The receiver of Cedenco Foods, which owes ANZ NZ$46 million, says a sale of the business is likely to be finalised within a couple of months.
ANZ appointed KordaMentha as receivers last November after Cedenco defaulted on loans and with concern over governance and ownership issues swirling as United States authorities laid fraud charges against Frederick Scott Salyer, former owner and chief executive of Cedenco’s parent company, SK Foods International.
Salyer is now reportedly languishing in a Sacramento jail with his lawyers seeking his US$300,000 cash bond back and facing questions over whether a photo he had of a naked girlfriend holding two tomatoes in front of her body breached jail policy.
KordaMentha’s Brendon Gibson told interest.co.nz the process to sell Cedenco was well down the track. Gibson declined to comment on the names of potential buyers. However, interest.co.nz was told Singapore’s Olam International, the Californian tomato ingredient processor Morning Star Company and the Japanese food group Imanaka Trading Company were among them.
In New Zealand Olam already owns 18.4% of New Zealand Farming Systems Uruguay and 25% of Open Country Cheese’s parent company Dairy Trust. It also bought US assets from tomato processor SK Foods last year for US$39 million.
Final bids were said to be due in with KordaMentha’s adviser Goldman Sachs JBWere at the end of the month. Asked if this was the case with any sale likely to be completed in July or August, Gibson said KordaMentha had always talked about that sort of timeframe. The sales process was “well down the track,” he added.
Incorporated in 1991, Cedenco produces fruit and vegetable powders, purees, pastes, retorted and frozen vegetables for domestic and international customers from operations in Gisborne and the Hawkes Bay. In Australia Cedenco operates a tomato processing plant in Echuca, on the banks of the Murray River in Northern Victoria. It also has a customer support office in Tokyo. Cedenco is understood to produce annual earnings before interest, tax, depreciation and amortization of about NZ$20 million with one estimate of its value put at between NZ$80 million and NZ$100 million.
SK Foods reacted to November's receivership in a statement issued by law firm Kensington Swan saying it aimed to seek legal redress from ANZ, claiming the bank’s decision was without justification and it had breached an agreement with Cedenco. Gibson said SK International had sought some information from KordaMentha on Cedenco’s position leading up to the receivership. The firm had provided the information it was required to by law and Gibson said he was not aware of any further legal proceedings.
Salyer was arrested by FBI agents on February 4 as he arrived at New York’s John F Kennedy International Airport on a flight from London. Facing fraud charges over an alleged scheme to dominate the market for tomato paste and other processed vegetables, Salyer is now in California’s Sacramento County Jail having reportedly surrendered his passport and pilot's license.
A lawyer representing him, Malcolm Segal, has told US media the charges are unfounded. However, the LA Times quoted Benjamin B Wagner, the US Attorney in Sacramento, as saying: “This would have to be the biggest case involving fraud within the agriculture industry that we’ve had in many years."
Federal prosecutors allege SK Foods used about US$330,000 in bribes from 1998 to 2008 to subvert competition and clinch deals to sell tomato paste, peppers and other products to companies such as Kraft Foods, Safeway and B&G Foods.
KordaMentha’s first report says ANZ was owed about NZ$46 million when the receivers were appointed. Unsecured creditors were owed about NZ$3.4 million and employees NZ$641,000.
Cedenco was also placed in liquidation last month with the Australian-based Sheahan Lock Partners appointed liquidators.
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