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NatureSweet to acquire EuroFresh assets

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NatureSweet Limited, headquartered in San Antonio, Texas, announced Monday that the company intends to purchase the assets of EuroFresh Farms, based in Willcox and Snowflake, Ariz.

Also on Monday, Eurofresh filed a petition for protection under Chapter 11 of the U.S. Bankruptcy Code, allowing the company to implement the plan of reorganization.

NatureSweet's acquisition is expected to take place following EuroFresh Farms' "exit from the bankruptcy process in about 90 days or thereabouts," said Frank van Straalen, chief financial officer at EuroFresh.

The transaction would take place through a 363 sale, which allows a company filing for bankruptcy to immediately market its assets to bidders, with the approval of the United States Bankruptcy Court, said Linda Welter Cohen of the Caliber Group in Tucson, representing EuroFresh.

NatureSweet and EuroFresh Farms are two of the leading producers of high-quality tomatoes in North America, Cohen said. EuroFresh Farms is also a leading U.S. grower of greenhouse cucumbers.

"Bringing EuroFresh products into the NatureSweet family provides us with new product offerings and U.S. growing facilities that we are confident will provide significant value to our customers," said Bryant Ambelang, chief executive officer and president of NatureSweet. "This acquisition is a great opportunity to continue our growth while providing customers with the premium-branded tomatoes they have come to expect from NatureSweet. For the company, our customers and our associates, this is the right thing to do at the right time."

Johan van den Berg, chief executive officer of EuroFresh Farms, said, "We are pleased to have received this offer from a financially strong organization that will continue to invest in the business of growing and selling greenhouse tomatoes and cucumbers."

The court filings are not expected to affect EuroFresh Farms' ability to operate its business and deliver on current or future customer orders, Cohen said.

Van Straalen added, ".We are not expecting any changes for the employees. There may be some adjustments in management. In the next few months, we will work on the integration plan - the way we deal with customers and products the normal things companies do when they put two companies together."

"Bryant Ambelang will be the CEO. Johan (van den Berg) will most likely be part of the company going forward, but we don't know in what capacity," he said.

In April 2009, the company filed for Chapter 11 bankruptcy protection after taking on too much debt while in the process of expansion, according to then CEO Dwight Ferguson. EuroFresh emerged from the process before the end of 2009 with an agreement to recapitalize the company with a group of investors, including founder and current CEO and President Johan van den Berg.

"We are reorganizing for completely different reasons this time," van Straalen said. "The entire industry is suffering from historically lower prices in the market, and this puts pressure on the financial side of the business."

Some of those low prices come from the huge volume of tomatoes imported from Mexico due to a low reference price allowed by the U.S. Department of Commerce in an agreement stemming from the suspension of a 1996 anti-dumping investigation. This low reference price of 21 cents per pounds is based on field-grown tomatoes, while it costs 61 cents per pound to grow greenhouse tomatoes. This has depressed price levels in the U.S. to a point that domestic production of safe and healthy greenhouse tomatoes is no longer economically viable, van Straalen said in November.

While he did not totally blame the situation born from the suspension agreement, he acknowledged it as part of the reason for the low prices.

"We hired Piper Jaffray (an investment bank and asset management firm) to find buyers, investors or merger partners and we think this will be the best option for Eurofresh to go forward," van Straalen said Monday.

When asked what will be different for NatureSweet in this market, van Straalen said, "I don't know what will change for NatureSweet, but we're excited about this partnership."

Company information

NatureSweet, Ltd., is the leading grower of premium branded fresh tomatoes in North America under the NatureSweet brand. NatureSweet tomatoes are distributed throughout the United States at major grocers, club stores, and foodservice operators. As the number-one brand of tomatoes in the United States, NatureSweet's growing operations employ more than 5,000 people year-round. For more information, visit www.naturesweet.com. EuroFresh Farms is a leading year-round producer and marketer of greenhouse tomatoes and cucumbers in the United

States and a leading innovator in the branded, high-end fresh tomato and cucumber industry. Premium quality, safe and flavorful products are grown in two greenhouses in Willcox and Snowflake, Ariz., by 1,100 employees. For more information, visit www.eurofresh.com.



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