Agrexco plant - Eliahu Hershkovitz - August 30 2011
The Agrexco plant, featuring a spider web on the shuttered production line. Photo by Eliahu Hershkovitz
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Agrexco may become history today: The court is expected to rule on the company's liquidation after bondholders rejected a creditors' arrangement proposed by trustee manager Shlomo Nass. Meanwhile, the produce export company's workers will be demonstrating outside the home of Agriculture Minister Orit Noked today to protest the state's refusal to help anymore. Another demonstration is planned at the Agrexco pier at Ashdod Port.

The state has abandoned its responsibility for the company and its 470 workers, the latter claim. Union chief Shaul Tzivoni accused Noked of sticking her head into the sand despite repeated pleas from the company's workers and her own staff to save Agrexco. "We still expect you to do everything in your power to prevent the destruction of Israel's agricultural export industry," Tzivoni said in a public address to the minister. Noked's office did not comment for this report.

Meanwhile, since the bondholders - whose debt is not secured - categorically rejected Nass' proposal that they forgive 85% of the debt (getting back 15% of their money ), the court seems likely to order the company's demise today. Other Agrexco creditors, including the banks (who are secured creditors ) are also expected to give Nass' proposal the thumbs-down.

If the court does decide to finish off the company, its assets will be sold by auction.

The company owes about 175 million euros and has about 58 million euros in its liquidation kitty.

Agrexco owes its employees 2.3 million euros. They are prioritized over unsecured creditors but they also rejected Nass' proposals on the grounds that they were not handled separately.

They had helped the company by forgoing wages, the workers say. They had also helped raise money to keep the firm afloat, and now the banks are getting priority. Nass' proposals offer no security for the workers, nor did he offer interest on their pay in arrears.

The heads of farming organizations owed about NIS 35 million by Agrexco did not comment on the proposals or Barlev's report.

Barlev, who had been hired by the bondholders, commented that in many cases, Agrexco's financial statements indicate that the company paid farmers higher prices than it got for the fruit and vegetables in international markets. The payouts to farmers were key to the company's collapse, Barlev wrote.

Those money transfers, says a source in the farming organizations, were based on Agrexco's articles of association, which state that if the company runs a surplus, it has to share the money with the farmers. In fact, Agrexco was prohibited by its charter from accruing equity: It had to share the money.

The state should dig into its pockets to pay the bondholders, the source said. That way the company could be sold in an orderly fashion. Its existence is crucial for Israeli agriculture exports, the source said, adding that Agrexco's demise could put 2,000 farms in Israel in peril.