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"The company has entered and negotiated the terms of the financial restructuring and the bankruptcy with the bank and the bondholder," said Bill Schwer, executive vice president of Imperial Sugar. "That means all three parties agree this is the alternative that is going to be pursued."

Last month Imperial Sugar indicated that it did not meet certain financial covenants under its senior credit agreement on Sept. 30, so it would not meet $12.2 million in interest on a $250 million note that was due Dec. 15. Imperial Sugar attributed its decrease in net sales primarily as a result of lower sales prices for refined sugar.

The interest payment was waived through Jan. 8 and then extended to Jan. 14. According to Schwer, Imperial Sugar did not make that payment.

Through Imperial Sugar's proposed plan of reorganization, current holders of notes due in 2007 along with other unsecured creditors will receive 98 percent of the common equity in a restructured entity. Current holders of the common equity of the company will receive 2 percent of the common equity in addition to 7-year warrants to purchase an additional 10 percent of the restructured entity on a fully diluted basis.

"They converted the debt into stock in the company, and the debt holders are the majority stock holders in the company," explained Rick Griffith, Torrington Holly ag manager. "What that does is erase a good portion of our debt and make our balance sheet quite a bit stronger."

"The bondholders are now 98 percent holders of the company," agreed Leroy Schafer, district manager for the Torrington factory. "Whether that affects us at all, I have no idea, but we really don't expect to be anything other than business as usual.

"We're actually in a better financial situation with this Chapter 11 bankruptcy than we were last year," he added.

According to Griffith, the day-to-day operation at the Torrington plant has not changed.

"Our parent company, Imperial, filed for the bankruptcy," he said. "As far as Torrington is concerned, our employees are getting paid, our vendors are getting paid and our growers' payments will be paid. We're meeting our financial obligations, so we're proceeding on as business as usual."

Although there has been a delay, Holly Sugar plans to contract sugar beets for the Torrington factory for the 2001 crop. The delay is attributed to changing to a new computer system and not to the Chapter 11 filing, Schafer said.

"(The delay) did not having anything to do with the financial statements coming out," he said. "It was just the timing of the computer systems going forward."

"The contracts are at the printer right now as we speak," Griffith added. "I should have them in this office maybe by Friday. We plan to start contracting next week."

Schwer believes the filing will have no impact on growers.

"It should mean nothing," he said. "In the plan of reorganization, the growers are identified as critical suppliers, and we ask the court that we can pay everything that is due them. In addition to the request we've made to the court, both the banks and the bondholders agreed to that request. They understand that the growers are important and that they need to be paid."

The bankruptcy court gave approval for growers to be paid Tuesday night.

"After you go into reorganization, and the $250 million debt goes away, Imperial and Holly will be stronger companies with a much better balance sheet, and we hope growers understand that," he said.

Imperial Sugar also agreed with its lenders for up to $85 million in debtor-in-possession (DIP) financing, of which up to $50 million will be available after March 31.

"After you file the petition, you have to have separate financing, which will assist you with your operations while you go through bankruptcy," Schwer explained. "The significance is our banks, who previously financed our operations, are the same banks who are going to assist us with the DIP. And we think that's important to understand that our banks are comfortable to stay within our credit portfolio as we go through bankruptcy."

Imperial Sugar expects the reorganization proceeding to be completed within the company's fiscal year ending Sept. 30, 2001, and Schwer anticipates it being sooner than that.

"The growers have our assurance that beet payments will be made and that we are still a strong company," Griffith said. "We still have one of the best contracts in the industry, and we're going to continue to do our job and our business as we have done in the past."

Next week Holly will hold a grower informational meeting to discuss where the company is at and where it is going, Griffith said. Roger Hill, president of Holly Sugar Corporation, and Jim Kempner, president and CEO of Imperial Sugar Company, will be in attendance.

"They will be discussing the current status of Imperial and answer any questions that growers, financial institutions and landowners have about our company regarding the 2001 crop year," Griffith said. "This would be a good opportunity to meet the president of the company, and he will address their concerns."