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KANSAS CITY, Mo. -- As Farmland Industries made its debut in bankruptcy court yesterday, company officials evaluated how a sale of Farmland's lucrative food businesses might help or hurt the nation's largest farmer cooperative.
In an immediate move to exit unprofitable, non-core business areas, the bankrupt company said it would close 16 Northeast Arkansas Oil Co. (NEA) convenience stores in the Jonesboro, Searcy and Newport, Ark. markets. The stores will be shuttered Friday.
NEA is a subsidiary of Farmland Industries, and was acquired as part of the company's purchase of SF Services in 1998.
The convenience stores, all leased, have 120 part-time employees and 60 full-time employees. All 180 employees will be laid off and store inventory will be disposed. Perishable foods are being offered to Farmland employees.
Farmland Industries is owned by about 1,700 local co-ops that are made up of about 600,000 farmers in the United States, Canada and Mexico. The company's chairman, Harry Fehrenbacher, said he is considering three options, including selling the $12-billion meat businesses, considered the cooperative's best-performing and fastest-growing operations.
A second option is for Farmland to rid itself of its agricultural inputs businesses, primarily petroleum refining and fertilizer manufacturing, which have been a significant drain on company resources of late, the report said.
Farmland also could elect to keep its current structure, focused both on food and on farmer inputs, but make several cost-cutting measures along with a few key asset sales. "We see three major options out there. We want management to lay out the details for all of those," Fehrenbacher told Reuters in an interview.
The company has 120 days to present the court with a reorganization plan, Fehrenbacher said.
The bankruptcy filing, made in U.S. Bankruptcy Court for the Western District of Missouri in Kansas City, listed assets of $2.7 billion and total debt of $1.9 billion.