AgFeed bidding procedures approved for proposed $50.5 million sale

By Jim Witters

Wilmington, Del., Oct. 10 - AgFeed USA, LLC received approval of bid procedures connected to the proposed $50.5 million sale of its stock in AgFeed Industries, Inc. (British Virgin Islands) to a newly formed affiliate of Ningbo Tech-Bank Co., Ltd.

Judge Brendan L. Shannon approved the procedures, including stalking-horse protections, during an Oct. 10 hearing in the U.S. Bankruptcy Court for the District of Delaware.

AgFeed Industries is the debtor's Chinese affiliate.

Ningbo Tech-Bank's affiliate, Good Charm International Development, Ltd., has agreed to pay $52.88 million, less working capital adjustments of $2.38 million, for 100% of the outstanding stock.

The stock purchase agreement also contains provisions for additional adjustments at closing for net working capital, cash on hand and livestock inventory.

Both the informal committee of equity security holders and the official committee of unsecured credits agreed to the bidding procedures, but reserved their rights to object to the purchase price adjustments at the sale hearing.

Bid procedures

Under the bidding procedures approved during the hearing,

• If Good Charm is not the prevailing bidder at auction, Good Charm will receive a 3% breakup fee of about $1.6 million and expense reimbursements of as much as 1% of the base purchase price, about $528,000;

• The bid deadline is Nov. 13;

• Competing bids must exceed by $250,000 the sum of the base purchase price, the breakup fee and the expense reimbursement;

• Bidders must make a commitment to close the sale within 15 days of the entry of a sale order;

• The auction, if needed, will begin at 10 a.m. ET on Nov. 20;

• Bidding at the auction will be in increments of $250,000; and

• The sale hearing is scheduled for Nov. 21.

AgFeed USA, an Ames, Iowa-based producer of animal feed, filed for bankruptcy on July 15. Its Chapter 11 case number is 13-11761.

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