Global grain market? You betcha
Omtron USA, which owns defunct North Carolina poultry processor Townsends Inc., filed for Chapter 11 bankruptcy Friday, the second poultry producer to do so in as many months.
The subsidiary of Ukrainian egg and egg-product producer Agroholding Avangard, Omtron USA purchased Townsend's North Carolina plants out of bankruptcy in February 2011 for $24.9 million. Townsend had filed for Chapter 11 bankruptcy in December 2010, blaming the high cost of feed in 2008 that had continued to suppress profitability.
When it purchased the plants, Omtron had intended to import corn for feed from the Ukraine, where it is much less expensive, according to business journal MeatPoultry.com. However, changes to the Ukrainian government's export taxes in July reduced Ukrainian corn exports to a trickle.
U.S. grain prices have risen significantly as a result of a devastating drought in the Midwest. The rising prices caused Fresno, Calif., poultry producer Zacky Farms to seek Chapter 11 protection in October saying it was costing it $1.8 million per week to feed its turkeys and chickens. With its supply of Ukrainian corn cut off and U.S. grain at record highs, Omtron appears to have been left with no other out.
Following the change in Ukrainian tax policy, the mayor of Siler City, N.C., where one of the plants is located, announced in July that the two Townsends chicken-processing plants would be closing as of Oct. 1, eliminating 680 jobs, according to local news accounts, adding that the closure would be devastating to the community where it was the largest employer and supported many of the chicken farmers in the area.
Omtron USA filed for Chapter 11 bankruptcy on Friday with the U.S. Bankruptcy Court in Wilmington, Del., claiming between $10 million and $50 million in each assets and liabilities. It said it owes $760,000 to the town of Mocksville, where the other plant is located, for a disputed equipment lease. It didn't provide further information about its finances.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)
Write to Stephanie Gleason at firstname.lastname@example.org
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 12, 2012 12:37 ET (17:37 GMT)