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KANSAS CITY, Mo. - Bankrupt Farmland Industries Inc. on Thursday said it would sell its interest in its beef processing business to its partner, U.S. Premium Beef, for $232 million, The Associated Press reports.
Farmland National Beef, the fourth-largest beef processor in the country, is mostly owned by Farmland, the nation's largest agriculture cooperative, which filed for Chapter 11 bankruptcy protection in May 2002. U.S. Premium Beef, a Kansas City-based cooperative of cattle ranchers, has had a 29 percent share of Farmland National Beef since December 1997. Its members provide much of the beef processed by the company.
The beef business is run separately from Farmland's other operations and is not part of the bankruptcy, although proceeds of Farmland's sale of its stake in the beef operation will go to help pay off its creditors, according to the AP.
Other potential bidders have until July 7 to try to outbid U.S. Premium Beef. If any come forward, an auction would be held July 9, said Larry Frazen, Farmland's lead bankruptcy attorney.
U.S. Bankruptcy Judge Jerry Venters approved the offer and procedures for an auction.
Farmland also owns a pork processing operation, which it is marketing for sale. Farmland officials have indicated they might try to reorganize the company around the pork business.
Farmland National Beef, which has 6,200 employees, processes 3.2 million head of cattle each year. It has beef packing plants in Liberal and Dodge City in Kansas, and plants in Kansas City, Kan.; Hummels Wharf, Pa.; and Moultrie, Ga. that package beef ready for grocery meat cases.
Farmland's part of the beef business earned $5.8 million in the quarter ending Feb. 28, down from $10.2 million a year ago.
U.S. Premium Beef has 10 employees and is owned by 1,850 cattle producers in 37 states.