A former owner of Foremost Dairies-Hawaii has emerged as the tentative buyer for a portion of Meadow Gold Hawaii,
the state’s largest dairy
processor.
Bahman Sadeghi, who shuttered Foremost and sold its assets to Meadow Gold eight months after he bought Foremost in 2004, is the new suitor for Meadow Gold’s neighbor island
operations.
Dean Foods Co., the
Texas-based owner of Meadow Gold, is selling all its subsidiaries after filing for bankruptcy in November. Deans Foods disclosed Sadeghi as the bidder for the neighbor island operations in documents filed Wednesday in U.S. Bankruptcy Court in Texas.
Sadeghi, through MGD
Acquisition LLC, intends to pay $7 million for Meadow Gold’s processing plant in Hilo along with distribution facilities on Hawaii island, Maui and Kauai that employ 71 workers.
Meadow Gold’s main dairy processing and distribution operation in Honolulu, with 216 employees, is slated to close Thursday, and Dean Foods intends to later sell the plant’s real estate, valued around $30 million.
Dean Foods announced the partial sale and closure plan last week but did not disclose the buyer or financial details of the purchase, which is subject to Bankruptcy Court approval.
The announcement led many retailers and food service customers to seek out new suppliers of dairy products to replace Meadow Gold, including milk, butter, ice cream and passion-orange-guava (POG) juice.
Sadeghi, who is also a
former Hawaii island dairy farm owner, said his plan is to continue statewide distribution of Meadow Gold products and expand the Hilo facility to restore lost production capacity from the Honolulu facility, which he couldn’t afford to acquire.
“The goal is to bring Meadow Gold back to where it was,” he said. “I intend to basically build on the Meadow Gold brand and continue their legacy.”
However, a retired mainland dairy farmer involved in a recently canceled Meadow Gold Hawaii purchase said he intends to challenge Sadeghi’s deal in Bankruptcy Court after alleging that improper insider dealings derailed his plan and led to Sadeghi’s bid.
The retired dairyman, Mike Pickens, alleges that Glenn Muranaka, Meadow Gold Hawaii president and general manager, disrupted a purchase by Industrial
Realty Group LLC that was to result in Pickens running Meadow Gold Hawaii.
“It really got ugly,” said Pickens, a California resident who formed 8 Cow Dairies to run Meadow Gold Hawaii.
Pickens, who previously made an unsuccessful attempt to buy Cloverleaf Dairy on Hawaii island, alleged that Muranaka disparaged him and that financial issues and management
irregularities came to light as he and Industrial Realty prepared to complete their purchase earlier this month.
Pickens also suggested that Muranaka is involved with Sadeghi’s bid.
Muranaka said nothing of the sort is true and that his allegiance over a 47-year
career with Meadow Gold Hawaii has been to the
company, its legacy and its employees.
“I’m in the same situation with them,” he said.
Muranaka, who retired in 2017 and returned in June, said he was devastated when Industrial Realty’s purchase failed. “We all wanted to protect jobs,” he said.
Sadeghi said Muranaka has agreed to help with a transition and that nothing beyond that has been determined. Sadeghi also said Muranaka has no stake in the entity buying Meadow Gold Hawaii.
Justin Lichter, a vice president of Los Angeles-based Industrial Realty, declined to comment on the failed bid, but the company has raised issues in Bankruptcy Court.
Industrial Realty, which submitted its bid for Meadow Gold Hawaii on March 31, intended to pay $25.5 million and have
8 Cow run the operation.
A purchase agreement was approved by a bankruptcy judge April 6, but Industrial Realty terminated the deal after some hitches.
Industrial Realty claimed in a court motion filed Thursday that Dean Foods disclosed April 2 that it could not deliver on a key purchase term to exclusively convey the Meadow Gold name because Dean Foods, the nation’s largest milk processor, had made the name part of a sale to another company for assets in other markets. Meadow Gold is a brand name not
exclusive to Hawaii.
“These assets were material because the trade name is almost 120 years old and is well recognized in the
Hawaii dairy market as a symbol of quality,” Industrial Realty said in its motion, which also referred to other unresolved issues but did not name them.
Dean Foods said in a filing that Industrial Realty then offered $19.1 million for Meadow Gold’s real estate without intending to continue operating the business.
On April 8, Sadeghi inquired about making a bid and followed up with an offer on April 12, according to court documents. Dean Foods announced a day later that Industrial Realty terminated its purchase agreement.
Wayne Kaululaau, president of Hawaii Teamsters Union Local 996, representing Meadow Gold workers, said losing the original Industrial Realty/8 Cow offer was unfortunate because it would have retained all employees and their collective bargaining agreement. Sadeghi’s bid proposes to shed the union contract under bankruptcy rules.
“I’m very disappointed on how things have unfolded at Meadow Gold,” he said.
A hearing on the pending sale is scheduled for
Tuesday.
Dean Foods expects the sale to be completed by early May.