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Minor hiccup in Sunland sale closing

Peanut butter is disposed of Friday at the dump in Clovis, N.M.  Nearly a million jars of peanut butter are being dumped at a New Mexico landfill to expedite the sale of a bankrupt peanut-processing plant that was at the heart of a 2012 salmonella outbreak and nationwide recall. (AP Photo/Clovis News-Journal, Tony Bullocks)
Peanut butter is disposed of Friday at the dump in Clovis, N.M. Nearly a million jars of peanut butter are being dumped at a New Mexico landfill to expedite the sale of a bankrupt peanut-processing plant that was at the heart of a 2012 salmonella outbreak and nationwide recall. (AP Photo/Clovis News-Journal, Tony Bullocks)
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Golden Boy Foods was falling a little behind schedule Friday in finalizing its $26 million purchase of the former Sunland peanut butter plant in Portales.

“By Monday, it should be closed,” said Tom Walker, the Albuquerque lawyer representing the Bankruptcy Court trustee who auctioned off the Sunland property Wednesday. “There are some hiccups, but they’re ordinary. It’s little things slowing it down.”

Golden Boy is not commenting to the media on its purchase at this time, said Richard Harris, president and CEO of Golden Boys’ parent company, Post Private Brands Group, in an email to the Journal on Thursday.

The sale of the Sunland plant for $26 million appears to be the biggest industrial property deal in New Mexico in at least 23 years, said Atsuko Poelman and Jim Smith of CBRE, a commercial real estate services firm in Albuquerque.

One proviso about the Golden Boy’s purchase of the Sunland plant is that the deal isn’t limited to just real estate – land, buildings and other improvements – but includes considerable equipment and likely other considerations as well, Smith noted.

Meanwhile, the dumping of 950,000 jars of nut butter – or about 25 tons – resulted from an impasse with Costco Wholesale, said Roswell lawyer Clarke Coll, who was appointed trustee in charge of Sunland’s bankruptcy estate.

Costco refused to take the peanut butter shipment and declined requests to let it be donated to food banks or repackaged and sold to brokers who provide food to institutions like prisons, he said.

“We considered all options,” Coll said. “They didn’t agree.”

Costco officials did not return telephone calls seeking comment.

Court filings indicate the product was made with Valencia peanuts owned by Costco, which bought the produce at a point when Sunland was temporarily shut down. The peanut butter, made when production later restarted, had been sitting in a warehouse since Sunland’s bankruptcy filing in October.

After extensive testing, Costco agreed to a court order authorizing the trustee to sell the peanut butter. But after getting eight loads, Costco rejected it as “not merchantable” because of leaky peanut oil.

Coll said “all parties agreed there’s nothing wrong with the peanut butter from a health and safety issue,” but court records show that on a March 19 conference call, Costco said “it would not agree to any disposition … other than destruction.”

So instead of selling or donating the peanut butter, with a value estimated at $2.6 million, the estate is paying about $60,000 to haul it to the Curry County landfill in Clovis, where public works director Clint Bunch says it “will go in with our regular waste and covered with dirt.”

Founded in 1988 by 10 farmers to integrate peanut processing into their farming operations – a common thread in many grassroots peanut-processing plants around the country – Sunland Inc.’s plant sits on about 69 acres at 42593 U.S. Highway 70 outside Portales in Roosevelt County.

First selling just peanuts, Sunland added peanut butter production in 1990 and its physical facilities have evolved considerably over the years.

Its 44,000-square-foot peanut butter facility was described as state of the art when completed in 2004, turning tens of millions of pounds of peanuts into peanut butter each year. The facility went through a major overhaul in 2013 after a salmonella breakout was traced to the plant a year earlier.

Sunland’s former facility today consists of 11 buildings with an estimated 217,000 square feet of space, two-thirds of which is various types of warehousing, plus two drying sheds and 30 semitrailers used for drying peanuts, according to court documents.

Most of the buildings, including the warehouses, are designed for various roles in peanut processing. There’s a rust-resistant salting building, for example, and a compartmentalized seed farmer stock warehouse.

The peanut butter facility basically houses a production line. Peanuts enter one end of the building, where they are blanched, roasted, ground and turned into peanut butter that comes out the opposite end.

Sunland was the only peanut butter plant in the Portales area, but the city also has the Portales Select Peanut Co., owned by North Carolina-based Hampton Farms, that produces roasted peanut products. One of Portales Select’s signature products is Borden’s Valencia Peanuts sold both in the shell and shelled.

Hampton Farms had its eyes on the peanut butter plant after Sunland filed for bankruptcy court protection in 2013, said Tom Nolan, vice president of sales and marketing for Hampton Farms, in an email to the Journal.

“We always intended to reopen the Portales peanut butter facility,” he said.

In the end, however, Hampton Farms was outmaneuvered and outbid by Golden Boy in the bankruptcy court auction.

Jeri Clausing of The Associated Press contributed to this story.

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