Private Equity Firm To Pay $125 Million For Allens Canning

Allens Canning business went on the auction block earlier this week with Sager Creek Acquisition Corp. winning the bid and agreeing to pay $124.78 million for the bankrupt business. Little is known about Sager Creek, a recently formed Delaware-based corporation, according to the court filing.

The president of Sager Creek, James Athanasoulas, is the managing director of Sankaty Advisors, a unit of Boston-based Bain Capital. Sankaty Advisors is a secondary lienholder listed among Allen’s creditors. The amount owed was not disclosed.

The $124.781 million price tag is subject to increase or decrease for the actual amount of “First Priority Obligations,” other pending claims and fee along with the $3 million break-up fee required by the court. The sale be must authorized and approved by the bankruptcy court in a hearing set for Tuesday, Feb. 11, in Fayetteville. A secondary bid was recorded by Atlanta-based McCall Farms in the amount of $124.606 million, according to the filing.

There were a number of assets excluded from this proposed deal such as the stadium suite at Arvest Ballpark in Springdale, an airplane hanger at the Siloam Springs Municipal Airport, frozen re-pack facility and processing plant in Montezuma, Ga., and five residential properties each located in Siloam Springs.

Other personal items also excluded from the deal included a desk in the CEO’s office once belonging to Earl Allen, various sports and personal memorabilia located in the corporate offices of Nick, Josh and Rick Allen, and various historic photographs of the family business displayed in the corporate headquarters.

The stalking horse bidder, New York-based Seneca Foods Corporation, walked away from the deal to acquire Allens a second time this past week as the fruit and vegetable company was outbid for the Siloam Springs-based canned food business.

Seneca entered a bid at $148 million after combing through Allen’s records. Early reports indicated the winning bidder, Sager Creek, offered the court $159.98 million for the assets up for grabs. Subsequents details in the court filing late Friday, (Feb. 7) indicated the purchase price to be $124.781 million by Sager Creek, with McCall Farms backup bid of $124.606 million.

This is the second failed attempt by Seneca to close a deal with Allens in three years. Seneca said in December that Allens canned food business would fit into the company’s long-term growth plans.

Allens and Seneca tried to merge their operations in June 2011, but walked away from the deal in September 2011 when the businesses could not agree on terms.

Given that Sager Creek principals are venture capitalists/private equity investors and not manufacturers like Seneca or Allens, it’s possible the business could be dismantled and sold off or infused with cash and sold for a higher price.