Hog producer AgFeed Industries filed for Chapter 11 bankruptcy protection on July 15 after agreeing to wind down its supply contract with Hormel Foods, its main U.S. customer. Hormel purchases weanling pigs and hogs from the company.
AgFeed plans to sell its U.S. operations while under Chapter 11 protection, the Wall Street Journal reported. It's also looking for a buyer for its Chinese units, which aren't included in the U.S. bankruptcy case.
The company has lined up a $79 million leading bid for most of its U.S. assets from Maschhoffs LLC, a Carlyle, Ill., hog production network, according to papers filed with the U.S. Bankruptcy Court in Wilmington, Del. The offer, which is subject to court approval, would be tested at a court-supervised auction.
The company's U.S. operations brought in $244 million in revenue in 2012, court papers stated.
The company has been involved in a dispute with Hormel that led to an arbitration award of $7.9 million against AgFeed earlier this year. This decision spurred an event of default under the company's $68.5 million credit facility, which matured in February and hasn't yet been repaid.
AgFeed and Hormel have since reached a settlement and have agreed to wind down their business relationship by the end of 2013.