Bidders for failed beef processor EG Green & Sons will have to spend an estimated $15 million to address bottlenecks in its Harvey abattoir, industry sources have told WA Business News.
Bidders for failed beef processor EG Green & Sons will have to spend an estimated $15 million to address bottlenecks in its Harvey abattoir, industry sources have told WA Business News.
The administrators of the company, Ferrier Hodgson partners Martin Jones and Darren Weaver, have kicked off the sale process by calling for expressions of interest in EG Green.
They are seeking interest from parties who want to take a strategic investment or purchase the group’s assets.
There will be at least two bidders, with Futuris subsidiary Elders considered to be the front-runner after it did a deal with National Australia Bank to buy the bank’s $20 million loan to EG Green.
The Green family, which previously owned the business, is working on a competing bid in partnership with an unnamed international investment fund and a group of six major beef producers.
The beef producers had been asked to invest in the business prior to it going into administration, on Friday August 19.
The producers are being advised by corporate advisory firm Mainsheet Corporate, which has brought in the unnamed $7 billion ‘special situations’ investment fund.
Whoever buys EG Green, which has total debts in excess of $40 million, will need deep pockets.
It is believed a major problem with the abattoir is the limited capacity of the boning room, which has only half the capacity of the slaughter room.
The estimated amount of money that needs to be invested in the abattoir ranges from $10 million to $20 million.
Meanwhile, Elders managing director Greg Hunt has confirmed that one of the groups he is talking to in relation to EG Green is Melbourne firm Tasman Group Services, which operates four abattoirs in Victoria and Tasmania.
“What EG Green needs is an appropriate, experienced meat processor to work with us to run the plant,” Mr Hunt said.
He agreed that Elders, which was a major trade creditor of EG Green and has bought NAB’s loans, would be in a strong position at future creditors’ meetings.
“It certainly helps us steer the process,” he said. “It puts us in a reasonably strong position.”
Mr Hunt emphasised that Elders was most concerned with protecting its financial position and its customer relationships.
“We don’t necessarily want to be a long-term owner of the assets,” he said.
Mr Hunt said Elders would ensure the abattoir was available on commercial terms to other players in the industry, and could operate it as a custom killing operation.
He noted that some growers were keen to develop their own brand, which wasn’t possible under EG Green, under the Harvey Beef brand.
