Koch unit makes offer for Farmland plants

Company officials mum on possible interest in Lawrence's nitrogen fertilizer facility

Wichita-based Koch Industries has expressed an interest in purchasing the fertilizer operations of bankrupt Farmland Industries Inc., but it is unclear whether the company has any interest in Farmland’s Lawrence plant, which has been shut down for more than a year.

Farmland spokeswoman Sherlyn Manson said Koch made an unofficial offer for parts of Farmland’s nitrogen fertilizer business in August. Manson, however, said that Koch, in its proposal, did not offer to purchase all seven of Farmland’s plants. She declined to say whether the Lawrence plant, located along Kansas Highway 10, was included in the offer.

Mary Beth Jarvis, a spokeswoman with Koch Industries, also declined to comment on which plants were included in the offer.

Industry analysts have speculated there would be little interest from fertilizer companies to purchase the Lawrence facility. It is more than 50 years old, which makes it is the oldest of the seven plants Farmland owns. It has been shut down and most of its 150 employees released since May 2001.

The $180 million offer from Koch Nitrogen, a subsidiary of Koch Industries, was publicly disclosed Tuesday during a hearing before U.S. Bankruptcy Judge Jerry Venters.

Koch Nitrogen’s offer was not an official bid but part of an “offer of interest” sent to Farmland in August, a month before Farmland announced it intended to sell its entire fertilizer operations as part of its effort to regain profitability.

Still, the Wichita company’s letter was significant as the first time any value has been publicly placed on the fertilizer business.

After the hearing, Farmland bankruptcy attorney Laurence Frazen characterized the offer as “a lowball bid.” He said the company expected higher offers when bids are received by the Nov. 12 deadline.

Kansas City, Mo.-based Farmland, the largest farmer-owned cooperative in North America, filed for Chapter 11 reorganization May 31, in part because of sharply lower sales of fertilizer.