Pure Prairie Poultry chicken processing plant in Charles City has closed

PUBLISHED THURSDAY, OCT. 3, 2024 | UPDATED SATURDAY, OCT. 5, 2024

By Bob Steenson, bsteenson@charlescitypress.com

Pure Prairie Poultry in Charles City stopped operations on Wednesday, Oct. 2, and all production employees at the plant were given notice that their positions have been eliminated.

Also on Wednesday, the Iowa Department of Agriculture and Land Stewardship (IDALS) was granted an emergency order in a state district court to seize about 1.3 million chickens owned by Pure Prairie Poultry and located at growers’ barns, because the company could not afford to provide feed for them and they were in danger of starving.

Jon Austin, the current spokesman for Pure Prairie Poultry, said “north of 80” employees were let go when the plant closed.

There were also numerous temporary workers employed at the plant through employment agencies, who are no longer working there.

Masterson Staffing Solutions, with an office in Charles City, was listed in bankruptcy filings as a creditor being owed $1.97 million as of the time Pure Prairie Poultry filed for Chapter 11 reorganization. QPS Employment Group, also with a Charles City office, was listed as being owed a little more than $741,000.

The bankruptcy action, which had been filed Sept. 20, was quickly dismissed after several major creditors would not agree to let Pure Prairie secure additional financing to keep operating through reorganization. They objected because that financing would have been at a senior secured status, meaning it would have had a higher priority to be repaid than other creditors.

The judge in federal bankruptcy court in Minneapolis issued an order on Friday, Sept. 27, closing the Chapter 11 case.

Austin, the Pure Prairie Poultry spokesman, said the company had hoped to be able to keep operating on at least a limited basis in bankruptcy while it sought a buyer to purchase the facility as a going concern, but with the lack of additional financing and the dismissal of the bankruptcy case, “we concluded we didn’t have a viable operating plan.”

He said the company is still looking for a buyer and believes “it’s still a possibility.”

Austin said some non-production people are still at the facility, working on potential sales and shutting things down.

Asked if all the management team was still in place, Austin said, “I don’t believe so. I don’t want to single anybody out …, so I’ll just say there have been some layoffs among the management ranks.”

Brian Roelofs, who was president and CEO, confirmed to the Press when contacted by text that he is no longer with Pure Prairie Poultry.

Austin said, “Unfortunately there’s a lot of unknowns at this point and that’s a hardship for the people who work there. It’s a hardship on the community and we appreciate that, but like I said, we’re still looking at options. We still have hope that we’re going to find a buyer who wants to operate the plant as a going concern. And that’s really where the focus of our efforts are.”

Austin is senior partner of J Austin & Associates of Minneapolis. The firm describes itself as “a full-service communications firm with expertise in crisis and issue management, special situations, transactions and transitions.”

Regarding the chickens taken custody of by the state, IDALS filed an emergency petition on Wednesday in Sioux County District Court, saying that 1.3 million broiler chickens “are either out of feed or soon will be out of feed.” They are located on 13 sites at barns in Latimer, Boyden, Maurice, Orange City, Ledyard, Rock Valley, Parkersburg, Aplington, Atkinson and Dows.

Although they are housed in the growers’ barns, the chickens belong to Pure Prairie Poultry and the company pays for their feed and care. The growers also have an ownership stake in the company.

“IDALS shall assume supervision of and provide for the sustenance of the identified livestock or appoint a qualified person to provide for such sustenance; IDALS shall provide for the disposition of the identified livestock; and an agricultural lien shall attach to the livestock,” the court petition stated.

In the petition, it says the company had notified IDALS that the company had no more money to pay for feed for its chickens at its contract grower sites.

“IDALS’ investigation of this matter confirms that as of October 2, 2024, the livestock … are either out of feed or will soon be out of feed,” the petition states.

An affidavit filed in court by the state veterinarian, Dr. Jeff Kaisand, states that he spoke with George Peichel, the chief financial officer (CFO) of Pure Prairie Foods, who told him that PPP had no more money for food at its grower sites.

“PPP further stated that while there was at least one entity that has interest in purchasing PPP, it is not clear whether that entity has an interest in taking over the poultry currently being raised by the contract growers …, or, even if there was interest, whether the various financial institutions with security interests in PPP would approve of the purchase,” Kaisand wrote.

“I also had conversations with several financial institutions with interests in PPP on September 30, 2024, and those entities identified that while they had security interests in PPP’s equipment, the real estate, processing plant, and post-processing poultry meat products, they did not have any security interests in the poultry itself and therefore would not be extending any additional credit to PPP to pay for feed.” Kaisand wrote in his affidavit, adding that if immediate action was not taken, “starvation will be the likely result for these animals.”

IDALS will seek reimbursement of the taxpayers’ costs from responsible parties, including through possible legal remedies, according to the department statement. The department also has contacted local law enforcement agencies and apprised them of the situation, it said.

Iowa state Rep. Charley Thomson, R-Charles City, contacted the Press regarding the IDALS action, saying, “In Iowa we do not allow livestock to starve to death.”

Thomson said that at some point he’d like to organize a discussion about what had happened at Pure Prairie Poultry, and how a company with significant financing and what appeared to be an experienced management team could not be successful.

“How is it they can’t make it?” Thomson asked. “What can we as a state learn from this?”

This is the text of a letter that CFO Peichel sent to employees on Wednesday, Oct. 2, announcing the closing:

“I write with an update on where things stand with us.

“We continue to explore options, including possible buyers, but our efforts to restart the plant even on a limited basis have proven unsuccessful. Without a viable operating plan, we are discontinuing operations at our Charles City production plant.

“As a result, I am truly sorry to inform you that your position has been eliminated effective immediately.

“As soon as possible, there will be additional information sent to you about the separation process including expiration of compensation and benefits.

“On behalf of the entire leadership team, please know that I deeply regret we have come to this option, but it is our best chance of finding a buyer who can restart and operate the plant. Even so, I recognize that this decision – on top of the stress of the last several weeks – is an additional hardship and for that too, I offer my sincere apologies. This team has done remarkable things in the last several years and regardless of where we find ourselves, those accomplishments are real, and I hope you will find them a source of pride.

“Sincerely, George Peichel, CFO”