Plenty left from NZ$140 mln Cedenco sale after ANZ paid out

Plenty left from NZ$140 mln Cedenco sale after ANZ paid out

United States federal authorities could decide who gets the bulk of NZ$140 million secured through the sale of New Zealand’s Cedenco Foods.

Cedenco’s receiver KordaMentha announced the sale of the producer of fruit and vegetable powders, purees, pastes, retorted and frozen vegetables last month.

Cedenco’s New Zealand operations are being bought by Japan’s Imanaka Trading Company, pending Overseas Investment Office approval. It’s Australian business is being bought by a second Japanese firm, Kagome Co.

Interest.co.nz understands the combined sale price is about NZ$140 million after the Japanese buyers secured the deal against competition from the likes of Singapore’s Olam International and Californian tomato ingredient processor Morning Star Company.

Owed NZ$46 million, ANZ appointed KordaMentha last November after Cedenco defaulted on loans and with concern over governance and ownership issues swirling as US authorities laid fraud charges against Frederick Scott Salyer, former owner and chief executive of Cedenco’s parent company, the Monterey based SK Foods International.

KordaMentha’s Brendon Gibson told interest.co.nz while he couldn’t comment on how much Cedenco sold for, there could be money left over after the ANZ, staff and unsecured creditors are paid out. The US courts would look at where this money went, including whether Salyer – who is facing charges of racketeering, bribery, obstruction of justice and antitrust violations that could send him to prison for life - was able to collect any. Salyer has pleaded not guilty and is fighting the charges.

KordaMentha’s latest report shows Cedenco receipts of NZ$27.8 million dating from its appointment on November 9 last year to May 8 this year, and payments of NZ$32.6 million. That leaves a short fall of NZ$4.7 million. The first receiver’s report estimated staff were owed NZ$641,000 and unsecured creditors NZ$3.4 million. So there should be plenty of money left once the ANZ and other creditors are paid out.

Salyer was arrested by Federal Bureau of Investigation (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 awaiting trial after being denied bail.

The most recent US media reports suggest Salyer's lawyers are countering the charges against him by accussing the FBI of using an informant to steal documents instead of conducting lawful searches. They claim the FBI's case is contingent on a swathe of documents obtained without court-authorised warrants from a vice president of Salyer's company who simply stole the material.

This breaches the Fourth Amendment of the US Constitution, Salyer's lawyers argue, which prohibits searches and seizures without warrants.

However, the LA Times has quoted Benjamin B Wagner, the US Attorney in Sacramento, as describing Salyer's case as the biggest case involving fraud within the agriculture industry "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.

In New Zealand Cedenco has 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 was also placed in liquidation in May with the Australian-based Sheahan Lock Partners appointed liquidators.

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