French fry giant bids for some of Henderson firm’s assets

Steve Green

Tuesday, May 9, 2000 | 11:04 a.m.

The company founded by Idaho billionaire J.R. Simplot is bidding for some of the assets of bankrupt grass seed company AgriBioTech Inc. of Henderson, but today denied reports it has agreed to an outright purchase.

Simplot, whose family wealth is estimated by Forbes magazine at $3.6 billion, made a fortune beginning in the 1960s when he started selling Idaho potatoes as frozen french fries to the McDonald's restaurant chain.

His privately held J.R. Simplot Co. of Boise remains a major potato supplier, has annual revenue of about $2.8 billion, employs about 12,000 people in North America and is one of the nation's largest agriculture companies.

Simplot also was an early financial backer of the Boise computer chip company Micron Technology Inc.

AgriBioTech, which filed for bankruptcy in January, issued a statement Monday saying it agreed in principle to sell its turfgrass seed assets and specialty division, "creating a value of approximately $65 million, plus assumption of liabilities."

AgriBioTech identified the buyers as J.R. Simplot Co. and Kenneth Budd, former president and chief operating officer of AgriBioTech.

AgriBioTech officials could not be reached this morning to clarify their statement.

But J.R. Simplot Co. spokesman Fred Zerza in Boise said that while Simplot is bidding for certain AgriBioTech assets, it has no sales agreement.

"The bidding process remains open. There can be other bids," he said. "We are hesitant to characterize it as an agreement in principle at this time."

Besides the possibility of other bids, Zerza pointed out any sales agreement would be subject to due diligence and other contingencies.

He said the company bid substantially less than the $65 million figure in the AgriBioTech statement. It's unknown what Budd bid -- his bid is separate from that of Simplot's.

Simplot is already in the turf seed business, with much of the industry's sales made to golf courses.

A purchase by a financially respected company like Simplot would likely be welcomed by grass seed farmers in the West, who have been hurt by AgriBioTech's bankruptcy and the firm's inability to buy seed from growers.

"The purchaser is expected to assume (AgriBioTech's) obligations under contracts with its growers and other contracts. The growers' contracts call for (AgriBioTech) to purchase existing turfgrass seed inventory in the growers' possession," AgriBioTech's statement said.

"The sale is consistent with the company's previously announced strategy of selling its assets in one or more going-concern sales as efficiently and expeditiously as possible to preserve the value of the bankruptcy estate," AgriBioTech said, adding it's still trying to sell its forage seed business.

Shareholders, however, are unlikely to realize any value for their stock once the company's assets are sold.

AgriBioTech filed for Chapter 11 bankruptcy protection after struggling to consolidate nearly three dozen acquisitions over the past six years. In February, the company was delisted from the Nasdaq exchange.

As of February, the company listed $351 million in assets and $165 million in liabilities in filings with the bankruptcy court.

The company lost $19.5 million or 39 cents per share in its second quarter ending Dec. 31 vs. a loss of $10.3 million or 26 cents in the year-earlier period. Revenue for the quarter fell from $76 million to $52 million.

Steve Green is business editor of the Sun. He can be reached at (702) 259-4083 or sgreen@lasvegassun.com