FRESNO – Central Valley stone fruit producer Prima Wawona initiated Chapter 11 bankruptcy filings this month to help facilitate the sale of the company owned by private equity firm Paine Schwartz Partners.
The Fresno-based company announced Oct. 13 that it is looking to sell to a third-party buyer or convert its existing lender debt into equity ownership of the business. CEO John Boken said in a press release that the current capital structure of the business is unsustainable due to increased costs and weather-related impacts.
“We are pleased that our lenders have reached an agreement and fully support this ownership transition that charts a path forward to strengthen Prima Wawona and position the business for long-term success,” Boken said.
With a Chapter 11 bankruptcy filing, Prima Wawona will be able to reorganize its ownership while remaining in operation and retaining its employees. Prima Wawona voluntarily initiated its Chapter 11 case in the United States Bankruptcy Court for the District of Delaware.
According to the press release, the company’s lenders consented to the use of cash collateral to support the regular operations of the business. The court filing lists the lenders as Gerawan Farming LLC, Gerawan Farming Partners LLC, Gerawan Farming Services LLC, Gerawan Supply Inc., GFP LLC, MVK FarmCo LLC, MVK Intermediate Holdings LLC, Wawona Farm Co. LLC and Wawona Packing Co. LLC.
Prima Wawona also filed court motions seeking approval to continue its operations during the Chapter 11 process, “including the continued payment of employee wages and benefits without interruption,” the press release said. The company will pay its vendors normally for any goods or services provided after the filing date.
Looking for a fresh start
Prima Wawona formed in 2019 after a merger between Gerawan Farming, a stone fruit grower based out of Fresno, and Wawona Packing Co., based out of Cutler. At the time of the merger, Paine Schwartz was an investor in Wawona and partnered with the companies to facilitate the transition, according to a 2019 press release from the two companies.
“This merger represents a tremendous milestone and the type of growth opportunity that we can achieve by leveraging Paine Schwartz’s agribusiness sector expertise and close collaboration with family-owned businesses,” Paine Schwartz CEO Kevin Schwartz said at the time of the merger.
The company produces peaches, plums, nectarines and apricots and has more than 18,000 acres of orchards, according to court documents. They operate in south Fresno County and north Tulare County and have offices in Reedley, Sanger, Kerman and Cutler.
Prima Wawona employs around 8,000 workers over the course of a year, according to a court motion to allow them to continue to pay wages and offer employee benefit programs. At the time of filing, they had around 600 seasonal employees and 140 full-time employees, the motion said.
Throughout their harvest season between April and September, they employ approximately 4,500 seasonal workers and 2,400 farm labor contract (FLC) workers, and during the off-season they employ approximately 1,350 employees, according to the motion.
“Failure to properly reassure the employees (especially the seasonal employees) and FLCs that the debtors have the means and ability to satisfy obligations owed to them would be detrimental to the debtors’ business and negatively impact the value of their estates,” the motion said.
In an Oct. 13 letter addressed to Prima Wawona seasonal employees, Boken said the Chapter 11 process will have no impact on how they work and they plan to follow their regular recruitment and hiring process for the upcoming pruning/thinning and harvest seasons.
“We are confident that the steps we are taking will make us a stronger company and an even better place to work in the future,” Boken said in the letter.
Boken said the entire organization is “focused on working through this process as quickly as possible.”
Prima Wawona intends to move its sale forward with the highest and best offer through the court-supervised Chapter 11 auction process, the company said.