Erly to Sell Some Units, Focus on Juice and Rice
Saddled with debt from an aggressive acquisition drive, Erly Industries Inc., the Los Angeles-based conglomerate that owns Comet Rice, will sell its less profitable divisions and concentrate on its core businesses of juice and rice, company officials said.
Erly’s problems began in 1988. A year earlier, the company loaned $24 million to struggling Hansen Foods to help the natural soft-drink maker restructure its business. In return, Erly was to receive 50% of Hansen’s profits.
But in 1988, Hansen defaulted on the Erly loan and subsequently filed for protection under Chapter 11 of the federal bankruptcy code. Erly had borrowed $12 million to make the loan to Hansen and was left having to pay off its own creditors.
Despite the Hansen debacle, Erly went on to acquire Kraft Inc.’s citrus business, the troubled TreeSweet companies and a 48% interest in Houston-based American Rice--all within 10 months.
Working on Hansen Deal
“The financing for the acquisitions have added to the cash pressures,” Gerard P. Thomas, Erly’s vice president and chief financial officer, said Friday. “We are now looking at a restructuring that would call for the sale of our Chemonics fire retardant business and international agribusiness consulting business.”
Thomas would not identify Chemonics’ buyer, but he said Erly will get $10 million for the Phoenix-based unit and will retain a 15% interest.
Erly is also involved in negotiations to complete the sale of Hansen Foods, which was authorized by the bankruptcy court. If Hansen is successfully sold, Erly will receive $13 million and an $11-million note payable over 10 years.
The company is also working toward selling its wine business or merging it with another firm. In addition, a merger between Comet Rice and American Rice is in the works, Thomas said.
“While facing hard decisions which result in substantial reserves and charges to operations is never easy, we believe that Erly is well positioned to capitalize on opportunities in the rice and juice businesses,” said Gerald D. Murphy, president and chairman of Erly.
In addition, Murphy said, “the restructure program will improve our financial ability to accomplish this.”
Erly Industries Inc. reported sales of $283.3 million for the year ending March 31, up from $174.3 million for fiscal 1988.
In fiscal 1989, the company posted a loss of $13.9 million, compared to a loss of $8.6 million for fiscal 1988. The 1989 figure includes a $148-million loss from discontinued operations, while the 1988 figure a $10.4-million loss from discontinued operations.
