Bankruptcy trustee Joe Sarachek said the move should end months of uncertainty for the plant, Agriprocessors Inc., and the town of Postville. The sale would be subject to the approval of a bankruptcy court. A previous attempt to auction the plant failed three months ago.
"If no one else bids on it and the judge approves the sale, they own Agriprocessors," Sarachek said. "Other buyers are certainly free to come in and bid more."
Agriprocessors, once the nation's largest supplier of kosher meat, is the largest employer in Postville, a community that once had more than 2,000 residents but has seen its population dwindle and many businesses fail since the plant ran into trouble.
Top managers and the company were indicted months after 389 people were arrested in a May 12, 2008 immigration raid. Nearly six months later, Agriprocessors filed for bankruptcy and the court began seeking a buyer. An Israeli company came forward with a $40 million bid, but later rescinded it and the plant was put up for auction.
Sarachek said Hershey Friedman, president of Montreal-based Polystar Packaging, and two partners bought out the secured credit of two of the company's major creditors. Friedman and the other two buyers do not own any slaughterhouses in the U.S. or Canada.
The lines of credit were valued at $21 million, but Sarachek said SHF Industries paid less. The loans were a sticking point in the auction, as potential buyers could not agree with the creditors on a price. The creditors were not expected to get back the entire sums of the loans, and most of the auction process was spent determining what buyers would pay for them.
Sarachek did not disclose how much SHF Industries paid for the lines of credit, but said the company can be valued at slightly more than $25 million.
Sarachek said the two other partners, Daniel Hirsch and Mitch Kirschner, work in Friedman's U.S. operations. Sarachek said Hirsh is Friedman's son-in-law. Telephone messages left for Friedman and Kirschner were not immediately returned. No listing for Hirsh could be found.
Friedman is listed as president of Polystar Packaging and another plastics manufacturer in Brooklyn, N.Y., called Favorite Plastics. Polystar was founded in 1963 and employs 75 people, according to a Canadian government Web site.
The pending sale would include all of Agriprocessors' assets in New York, Florida and Iowa, which so far have served as collateral for the two loans. Sarachek said any equipment that was leased by the company would have to be negotiated after the sale. A date hasn't been set for the bankruptcy court to consider the sale.
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.
Another Agriprocessors asset, the Local Pride meatpacking plant in Gordon, Neb., is not a part of the sale and will be sold separately.