A Pine Bluff poultry plant closed its doors Monday - jeopardizing the future of 180 employees - as its owners look for a buyer or new investors after nearly a year of processing chickens.
Horizon Foods LC opened in July after a group of California investors provided funding to reopen a facility once owned by Tyson Foods Inc. The plant processed hens that had grown too old to lay eggs. The meat was then shipped overseas.
The investors originally estimated that it would cost $3 million to renovate the plant - built in 1957 and closed by Tyson in 2003. However, the total investment costs climbed near the $5 million mark, according to reports.
“Obviously, we are distressed by the news of a shutdown at Horizon Foods,” Lou Ann Nisbett, president and chief executive officer of the Economic Development Alliance for Jefferson County, said in a statement. “Horizon has had some difficulties that I know they’ve been trying to remedy, and I continue to be supportive of those efforts in any way possible.”
Rory Botto, the plant’s vice president and sales director, didn’t return telephone messages left at his office Wednesday.
Botto told the Pine Bluff Commercial that negotiations are under way for a sale. He also told the newspaper that the decision to close the plant was made by advisers for Scorpion Capital Partners, a New York investment group representing several unidentified Horizon investors.
Robert Schoff, chief financial officer for Scorpion, didn’t return telephone messages Wednesday. Schoff told the Commercial that the investment firm did not decideto close Horizon, attributing the decision to Horizon being “out of cash.” He said that if the company can’t meet its liabilities, then its investors are looking to get out.
Botto initially tried to put together a deal in 2007 to reopen the plant after being involved in meat-processing operations in California and Nevada. That effort fell through, Botto said in an interview last year, when investors pulled out as the nation went into economic recession. He tried again, however, which resulted in Horizon’s announcing the opening in March 2012.
Botto, who helped bring the Horizon investors together, pleaded guilty in 2000 in federal court in California to making a false statement to a bank and was ordered to repay $367,000. The U.S. Bureauof Prisons said that Botto was released in June 2001.
Botto’s history did not interfere with his ability to attract investors for the Horizon project. He also was able to secure two performance based incentives from the Arkansas Economic Development Commission. It sought a state income-tax credit for new job creation as well as a sales and use tax refund on qualifying materials, machinery and equipment used in the renovation.
Commission spokesman Scott Hardin said in an email Wednesday that the application process for Horizon to qualify for the incentives was never finalized. Hardin said the commission provided $58,558 for the company’s worker-training programs. At the time it opened, Horizon officials hoped that the processing plant would eventually employ more than 300 within three to five years.
Horizon also secured $329,000 from the Economic Development Corp. of Jefferson County that was used by the corporation to purchase refrigeration equipment. The corporation, also known as the sales-tax board, administers Jefferson County’s three eighths percent economic-development sales tax.
The money was secured by the equipment and would have to be repaid within five years by Horizon if the company failed to meet hiring goals. Under the agreement, the company was to receive a $1,000 credit for each job created, up to the purchase amount. The first four years called for annual payments of $20,000 (which could be offset with hiring credits), with the remaining $249,000 due in the fifth year which also could be offset with hiring credits.
The Economic Development Corp. said that in April, Horizon Foods met its first anniversary hiring conditions for a credit of $20,000 toward the price of the refrigeration equipment.
Nisbett worked with Horizon Foods officials for several years before the plant opened, and said Wednesday that she remains in contact with local company executives.
Horizon is also dealing with other creditors. It owes approximately $30,000 in unpaid sewer fees to the Pine Bluff Wastewater Utility, utility Manager Ken Johnson said.
On Wednesday, Johnson said he is consulting with the city attorney about the unpaid bill.
Johnson said the company had been late several times in paying its bills since it began operations.
In April, Horizon made a $15,000 payment toward a total debt of $26,000. But, the amount owed had grown to $30,000 by the time the plant closed, Johnson said. He also said that in February, Horizon made a $7,000 payment with a check that was returned for insufficient funds. That money was included in a cashiers’ check used to make the April payment, he said.
However, Nisbett remained hopeful that the plant will reopen.
“Our community needs the jobs, and Horizon officials believe the plant layout here is perfect for their needs,” she said. “Hopefully, they have a win-win plan in mind that could still save the operation.”
Business, Pages 25 on 06/06/2013