephen Tetro told Nail that White Oak would not raise the cash portion of its offer.
Tetro declined comment to The Associated Press after the auction.
Northern Beef Packers began with homegrown roots. In 2006, Aberdeen livestock businessman Dennis Hellwig became its largest investor in response to then-Gov. Mike Rounds' South Dakota Certified Beef initiative. Rounds hoped to get the state's ranchers premium prices by allowing consumers to track animals from birth, through a feedlot and to a meatpacking plant.
But when local financing tightened up, the plant opted to look for investors through a federal investment-for-green-cards immigration program.
Hellwig was bought out, and Northern Beef became 41 percent owned by businessman Oshik Song with 69 other Korean investors who each gave at least $500,000 under the EB-5 program that encourages foreign investment in exchange for qualifications to secure permanent residency.
The Aberdeen plant continued to struggle to complete construction and was unable to ever reach full production. Northern Beef had $138.8 million in liabilities and just $79.3 million in assets when it filed for Chapter 11 bankruptcy protection, according to court documents.
Julie Johnson, executive director of the economic development organization Absolutely Aberdeen, said it's nice to have a company recognize the state-of-the-art beef plant as a valuable asset.
"We look forward to working with whoever the new owner is," Johnson said.