Fwd: RE: [GWL]: F&G is going down
- Subject: Fwd: RE: [GWL]: F&G is going down
- From: N* S*
- Date: Thu, 5 Jul 2001 12:54:11 -0700
Forwarded from one of my other discussion groups:
>
>BY DAN SPRINGER
>P&D Assistant Managing
>Editor
>
>Foster & Gallagher, Inc.,
>the Grand Rapids, Mich.-based corporation that owns
>Gurney Seed & Nursery Co.filed for bankruptcy Monday. The move comes just
>days
>after the company closed all of its seed and nursery operations in several
>Midwestern states, Canada and the Netherlands.
>
>Foster & Gallagher, which operates 21 subsidiaries, purchased Gurney's in
>1999. In May of 2000, company officials announced that the Gurney's
>operation that had been in Yankton for nearly 130 years was moving to
>Michigan.
>
>The company announced Friday that they were closing all of their seed and
>nursery related operations like Michigan Bulb, Breck Bulb, Stark Bros. Seed,
>Springhill Nursery, Henry Fields Seed & Nursery and Gurney's Seed & Nursery.
>
>
>
>A company spokesman said at the time that he was unsure if the company would
>seek protection from the United States bankruptcy court. It was decided over
>the
>weekend that filing for Chapter 11 bankruptcy was the company's best hope
>for
>repaying its creditors.
>
>"Today is a sad day for employees, vendors and a dedicated management that
>sought to keep F&G financially viable," said Robert A. Ostertag Jr., member
>of the Board of Directors of Foster & Gallagher, Inc. and former CEO of the
>company.
>"Ultimately the heavy debt burden associated with F&G's Employee Stock
>Ownership Plan, plus the demise of Michigan Bulb Company's (MBC) sweepstakes
>horticulture business were too much to overcome. We presented the lenders
>reorganization plans, but they were not accepted. The company has no further
>course to take, but to file for bankruptcy protection."
>
>The company filed for bankruptcy in order to wind-down their businesses and
>sell all or substantially all of their assets, the company said in a
>prepared press release.
>
>The Company said that its management team, board of directors and bank
>lenders explored a number of alternatives, including a financial
>restructuring, operational reorganization of its core businesses and a sale
>of strategic assets. The Company said that it has been determined, however,
>that a sale of assets and an orderly wind-down of the businesses offered the
>best possibility of maximizing the creditors' recoveries.
>
>F&G's management team and board of directors are in the process of seeking
>potential purchasers for the orderly sale of some of the company's remaining
>operations under the supervision of the Bankruptcy Court. This will include
>the
>company's Walter Drake Gift Group, the only F&G subsidiary that remains
>open, the company said in a Monday press release.
>
>As part of the Chapter 11 proceeding, F&G has arranged for short-term
>financing
>from certain of its existing lenders, which helps ensure that F&G will be
>able to
>conduct an orderly wind-down of its remaining operations.
>
>In the past two years, F&G has taken steps to address its financial and
>operational challenges, such as divesting non-core businesses and assets,
>consolidating operations and reducing management and employee headcount
>while initiating new marketing strategies. However, F&G said that its
>significant financial and operational challenges, coupled with a difficult
>marketplace prompted the conclusion that a traditional restructuring would
>not sufficiently address F&G's obligations.
>
>"Simply put, F&G ran out of time when the financial support from key lenders
>diminished," said William J. Fitzgerald, member of the Board of Directors of
>Foster & Gallagher, Inc. The steps taken by F&G management and the Board of
>Directors over the past two years to stabilize the company included:
>* realigning and resizing business units
>* divesting non-core businesses and redundant assets
>* adding a significant non-sweepstakes revenue base through the acquisition
>of
> Gurney's and Henry Field's horticulture businesses.
>
>F&G's sales peaked at $476 million in 1997, with operating profits in excess
>of $36 million. However, in 1998 the direct marketing industry was enveloped
>by sustained negative publicity and legislative activity targeting
>sweepstakes marketing. Although most of the sweepstakes criticism was
>directed toward other direct marketers, Michigan Bulb experienced a
>dramatic decline in business.
>
>"As F&G started 1998, no one ever imagined the impending reversal of
>business
>fortune that would occur leading to significant operating losses due to the
>sweepstakes issue," said Ostertag.
>
>While company officials blame the problems with the sweepstakes marketing
>for the company's demise, at least one employee said the company suffered
>from bad business practices.
>"The vast majority of people in the company were excellent people, but it's
>amazing that a few people at the top could run it into the ground with the
>skilled labor they had working for them," said Karl Sauter, a horticulturist
>who moved with the company from Yankton to Grand Rapids.
>"My opinion is there were a lot of bad business decisions made. They blame
>the
>sweepstakes all the time, but they could have gotten out of the sweepstakes
>a long time ago."
>
>To contact Dan Springer, e-mail him at danspr@yankton.net
>
--
**********
'''''''''''''''''''''''
Nan Sterman
San Diego County California
Sunset zone 24, USDA hardiness zone 10b or 11
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