Debt repayment plan OK'd; shareholders removed from top positions
By MATEUSZ PERKOWSKI
A large grass seed farming operation in Oregon's Willamette Valley expects to emerge from bankruptcy on Sept. 1 after the recent approval of its debt repayment plan.
Olsen Agricultural Enterprises of Monmouth, Ore., has undergone a management shakeup and sold off several farm properties as part of the restructuring.
Last year, the company filed for Chapter 11 protection -- which protects debtors from creditors during business reorganization -- with nearly $36 million in debt and $42 million in assets, according to court documents.
Olsen Ag consisted of several merged companies that grew grass seed, grains, winegrapes, nursery stock and other crops on about 7,800 acres in three counties.
A major downturn in the grass seed market beginning in 2007 coincided with Olsen Ag taking out significant new debt to invest in its winery business, according to bankruptcy court documents.
After the bankruptcy filing, two of the company's shareholders -- James Olsen and Robin Olsen -- were removed from their positions as marketing director and operations director, respectively.
Under the plan, the company's debt to its biggest creditor, Rabo Agrifinance, will be reduced from about $30 million to $22 million through the sale of several parcels of land.
Benjamin Hanna, who was hired as Olsen Ag's general manager during the bankruptcy, said the debt reduction was critical to getting the company's liabilities down to a "manageable size."
Olsen Ag also plans to shut down its proprietary Viridian wine label and focus on growing grapes for other wineries, said Hanna. Due to challenges with sales and marketing, the company will leave those functions to others.
"It just doesn't fit our business model," he said.
With many grass seed farmers in Oregon's Willamette Valley switching acreage to wheat, Hanna said he's optimistic the smaller supply of grass seed will likely improve prices for the crop.
He also expects to diversify the company's seed production to include organic cover and row crops.
"It's still a minor part of what we do, but we feel it's important and will continue to pursue that," Hanna said.
Selling property to pay down debt has reduced Olsen Ag's total operation to about 6,500 owned and leased acres, he said.
The acreage that was sold off was either too remote for efficient management or contained young grape vines that didn't yield much, he said. "We have the right amount of acreage to do things well."
In 2010, the year prior to its Chapter 11 filing, Olsen Ag generated $6.4 million in revenues and had a net loss of $5.8 million, according to court filings.
The company intends to return to profitability in its 2013 fiscal year, when it projects revenues to reach $8.25 million, generating a net income before taxes of $1.2 million, according to the filings.