AFA Foods files bankruptcy; cites “pink slime” media coverage as factor
AFA Foods, a ground beef processor headquartered in King of Prussia, Pa., has sought bankruptcy court protection with a plan to sell some assets. The company stated that media coverage of lean finely textured beef produced by rival BPI has cut demand for its products.
“Ongoing media attention has called into question the wholesomeness” of the meat, and has “dramatically reduced the demand for all ground beef products,” AFA interim CEO Ron Allen said in court papers, reports Bloomberg News.
AFA Foods lists assets of $219 million and debt of $197 million in Chapter 11 papers filed today. Among AFA’s largest unsecured creditors listed in the court petition are Orleans International Inc., owed $8.3 million, and Tyson Fresh Meats (IBP), owed $3.27 million.
AFA “continues discussions with potential buyers to secure the highest and best outcome for its business,” officials said in a statement. Los Angeles-based Yucaipa, which owns AFA Foods parent AFA Investment Inc., is run by billionaire Ron Burkle.
AFA has about 850 full-time employees and annual revenue of $958 million, according to the statement. The company obtained a $56 million credit line from GE Capital and Bank of America Corp. (BAC) to carry it through the bankruptcy process.
Source: Bloomberg News