Black Diamond Capital Management LLC will be purchasing Hines Horticulture, bringing one of the nation’s largest growing operations out of Chapter 11 bankruptcy protection. The asset purchase agreement was approved by the U.S. Bankruptcy Court for the District of Delaware this week.
Based in Irvine, Calif., Hines has seven facilities spanning 4,000 acres of outdoor and greenhouse production in Arizona, California, Texas and Oregon. Hines filed for Chapter 11 bankruptcy protection in August and Black Diamond was secured early on to be the lead bidder during the bankruptcy sale process. No other bidders came forward with a better offer. The sale price has not been revealed yet.
Based in Lake Forest, Ill., Black Diamond is a privately held alternative asset management firm that manages about $5.4 billion in assets across hedge funds, control distressed/private equity funds and collateralized loan obligation vehicles. According to Stuart Erickson, managing director of Miller Buckfire & Co., which is representing Black Diamond in this case, “Black Diamond has a proven track record of acquiring substantial operating assets out of Chapter 11.” The newly formed entity purchasing Hines is owned by affiliates of Black Diamond.
Hines also filed an amended plan for its emergence from Chapter 11 bankruptcy protection, which will be voted on by its creditors by Jan. 21. A confirmation hearing is scheduled for Jan. 28.
Hines owes more than $192.6 million to unsecured creditors with nonpriority claims. Ahead of them to collect money are secured creditors, like banks, and all tax-collecting government agencies where Hines operates.
The top 12 claims from unsecured creditors who are also industry suppliers include:
–SunGro Horticulture–$550,557 (Hines used to own SunGro)
–Syngenta Seeds–$516,888
–Ball Seed–$445,807
–Conard-Pyle Co.–$208,026
–McGregor Plant Sales–$205,007
–Simplot Partners–$176,118
–ForemostCo Inc.–$167,865
–Western Farm Service–$158,352
–Wilbur-Ellis Co.–$146,263
–Abbott-IPCO–$145,280
–Magnolia Gardens Nursery–$140,800
–BWI Companies–$107,185
Together, the claims from these dozen companies represent nearly $3 million of the $192.6 million, so the debt is distributed widely to hundreds of companies.
Interestingly enough, royalty agreements are a priority in bankruptcy cases. Court records show Conard-Pyle should be receiving more than $220,000 in royalty payments. Others listed include more than $10,000 for Weidners Gardens, more than $13,000 for Spring Meadow Nursery and $18,000 for Flowerwood Nursery.