SALEM, Ore. (AP) — Agriculture entrepreneur Frank Tiegs has pulled out of his planned $155.5 million takeover of the bankrupt NORPAC Foods processing company.
Tiegs said he’s withdrawn from the “asset purchase agreement” because of red flags with the company, The Capital Press reported.
In August, the farmers’ cooperative filed for Chapter 11 bankruptcy protection to restructure its debt while remaining operational and announced Tiegs’ Oregon Potato Co. planned to buy most of its assets.
A hearing to approve the deal was scheduled for Oct. 28 in bankruptcy court after no other bidders materialized to compete with higher offers. Tiegs said NORPAC hadn’t supplied documents that were needed to complete the agreement.
Since making the offer, Tiegs says he’s become aware of serious problems with soil and water contamination at NORPAC’s facilities, and regulatory problems he did not want to discuss.
Other red flags included NORPAC officials not supplying him with requested documents and deleting an email system that contained internal company communications, Tiegs said.
Capital Press was unable to reach Albert Kennedy, the lead attorney representing NORPAC in the bankruptcy for comment.
But during a Monday court hearing, Kennedy told U.S. Bankruptcy Judge Peter McKittrick that Tiegs notified NORPAC of the termination less than 30 minutes before competing bids were due on Oct. 18.
“We have since responded and said we believe the grounds for the termination are baseless and the termination notice was given in bad faith,” Kennedy said.
While NORPAC remains willing and able to close the transaction, the timing is precarious, he said. In previous court documents, the company disclosed that it needed additional financing to continue operating as a going concern.
“The window for closing this transaction is very short, and if they don’t withdraw their termination within a matter of a day or two, it will probably be impossible,” Kennedy said.
