AgriBioTech Files For Bankruptcy

AgBiotech Reporter Feb00

[Idaho Officials Consider Action Against AgriBioTech]

AgriBioTech, Inc. (ABT) and its operating subsidiaries have filed voluntary petitions with the US Bankruptcy Court to reorganize under Chapter 11 of the US Bankruptcy Code in order to implement an operational restructuring and financial reorganization.

The company intends to operate in the normal course of business during the restructuring. To ensure that it has the short-term working capital necessary to operate its business, ABT is negotiating for debtor-in-possession (DIP) financing from its current lending group, led by Bank of America N.A. This DIP financing should include additional funds.

The company said that its efforts over the past several months to obtain a new financing pack-age from GE Capital were unsuccessful.

"AgriBioTech has faced many challenges in the last few years," said Richard Budd, ABT's CEO.

"An oversupply of seed with a downturn in industry pricing, difficulties inherent in integrating the operations, culture and accounting systems of 34 companies into single operational units, delays in bringing seed to market, reduced revenues, higher-than-expected expenses and slow cash collections from a weak agricultural economy have led to significant losses and a lack of current liquidity." ABT intends to use the bankruptcy proceedings to restructure its operations and devise a plan to pay its creditors. The company claims that the book value of its assets, excluding intangibles such as goodwill, exceeded liabilities as of Dec. 31, 1999.

Idaho Officials Consider Action Against AgriBioTech

Idaho Department of Agriculture officials are "exploring options" for some alfalfa and clover seed growers who sold $34 million worth of seed to AgriBioTech but were not paid, according to the Boise Idaho Statesman.

By filing for bankruptcy, AgriBioTech effectively halted payment to about 200 of the 435 alfalfa and clover seed growers in Idaho and eastern Oregon. The company reportedly paid 40 cents on the dollar to some growers who needed the partial payment, the paper said. Other growers declined to take the early payment and haven't been paid anything, said Rick Waitley, a spokesman for the Idaho Alfalfa Seed Growers Association.

Idaho Department of Agriculture Deputy Director Mike Everett is advising growers to get an attorney and review their options under the bankruptcy act. State agriculture officials, meanwhile, are exploring options of their own. One option being considered is enforcing Idaho's bonded warehouse law. Under the law, the department has the authority to inspect warehouses to make sure seed is there, check company sales records and, under certain circumstances, seize the ware-house and its contents. State officials are examining whether they could use the law to seize the warehouses and the seed they contain. That could keep the crop from being sold and the money from being distributed to creditors other than the growers.