Hines Horticulture Seeks to Sell Assets

September 5, 2008 - 06:36

A few weeks after filing for Chapter 11 bankruptcy, Hines Horticulture announced that it will seek to sell its assets to hedge fund Black Diamond Capital Management, Home Channel News reported.

The California-based company is one of the largest producers of ornamental shrubs, color plants and container-grown plants in the country.

Black Diamond, which is Hines’ largest unsecured creditor and the holder of a majority of its $175 million in senior subordinated notes, has agreed to serve as the “stalking-horse bidder” for Hines. A “stalking-horse” bid is the first bid on a bankrupt company’s assets, from a bidder chosen by the bankrupt company, according to Home Channel News.

The hedge fund is in the midst of due diligence, the newsmagazine reported, and Hines has offered to pay the fund a $225,000 work fee as an incentive to finish it in short order.

Documents show that the stalking-horse bid is worth up to $58 million in cash, which would pay off Black Diamond’s debts, plus $500,000 in wind-down costs.

Hines pursued several possible restructuring alternatives in the months prior to filing bankruptcy, including a sale of all or pieces of the business, a new debt or equity infusion or a balance sheet restructuring.

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