Prima Wawona enters bankruptcy

January 2024 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

January 2024 Issue

After losing nearly all of its value leaving it $1bn in debt, the industry’s largest producer of stone fruit Prima Wawona is transitioning ownership of the company and recapitalising its business.

To facilitate the sale process, the company has initiated voluntary Chapter 11 proceedings with the backing of its lenders, who entered into a lender support agreement (LSA) among themselves. The company has stated it will ultimately proceed with the highest and best offer via a court-supervised auction process.

In recent months, Priam Wawona has faced significant headwinds, including increased costs and weather-related impacts that have combined to make its existing capital structure unsustainable.

In connection with an agreement reached among the company’s lenders, Prima Wawona is proceeding with a transaction that will involve either the conversion of existing lender debt into equity ownership of the business or allow for a sale transaction to a third-party buyer.

With the support of its lenders, Priam Wawona intends to move through the Chapter 11 process expediently to consummate a sale transaction or an equitisation transaction with its lenders.

The company has also filed a number of customary motions seeking court approval to continue to support its operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption. Prima Wawona intends to pay vendors in full under normal terms for goods and services provided on or after the filing date.

“Over the last several years, Prima Wawona has grown tremendously,” said John Boken, chief executive of Prima Wawona. “Over the course of 2023, we proactively evaluated options intended to enable us to build on our leading market position, our efficient and sustainable farming practices and our history as an employer of choice. We are pleased that our lenders have reached an agreement and fully support this ownership transition that charts a path forward to position the business for long-term success.”

Moreover, the ownership transition is expected to allow for the continued operation and long-term sustainability of the business. At the same time, Prima Wawona remains dedicated to delivering consistent and superior-quality stone fruits to its customers and consumers. The company also recently completed a successful harvest season and intends to continue providing its customers across the country with the highest quality fruit.

“As we move forward, we are committed to our industry-leading farming practices and continuing to provide the high-quality stone fruit for which Prima Wawona is known,” continued Mr Boken. “We thank our customers and partners for their ongoing support, and we look forward to continuing to serve them. We are grateful to the entire Prima Wawona team for their hard work and dedication at this important time in the history of our company.”

Serving as the company’s legal counsel is Kirkland & Ellis LLP and Young Conaway Stargatt & Taylor, LLP. Houlihan Lokey Capital, Inc. is serving as investment banker and AP Services, LLC is serving as interim management and restructuring adviser.

“The court-supervised Chapter 11 process allows for the possibility that a qualified third-party buyer will emerge as the owner of the business as an alternative to our lenders,” concluded Mr Boken. “The entire Prima Wawona organisation is focused on working through this process as quickly as possible.”

Fraser Tennant