Tri Valley Growers, one of the nation's largest canned fruit and tomato processors, today announced that, in order to facilitate a restructuring of the company, it has filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code. 

Concurrently, Tri Valley Growers announced it obtained a commitment for approximately $270 million in debtor-in-possession (DIP) financing from a group of financial institutions led by Bank of America Business Credit to fund the company's operations during its voluntary restructuring under Chapter 11. The DIP financing, which is subject to Court approval, will provide funds for post-petition supplier and employee obligations, as well as the company's ongoing operating needs during the restructuring process. 

Tri Valley President and Chief Executive Officer Jeffrey P. Shaw called the Chapter 11 filing, "our best path for the continuation of our company's operations and services." He said that by availing itself of the Chapter 11 process, the company's operations will continue forward while it completes its restructuring. Further, its vendors, employees and other constituents will be afforded the protections provided by the Bankruptcy Code for post-petition business transactions and operations. 

Mr. Shaw said that Tri Valley Growers' financial performance has been impacted during the past two years by the effects of unfavorable long-term contracts, industry wide oversupply of tomatoes and plants running under capacity, which collectively stranded the company's attempts to achieve profitability. He noted that despite the challenging conditions under which the company has been operating, Tri Valley Growers has made tremendous progress in many key areas during the past year. "We reduced our short-term debt by $60 million, cut inventory by $70 million and significantly improved our levels of service. Clearly, the problems associated with the canned tomato market have hampered our progress. We are working hard at all levels of the organization to facilitate the turnaround of Tri Valley Growers. 

"Despite the challenges of the past two years, we at Tri Valley believe the company has strong fundamentals and the potential for a bright future. Our fruit business is very profitable. We take great pride in our solid relationships with our customers. The quality of our products is without peer and we will have some exciting product news in the near future. As we move forward with our restructuring initiatives, we will work to create and maintain a financial structure that will support the business and form a new basis for continued growth and a return to profitability," Mr. Shaw said.  

Tri Valley Growers produces or markets approximately half of the nation's canned peaches and apricots. The company also processes and markets a sizable amount of the canned tomatoes. Tri Valley Growers' products are consumed in the U.S. and overseas. They are sold under branded and private labels to the retail grocery and food service industries. 

"We explored all the available alternatives, and we believe that a voluntary Chapter 11 proceeding gives us the best opportunity to rapidly reconfigure our operations, restructure our debt and reposition our company for greater long term operational efficiency, heightened sales success and strong profitability. Today's action is critical to establishing a more appropriate capital structure and a strong competitive future for Tri Valley Growers. 

"We have hard working, loyal employees. We count on our solid relations with our vendors and valued customers to support our team's efforts to move Tri Valley swiftly through the restructuring process," Mr. Shaw said. 

Tri Valley Growers said that while it completes its restructuring, the company's food processing and canning operations, warehousing, shipping and distribution system; transportation network, consignment centers, equipment leasing, and corporate offices would operate as usual. Two tomato facilities will be idled during this year's pack to balance inventories in a difficult tomato industry. The company's employees will continue to be paid without interruption, and it will continue to pay for all post-petition purchases from growers and vendors utilizing the protection provided by the Chapter 11 process. 

"Tri Valley Growers will be in contact with its growers, major vendors, and retail and institutional customers. I expect our key business constituents to support us during our restructuring process," Mr. Shaw said. 

The company filed its Chapter 11 petitions in the U.S. Bankruptcy Court for the Northern District of California in Oakland. 

Company news release