* Cites "changes in the market" for ground beef products
* Says plans to sell some or all of its assets
* Industry may not recover from the controversy - expert
By Tanya Agrawal and Andrew Stern
April 2 Ground beef processor AFA Foods filed
for bankruptcy protection on Monday, citing the impact of the
uproar over a meat filler dubbed "pink slime" by critics.
Meat processors have faced a backlash over the use of an
ammonia-treated beef filler they call "finely textured beef."
Food activists have campaigned to have it banned, but supporters
say the product is safe to eat.
AFA is one of the largest ground beef processors in the
United States and produces more than 500 million pounds of
ground beef products annually, the company said in documents
filed in U.S. Bankruptcy Court in Wilmington, Delaware.
In filing for bankruptcy, it cited "recent changes in the
market" for its products and media coverage related to the
filler, and said it was seeking a sale of some or all of its
assets. AFA owner Yucaipa Companies, the investment firm founded
by Ron Burkle, could not immediately be reached for comment.
The backlash over "pink slime" has prompted companies such
as Beef Products Inc (BPI) to halt production at some of its
plants and has led some big U.S. supermarket operators,
including Safeway Inc and Supervalu Inc, to say
they will stop buying the ammonia-treated beef.
The impact of the controversy is far-reaching, said Gary
Acuff, director of the Center for Food Safety at Texas A&M
University in College Station.
"The public view of this product is pretty damaged at this
point," Acuff said. "I'm not sure they'll recover from something
Jeremy Russell, of the National Meat Association, said "this
is certainly going to have an economic impact on the industry"
from cattle ranchers to meat processors, affecting thousands of
Ground beef makes up a "big part" of the overall meat
market, and prices are sure to rise, he said.
The phrase "pink slime" was first used by a former USDA
microbiologist, Gerald Zirnstein, who used the term in a 2002
email to co-workers after having toured a BPI plant. The current
debate began after celebrity chef Jamie Oliver drew attention to
Some politicians have rallied to the industry's side,
including Iowa Governor Terry Branstad, who blasted the
"This to me is outrageous," Branstad said. "I want to expose
the people who are behind this. I don't think Americans need to
be misled by a smear campaign."
AFA, based in King of Prussia, Pennsylvania, has plants in
California, Georgia, New York, Pennsylvania and Texas. It has
about 850 full-time employees. As of December 2011, it posted
annual revenue of $958 million.
The company expects to idle the California facility this
week to conserve cash and cut unneeded processing capacity under
current market conditions, according to a court filing.
AFA said it has $219 million in assets and $197 million in
liabilities. AFA also said it has secured a commitment for $56
million in debtor-in-possession financing from its lenders GE
Capital and Bank of America.
"An orderly sale through Chapter 11 will unlock value and
provide a smooth transition for employees, customers and other
business partners," Ronald Allen, interim chief executive of AFA
Foods, said in a statement.
The case is In re: AFA Foods Inc, U.S. bankruptcy court,
District of Delaware, No: 12-11128.