June 29, 2009

Hopes Abound With Sale of Agriprocessor to Canadian Group

New York…From Postville to Alaska, there were new hopes that the bankrupt Agriprocessor would soon spring to life, although there was still no word from the group that appears to have successfully acquired the company on what its plans for the company were. Hershey Friedman, the president of Montreal-based Polystar Packaging, is a well-known Orthodox Jewish activist and philanthropist. Although he and the two partners that bought out the secured credit of two of the company's major creditors have no direct food experience, they are known to be successful business managers and very well respected in the Orthodox Jewish community. They are said to have agreed to pay $8.5 million to two of Agriprocessors’ largest secured creditors — First Bank Business Capital of St. Louis and the credit arm of Metropolitan Life Insurance. Kevin Huntsman, a vice president and plastics specialist at Kansas City-based commodities consulting firm Mastio and Co., said it would make sense for Friedman to buy the meatpacking plant, as Polystar Packaging is one of the top 15 manufacturers of meat and poultry packaging. If there was any bad news, it was for the many unsecured creditors who stand to loose the money they are owed. The two other partners, Daniel Hirsch (Mr. Friedman’s son-in-law) and Mitch Kirschner, work in Friedman's US operations. Friedman is listed as president of Polystar Packaging and another plastics manufacturer in Brooklyn called Favorite Plastics. Polystar was founded in 1963 and employs 75 people, according to a Canadian government Web site.

The most enthusiastic people these days are citizens of Postville and kosher consumers in nearly 18 smaller markets that have not been served since a federal raid on Agriprocessor in May 2008. "If no one else bids on it and the judge approves the sale, they own Agriprocessors," Joe Sarachek, the court appointed trustee, said. "Other buyers are certainly free to come in and bid more." The lines of credit were valued at $21 million, but Sarachek said SHF Industries (the new company created by the partnership) had paid less. The loans were a sticking point in an earlier failed auction, as potential buyers could not agree with the creditors on a price. Industry observers say that a newly reconstituted Agriprocessors would face an uphill battle to win back share in the larger markets. Several competitors and newly established purveyors have stepped in to fill the vacuum. Agriprocessors itself has been producing some poultry and importing a small amount of beef from South America.