California’s troubled Humboldt Creamery puts Los Angeles plant up for sale

March 18, 2009 07:00 PM

Nearly a month after its CEO abruptly resigned, California's Humboldt Creamery has announced plans to sell its Los Angeles processing facility to focus on its core operations.


The decision is part of an ongoing review of the creamery's business by its board of directors following the Feb. 20 resignation of CEO Rich Ghilarducci.


The creamery, a cooperative with 50 member-dairies in Northern California, will begin engaging in talks immediately to sell its Los Angeles operation.


"Today, the board made a decision that we believe will help strengthen the creamery's business,” said board chairman Jim Renner. "It is our intention to focus on our strongest operations as we rebuild the business and ensure a profitable, sustainable future for the creamery. We know our business is fundamentally viable and that is where all of our efforts will be focused in the coming months.”


The co-op's financial troubles came to light Feb. 20, when its outside counsel received a call from Ghilarducci's personal lawyer, saying the CEO had resigned, effective immediately. The co-op's counsel was also told there might be inaccuracies in the company's financial statements, and that it should suspend its offering of its Series B Preferred Securities.


The board of directors was "shocked at the news,” Renner said Feb. 23. The group quickly ordered an independent inquiry and appointed Len Mayer, the co-op's chief operations officer, as interim CEO.


In a March 12 letter to the co-op's preferred equity and note holders, Mayer wrote, "Although we now know the problem we have to overcome is significant, the good news is that other companies have overcome similar or greater challenges. We intend to do so as well.”


Mayer also said a report from the co-op's financial consultant indicated the creamery's business remains fundamentally viable, with cooperation from customers, banks and vendors.


Humboldt Creamery is continuing normal operations and paying vendors and employees while discussions with its lenders continue. Under a plan adopted by the co-op board, Humboldt dairy producers received $700,000 in cash payments from the creamery March 2. Another $2 million in additional payments that were due on that date were deferred.


The 80-year-old co-op is based in Fortuna, Calif., about a four-hour drive north of San Francisco. Its main plant is located in Fernbridge, about 30 miles south of Eureka. That operation processes 300 million pounds of milk a year to produce fluid milk products, specialty milk powders and ice cream. The Los Angeles facility, which does not process milk, annually produces about 50 million ice-cream novelties.


The co-op employs about 220 people. Costco is a major customer.


Catherine Merlo is Western editor for Dairy Today. You can reach her at

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