Beef plant seeks interim financing

Jan. 31--Northern Beef Packers is seeking another batch of money to cover expenses pending the sale of the processing plant being finalized.

Meanwhile, a group of foreign investors is asking a bankruptcy judge to make repaying its investment in the plant a priority.

Earlier this week, an attorney for Northern Beef Packers filed documents requesting $254,314 in what's legally called post-petition financing. That's money used to prevent a business from completely shutting down after filing for bankruptcy.

The money would be used to cover payroll, security, insurance, maintenance, utility and other related costs through February, according to paperwork filed.

An attorney for Northern Beef said last week he expects the sale of the plant to White Oak Global Advisors to be finalized by the end of the month.

If a judge approves the financing, it would be the second batch from New Angus LLC, an entity created by White Oak to hold Northern Beef's operating assets after closing. Last month, the judge approved $537,026 in post-petition financing from New Angus. Both totals are, in essence, extensions of post-petition financing approved before the Dec. 5 bankruptcy auction in Sioux Falls.

At the auction, California-based White Oak submitted the highest bid for the idled plant on the south side of Aberdeen. Its $44.35 million bid was for $39.5 million of credit and $4.8 million cash. The credit was from money it loaned Northern Beef in 2012. The cash was to satisfy liens against the plant and pay fees.

Resolution of the liens is what's holding up the sale. White Oak has offered to place $4.35 million in an escrow account to cover the liens while the sale moves forward, but the judge has yet to rule on the motion.

The escrow money would be used to pay whatever is determined to be owed to Scott Olson Digging and more than $1 million in past due property taxes to Brown County, according to court paperwork. Scott Olson Digging, of Huron, is no longer in business. The contractor did dirt work during early plant construction, and the two sides still don't agree how much is owed for the work. White Oak has promised to pay the property taxes once the sale is complete.

The complaint filed this week by a foreign investor claims that members of SDIF Limited Partnership 6 did not properly subordinate their claim to White Oak's. Chinese investors in SDIF 6 lent the beef plant $35 million.

Paperwork asking a judge to move the SDIF 6 claim above that of White Oak's says the Beijing meeting organized to vote on the subordination was not properly called and there was not enough information in Chinese available for investors to understand the issues. Additionally, it claims, not enough signatures were properly collected to approve the subordination.

The judge has yet to rule on that matter.

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