AgriBioTech financial woes lead to filing for bankruptcy

Phil Levine

Tuesday, Jan. 25, 2000 | 11:04 a.m.

Henderson-based AgriBioTech Inc. said Monday it intends to file for Chapter 11 bankruptcy protection this week as part of a restructuring effort.

Chief Executive Richard Budd said the move is necessary to ensure the company has the capital needed to continue normal operations. The move comes in the wake of the company's failure to secure a new financing package from GE Capital Corp.

AgriBioTech has lost $49.8 million on revenue of $354.4 million in the past year.

Concurrent to the Chapter 11 announcement, the Nasdaq Stock Market halted trading in AgriBioTech shares Monday at a last sale price of $2.25, down from Friday's close of $2.50 and well off its 52-week high of $13.75.

Trading had not resumed as of this morning, Nasdaq said it requested additional information from the company. "Trading will remain halted until the company has fully satisfied Nasdaq's request for additional information," the stock market said.

Separately, Standard & Poors said its corporate credit and bank loan ratings on AgriBioTech will be lowered to D after the bankruptcy filing. The ratings are now B-minus. The company had $77 million in debt outstanding as of Sept. 24, S&P said.

AgriBiotech officials say Chapter 11 protection will provide the time required to devise a plan to pay off creditors.

Founded in 1994, AgriBioTech specializes in the sale and biotechnical research of forage and turfgrass seeds. The company's strategy was to buy independent seed distributors and consolidate them -- in all 34 companies were purchased, but AgriBioTech noted difficulties in integrating them in its bankruptcy announcement.

Budd said the company hopes to continue normal operations during the reorganization.

To ensure that occurs, AgriBioTech is negotiating for debtor-in-possession financing from a lending group led by Bank of America.

The company intends to use the funds to pay employee salaries and benefits during the restructuring.

AgriBioTech has faced several challenges over the last few years -- including an oversupply of seed and a downturn in industry pricing -- Budd said.

Higher than expected expenses, and slow cash collections from a weak agricultural economy, have also hurt the company's liquidity.

The bankruptcy protection comes after a tumultuous year for the company.

In November, AgriBioTech's board of directors adopted a "poison pill" provision to ward off hostile takeover attempts.

On Feb. 1, 1999, company co-founders John Francis and Scott Loomis resigned from the board of directors; three weeks later, co-founder and chief executive officer Johnny Thomas resigned from his position.