Dreyer’s, French Firm Top Rival Bid for Knudsen Units
A bidding war for the California milk plants of ailing Knudsen erupted in bankruptcy court Thursday as French cheese maker Bongrain S.A. and Oakland-based Dreyer’s Grand Ice Cream joined forces to top a competing offer by $250,000.
Knudsen, which is operating under Chapter 11 of the U.S. Bankruptcy Code, agreed on Sept. 23 to sell its six plants to food industry giant Kraft and Hughes Markets. Kraft and Hughes agreed to pay $68 million for the facilities.
Bankruptcy Judge Barry Russell in Los Angeles gave the two bidders until today to come up with their best offer for the Knudsen properties. He said he will announce the winning bid in court today.
Had Been Expected
A competing bid had been generally expected, and executives at Kraft and Hughes didn’t seem upset by Russell’s order. “It’s fun,” said Hughes President Fred McLaren, commenting on the bidding.
A week ago, Knudsen rejected a $45-million offer from Bongrain and Dreyer’s for Knudsen’s cottage cheese, yogurt and ice cream production facilities only. In court Thursday, Bongrain and Dreyer’s included the milk plants in their joint bid, although the companies “have no idea what we’ll do with them,” said Bongrain’s lawyer, Emmanuel Zimmer. “It’s too soon to say.”
The plants for sale are located in Visalia, Modesto, Fresno, Los Angeles and Las Vegas.
Kraft-Hughes Proposal
Under the Kraft-Hughes offer, Kraft would acquire the cottage cheese plant in Visalia and the ice cream plant in Los Angeles, while Hughes would acquire the other plants. McLaren said Hughes might later sell the Modesto and Fresno plants.
Russell denied objections to a sale from some Knudsen creditors. Marc Cohen, a lawyer representing unpaid dairy farmers, said in an interview that his clients believe that “more money is out there” and that the process was moving “too quickly” to attract more bids.
On Sept. 25, Bankruptcy Judge William Lasarow approved a request by Knudsen for a speedy hearing on the Kraft-Hughes offer. Normally, a 20-day waiting period is required so creditors can be notified of a sale.
Knudsen, which has been looking for a buyer for its assets since mid-April, argued that it will lose its day-to-day financing if a sale isn’t completed by Oct. 6.
“It is clear that this is an emergency,” Russell said Thursday. John P. Brinkco, Knudsen chief executive, said previously that the company is worth $200 million as an operating company but just $80 million if it is liquidated. The company has been losing $500,000 a week and has been kept afloat by a $20-million weekly cash infusion from Citicorp Industrial Credit Bank, which is owed $155 million.
