Easterday Ranches, Inc. – Court Approves Agri Beef Affiliate as Stalking Horse Bidder for Certain Farm Equipment ($14.0mn Bid); Sets September 22nd Sale Hearing

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September 8, 2021 – The Court hearing the Easterday Ranches cases issued an order (i) authorizing the Debtors to designate Blue Tag Farms, LLC as the stalking horse bidder (the "Stalking Horse Bidder," purchase price $14.0mn) in respect of the Debtors' farm equipment and related personal property (collectively, the “Equipment”), (ii) authorizing the Debtors to pay the Stalking Horse Bidder with a $250k break-up fee in the event of an alternative transaction and (iii) approving a proposed timetable culminating in a September 14th auction and a September 22nd sale hearing [Docket No. 1060]. The Equipment APA is attached to the the Debtors' notice of their intent to make the sale [Docket No. 1048] as Exhibit B.

The Stalking Horse Bidder is an affiliate of Boise, Idaho-based Agri Beef.

Approved Key Dates

  • Deadline to Submit Equipment Sale Bids: September 10, 2021
  • Deadline for Debtors to Qualify Equipment Sale Bids: September 13, 2021
  • Equipment Sale Auction: September 14, 2021
  • Deadline to Object to Equipment Sale: September 17, 2021
  • Equipment Sale Hearing: September 22, 2021

The notice states, “…since the filing of these Chapter 11 Cases, the Debtors have been continuing a marketing process initiated prepetition for the sale of the Real Estate Assets and the Equipment. In this regard, the Debtors, with the help of their various professionals, established a data room with respect to the Debtors’ assets and have entered into over a hundred non-disclosure agreements in connection therewith. In addition, and as particularly applicable to the Debtors’ marketing efforts with respect to the Equipment, the Debtors and their professionals have also been contacted by numerous parties interested in acquiring some or all of the Equipment, such as other agricultural operators and auctioneers, as a result of these well publicized Chapter 11 Cases.

The Debtors’ and their professionals’ marketing efforts culminated in the receipt of numerous Indications of Interest, including five formal Indications of Interest, as well as certain informal expressions of interest. Of the five formal Indications of Interest received, four were submitted by auctioneers interested in selling the Equipment piecemeal at a public auction and a fifth was submitted by the Equipment Stalking Horse Bidder for a bulk sale of the Equipment.

The Debtors have worked diligently to review and evaluate all interest in the Equipment received to date. Following the Debtors’ review, and in consultation with the Consultation Parties, the Debtor determined to engage with the Equipment Stalking Horse Bidder to negotiate and finalize the terms of the Equipment Stalking Horse APA. The Debtors have determined, as an exercise of their sound and reasonable business judgment, that the Equipment Stalking Horse APA represents the highest and/or best offer received by the Debtors to date for the sale of the Equipment.

As was contemplated when the Debtor filed the Bid Procedures Motion, the Debtors believe that a bulk sale, such as that set forth in the Equipment Stalking Horse APA, serves the critical function of setting a ‘floor’ for further competitive bidding for the Equipment while significantly reducing the risk associated with the removal of the Equipment from its current locations. Moreover, a bulk sale on the terms set forth in the Equipment Stalking Horse APA will allow the Debtors to comply with, and not be in default of, the terms of the Temporary Lease Agreement, as it guarantees that the Debtors will have vacated the leased premises by the Temporary Lease Termination Date (i.e., October 31, 2021)."

Key Terms of the Equipment Stalking Horse APA:

  • Sellers: Easterday Ranches, Inc (“Ranches”) and Easterday Farms (“Farms”)
  • Buyer: Blue Tag Farms, LLC, a Washington limited liability company
  • Purchase Price: The Equipment Stalking Horse APA contemplates that the purchase price consideration paid by Blue Tag Rams, LLC for the Equipment will be $14,021,720.00 in cash consideration, subject to adjustment for any missing Equipment.
  • Bid Protections: The proposed Bid Protections consist of a Breakup Fee in the amount of $250,000, payable only from the proceeds of an alternative transaction (if any), in the event that the Debtors do not close a transaction for the sale of the Equipment to the Equipment Stalking Horse Bidder.

Proposed Key Dates

  • Deadline to Submit Equipment Sale Bids: September 10, 2021
  • Deadline for Debtors to Qualify Equipment Sale Bids: September 13, 2021
  • Equipment Sale Auction: September 14, 2021
  • Deadline to Object to Equipment Sale: September 17, 2021
  • Equipment Sale Hearing: September 22, 2021

Asset Sale Background

On July 20, 2021, further to its bidding procedures order [Docket No. 664] and an auction completed on June 17th, the Court hearing the Easterday Ranches cases issued an order approving the Debtors’ $209.0mn (inclusive of $3.4mn of bidder protections which will not be received by the estates) sale of their “Easterday Land” and “Land” assets to Farmland Reserve, Inc. a Utah Nonprofit Corporation (the “Buyer,” an entity related to The Church of Jesus Christ of Latter-Day Saints) [Docket No. 927]. The assets also included certain property owned by the Easterday family, which will be transferred to the Debtors and then on-sold to the Buyer as detailed in the order.

The Buyer had paced bidding with an $188.0mn stalking horse bid, with the significantly augmented sale proceeds reflected in an amendment to a May 19, 2021 purchase and sale agreement (both documents attached to the sale order). The Buyer’s winning bid topped a $208.0mn bid from back-up bidder 100C, LLC, an entity controlled by the Bill & Melinda Gates Foundation.

Prior to the sale, Debtors operated commercial farming and ranching operations, which required significant acreage to accommodate the Debtors’ expansive operations.  In this regard, the Debtors’ operations spanned approximately 22,500 acres over multiple farms, lots/ranches, and other complexes and facilities, which are generally referred to by their common names: (i) Goose Gap Farm, (ii) River Farm, (iii) Nine Canyon Farm, (iv) Cox Farm and (v) a storage complex on River Farm (collectively, the “Sale Properties”).

About the Debtors

According to the Debtors: “From the early stages of planting to the final phase of packaging and shipping, you will find the Easterday family actively involved in all aspects of delivering you high quality produce you can trust. We are a family-owned and operated farming business. We believe that the size of our business is a unique balance between the economy and efficiency of scale and the attention to detail necessary for customer satisfaction. We are a proud grower and packer of conventionally raised onions and potatoes.”

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