| The Texas company that closed sugar refineries in Woodland
and Tracy a month ago has filed for bankruptcy protection from creditors.
Imperial Sugar Co., deep in debt, suffering ongoing operating losses
and seeing a halt in trading of its stock at less than $1 a share, will
try to reorganize its finances under Chapter 11 of the bankruptcy code.
"This is a sign of our industry, not just one company," said
Ben Goodwin, head of the California Sugar Beet Growers Association.
"These guys happened to be carrying a lot of debt, so they were
really swept up by this."
Imperial Sugar, the nation's largest processor and marketer of refined
sugar, went on an acquisition kick between 1996 and 1998 that greatly
increased its debt.
It ran into trouble in late 1999, when an oversupply of sugar in the
United States and worldwide pushed prices to their lowest level in recent
history.
Imperial Sugar officials, however, are optimistic the Houston-area
company will emerge from the bankruptcy proceedings by this better shape.
One reason for their optimism is an agreement by bondholders to
exchange their bonds for company stock, which is traded on the American
Stock Exchange. Shares were last traded Dec. 13, closing at 81 1/2 cents.
That swap of investments will eliminate the annual interest payments of
$25 million to bondholders and the need to pay off $250 million of debt,
greatly strengthening the balance sheet, said the company vice president,
Doug Ehrenkranz.
The exchange, however, also will dramatically dilute the value of stock
held by current investors whose ownership of the company will be reduced
from 100 percent to 2 percent, Ehrenkranz acknowledged.
At the time of the bankruptcy filing two weeks ago, Imperial's
president and chief executive, James Kempner, said that the company
doesn't expect any disruption in operations.
Sugar beet growers in California were concerned they might not get paid
for the crop just harvested and the winter crop that will be picked this
spring, said Goodwin, who negotiates contracts for the state's beet
growers.
But Goodwin said Tuesday he is satisfied that the court has authorized
Imperial Sugar to honor its contracts with the farmers.
The sugar beet industry in Northern California came to an end at the
end of last year when Imperial decided to close its processing plants in
Woodland and Tracy where the vegetable is turned into refined sugar. As a
result of the closures, some 250 farmers who delivered their crop to those
two factories will no longer plant beets.
The company is keeping sugar refineries at Mendota in Fresno County and
at Brawley in Imperial County that will process beets harvested on an
estimated 55,000 acres by about 300 farmers in Southern California.
"It's business as usual for those plants," Ehrenkranz said.
"There are absolutely no plans to do anything different there."
Meanwhile, the company hopes to sell the hundreds of acres of land
surrounding its plants in fast-growing Tracy and Woodland.
"We're continuing to market the property for them," said
Steve Machado, a real estate broker in Woodland. "We're talking with
people who have interest in the site." |