Austin Packaging owners hand over company control, prepare for salePublished 6:16pm Tuesday, April 16, 2013
Interim manager to refinance multi-million dollar debt
Austin Packaging Co. owners have turned over control of the business to an interim manager to get its debt in order and sell the company.
APC owners Jim Heimark and Jeff Thatcher and representatives of Wells Fargo Bank have agreed upon arrangements for the troubled frozen products manufacturer that filed for receivership — a way to avoid bankruptcy — on April 10. Both parties agreed Tuesday in Mower County District Court to allow Tony Natale, president of Shepherd Partners Inc. in Chicago, to act as interim manager, or receiver, of APC to handle debt issues and prepare it for a buyer, possibly within 60 days. Mower County District Judge Fred Wellman signed the agreement.
APC owes $1.54 million to Wells Fargo and $1.9 million to a Wells Fargo affiliate as of April 3, according to Mower County court documents. The company also owes $6.74 million to vendors in unsecured debt, court documents state.
The company took in gross revenue of about $70 million in 2012, and estimates about $30 million in 2013, according to court documents.
“My job is to get the best price for the company’s assets,” Natale said.
While an attorney on behalf of APC and Natale noted one unnamed potential buyer, Natale said the sale must be opened to the highest offer. The attorney told Wellman that APC needs assistance now, calling this a “critical moment in time.”
APC announced in March it would lay off 125 employees, or half of its workforce, but later decreased the number to 76. Employees at every level, from line workers and mechanics to managers and supervisors — largely from the pizza division — were laid off on March 29.
The move came as the company eliminated its frozen pizza manufacturing business, citing a year and a half of significant decline in the frozen pizza industry. APC manufactured Nestlé-owned pizzas such as Tombstone and DiGiorno, but said it is now focusing on manufacturing frozen and liquid sauces, such as cheeses, gravy, Alfredo and Asian-flavored sauces.
Natale is confident the company can be successful once the debt is eliminated and a buyer takes over.
“We see an opportunity for APC to thrive in the sauces and liquids business,” he said.
Nobody objected to the motion to appoint Natale as receiver, and Natale’s lawyer said APC’s two largest suppliers, Nestlé and General Mills, showed no opposition, either. A spokesperson for Wells Fargo said the company supported the move.
Attorney David Hoversten expressed concerns about APC’s lease agreements with the Austin Port Authority, which owns the land, and outstanding fees for discharges into the city of Austin’s sewer. However, Hoversten believes Natale will act in good faith and take care of those issues, which were immediately addressed by Natale’s attorney.
“I’m fairly satisfied,” Hoversten said. “They’ve indicated that those charges will be taken care of.”
Shepherd Partners specializes in financial advisory, turn-around consulting and interim management for businesses, according to its website.
Heimark declined to comment.