hlynch@newsobserver.com
Exterior of the Townsend Inc. chicken processing plant in Siler City, NC on Friday, Feb. 25, 2011. The plant along with several others in NC was in limbo after Townsend filed for Chapter 11 bankruptcy in December, 2010, but as of last week a bankruptcy judge allowed a Ukrainian buyer to purchase Townsend's Delaware headquarters and NC operations. The deal should close today, Friday, Feb. 25, 2011.
The Ukrainian billionaire who purchased the North Carolina assets of bankrupt chicken processor Townsends plans to reduce operating expenses and ramp up exports of dark meat in an attempt to return the company to profitability.
An adviser to the new owner, George Kikvadze, outlined the strategy during a phone interview this week from Kiev. He declined to rule out the need for layoffs.
"Our goal right now is to save as many jobs [as we can] and the way we can do that is by making the business as competitive as possible," he said.
Townsends employs about 1,200 people in Chatham County and has contracts with hundreds of chicken farmers in Chatham and surrounding counties. The company filed for Chapter 11 bankruptcy in December, and its assets were subsequently auctioned.
The North Carolina operations were acquired for $24.9 million by Omtron, a U.S. shell corporation created by Oleg Bakhmatyuk, a Ukrainian businessman who owns food, transportation, real estate and financial companies.
Omtron will continue to use the Townsends name and will operate separately from Bakhmatyuk's other businesses, including his holding company, Agroholding Avangard, Ukraine's leading egg producer.
But Omtron does expect to take advantage of Agroholding's existing relationships in markets in Eastern Europe, North Africa and the Middle East.
"The Townsends exports machine was idle," said Kikvadze, Omtron's chairman.
The biggest opportunity, he said, lies in exporting dark meat, which is not popular in the United States and sells for much less here.
"In Ukraine, Russia, the Middle East and North Africa, people love dark meat," Kikvadze said.
This strategy of exporting dark meat overseas has been pursued successfully by other poultry companies, including Sanderson Farms, Pilgrim's Pride and Tyson Foods.
Those companies typically export from 10 percent to 20 percent of their U.S. poultry, said Stephen Share, a food industry analyst with Morgan Joseph in New York.
"It's not a huge part of the business but it's more important than the size because they sell parts of the chicken we don't want in the United States," he said.
Kikvadze said Omtron will continue to look for other acquisition targets in this country. David Purtle, a former Tyson executive, has been hired as Omtron's CEO.
Many small and midsize poultry companies are struggling to survive in the face of rising commodity prices. Corn, the main ingredient in chicken feed, has doubled in cost since last summer.
Much of the price increase is being driven by the growing middle class in developing countries such as China and India. Those consumers are demanding more meat in their diets.
Kikvadze said Bakhmatyuk, who visited the United States for the first time in November but has yet to come to North Carolina, is following a similar strategy to that pursued by Brazilian companies that have come to dominate the global meat industry through a series of acquisitions.
He said Ukraine, with its 70 million acres of fertile farmland, is perfectly situated to take advantage of the world's growing demand for poultry.
"We want to turn Ukraine into the next sort of Argentina and Brazil - being smack in the middle of Europe and being able to export out to countries in the Middle East, Africa, Asia where you have exploding growth of protein consumption," he said. "And what better to have an American producer become part of this export pipeline."
