10/08/02

The agricultural cooperative Agway Inc. filed for Chapter 11 of the U.S. Bankruptcy Code on Oct. 1 with the United States Bankruptcy Court for the Northern District of New York in Utica, N.Y.
Agway businesses operated as usual last week, according to co-op officials.
The court approved Agway’s request to pay all employees’ wages and salaries on the normal schedule and to maintain all medical and other employee benefits at current levels. Agway also said that obligations incurred post-filing (on or after Oct. 1) with vendors, employees and others will be honored and satisfied in the normal course of business going forward without the need to obtain court approval.
Other relief approved by the court included:
• Interim approval to access $19 million cash to continue to conduct business as usual in all its operating businesses.
• Agway’s request to continue its “prepay” program with farmers who purchase the company’s animal feed and agronomy supplies, which will continue to allow customers to utilize their credit balances for product purchases now and throughout the proceeding.
• The company’s request to pay for purchases subject to the Perishable Agricultural Commodities Act (PACA). Agway Chief Executive Officer Donald P. Cardarelli said, “One of our top priorities was to ensure employees could continue to receive their pay and benefits as usual, so we appreciate the court’s swift action on that request. We plan to build on our recent restructuring initiatives, including the sale of several of our businesses. The recent agreement reached with Growmark to purchase Agway’s Seedway and Agronomy businesses is a positive step in the restructuring process, and we will continue to seek an appropriate buyer for Telmark.
“I want to assure Agway’s many stakeholders,” Cardarelli concluded, “that our ultimate goal is to preserve the maximum value possible, as we work to build a stronger financial foundation for the future of all our businesses.”
Agway Inc. intends to develop a longer-term strategic plan of reorganization that will serve as a framework for Agway’s emergence from the Chapter 11 process as a financially healthy, more competitive enterprise.
Four wholly owned Agway Inc. subsidiaries will not be included in the Chapter 11 filings: Agway Energy Products LLC, Agway Energy Services Inc., Agway Energy Services-PA, Inc. and Telmark LLC. In addition, Telmark debenture holders will not be subject to the Chapter 11 filings. And, Agway dealer stores will not be included in the filings, because they are separately owned and are not affiliated with Agway Inc. in any way.
The bankruptcy law prohibits companies from paying pre-Chapter 11 claims, including most indebtedness, without obtaining the approval of the court.
The company plans to continue its efforts to sell Telmark, Agronomy and Seedway as previously announced and does not have plans for other significant reductions in workforce or plant closings as a result of the Chapter 11 filing. Agway Feed and Nutrition, Agway Agronomy, Seedway, Feed Commodities International (FCI), Country Best Produce, CPG Nutrients, Agway CPG Technologies and Agway General Agency are included in the Chapter 11 filings.