Source: Associated Press
A Green Bay, Wis.-based beef processing company has submitted the minimum $12.75 million bid for an idled South Dakota plant, according to court paperwork filed Wednesday.
American Foods Group's bid for the Northern Beef Packers plant — the first to be submitted to the U.S. Bankruptcy Court — allows it to participate in an auction scheduled for Thursday afternoon in Sioux Falls.
An investment banking firm working with Northern Beef, White Oak Global Advisors, is automatically deemed a qualified bidder.
The $12.75 million minimum set by the court is a fraction of the roughly $115 million invested in the plant and equipment. The sale includes the Aberdeen plant's property, fixtures, improvements, machinery, equipment and supplies.
A message left Wednesday for an American Foods Group official was not immediately returned. The company's website says it ships more than 4 million pounds of beef a day and employs about 4,000 people.
Northern Beef opened on a limited basis in 2012 after years of delays, but the company filed for bankruptcy protection in July because it lacked money to buy cattle for slaughter.
The plant was pitched in 2006 in response to then-Gov. Mike Rounds' South Dakota Certified Beef initiative. Rounds, who is now running for U.S. Senate, 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 the company struggled to reach anywhere near its production target of 1,500 head per day. Most employees were laid off and production was halted. Court documents showed the plant had $138.8 million in liabilities and just $79.3 million in assets.
Once locally owned, Northern Beef Packers is 41 percent owned by businessman Oshik Song with 69 other South Korean investors who each gave at least $500,000 under the federal EB-5 investment-for-green-cards immigration program.
The EB-5 program has become the subject of state and federal investigations.
South Dakota Attorney General Marty Jackley found that $550,000 of a $1 million state grant given to the plant for construction and equipment costs was improperly diverted to SDRC Inc., a private entity that solicited EB-5 investors for the state, to pay immigration loan monitoring fees.
No details have been released about the ongoing federal investigation.