Archive for Thursday, April 26, 2001

BANKRUPTCY Co-op seeks to shed assets at auction

April 26, 2001


The state's largest farm cooperative is preparing once again to sell everything -- from grain to spreaders to elevators -- to satisfy its debts in a bankruptcy case.

Farmers Cooperative Assn. wants to auction all of its substantial assets -- elevators, convenience stores, land and grain inventory -- during an auction June 7. The co-op's equipment would be sold during three separate auctions in July.

The sales could draw one bid large enough to keep the cooperative substantially intact, or it could splinter the 48-year-old operation into dozens of separate parts. But one thing is clear.

Nobody's quite sure what to expect, given a bankruptcy judge's direction to find a fair and equitable way to sell the co-op's holdings. When the co-op filed its Chapter 11 case in September, it listed debts of $19.7 million against assets of $25.3 million.

"We could have eight or 10 buyers for each piece or we could have none," said Don Dumler, the co-op's president and chief executive officer. "An auction is about as democratic as you can get."

The co-op will take its proposal to Judge John Flannagan for a hearing at 1:30 p.m. Monday in U.S. Bankruptcy Count in Kansas City, Kan. If approved, planning for the auction would continue.

The co-op already has hired an auction company -- Del Peterson & Associates, of Freemont, Neb. -- to handle the tentative June 7 event. Space already has been reserved at the Douglas County 4-H Fairgrounds.

Slated for auction on June 7:

l Elevators and associated buildings and equipment in Edgerton, Overbrook, Scranton, Burlingame, Pauline, Topeka (two), Perry, Midland, North Lawrence, Oskaloosa, Meriden, Winchester, Atchison and Denton, all in Kansas; plus Bethany and Rushville, in Missouri.

l FCA's Lawrence headquarters at 2121 Moodie Road; an Ampride station at 23rd Street and Haskell Avenue; and a farm store in Gardner.

In past months, such properties were expected to fetch up to $7 million, Dumler said.

AGP Grain Cooperative, a subsidiary of Omaha, Neb.-based Ag Processing Inc., had offered earlier this year to buy the bulk of Lawrence co-op's assets for $4.5 million. But that offer was rescinded after Flannagan said he wanted the bidding opened up to all potential bidders.

Dwane Schaake, a former co-op board member who farms 600 acres east of Lawrence, said he heard about possible bidding interests from Bunge Corp., Archer-Daniels-Midland, DeBruce Grain and Midwest Fertilizer Co.

But Schaake, as one of 20 area farmers who are considering pooling their interests for a bid of their own, isn't sure what will happen.

"There's just not money out here to plunk down," he said. "If we had 300 people and $20,000 from each of them we could make a showing, but there certainly hasn't been any gigantic show of support."

Schaake's concerns turn to having a place to sell his crops and buy agronomy products. If there is no more co-op, an already difficult agriculture economy could get even tougher.

"We could come to the point where we would not have any place to dispose of our crops," he said. "That's what's worrying me. We're getting down to the firing line here. Something needs to be done."

-- Business editor Mark Fagan can be reached at 832-7188.

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