White Farm Equipment Faces Debt Crisis

Borg-Warner Acceptance Corp. on Tuesday demanded payment of $214 million in loans made to White Farm Equipment Co., a move White officials say will force the sale, merger or liquidation of the farm-implement maker.

“As a first step toward recovering our receivables, we have demanded repayment of our loans to the White Farm companies in the United States and Canada and plan to pursue legal remedies if payment is not made,” BWAC President Donald Torisky said in a news release.

White was “talking to interested parties, both domestic and international” about a possible sale of the company, said Robert Terry, White’s senior vice president and general manager of operations.

In the meantime, White will “consolidate operations,” Terry said in a telephone interview. He did not elaborate.

If a sale of the company is not possible, Terry said, White would consider a merger or liquidation of its assets.

The BWAC statement said the “unrelenting decline in agricultural markets” was responsible for the decision to recall the loans, and spokesman Bob Morris said it seemed unlikely that White would be able to find a buyer because the company’s liabilities overshadow its assets, mostly farm equipment.

“We take this step reluctantly but, as a prudent creditor, we really have no choice,” Torisky said. “We have for some time been providing the White companies with working capital loans to help keep them afloat until their markets turned around, but it’s clear now that this is not going to happen in the foreseeable future.

“By taking action on our loans now,” Torisky said, “we aim to cap our losses and optimize recovery of our investment.”

He said BWAC was unable to estimate the value of White’s collateral because of the depressed farm-equipment market and, therefore, could not calculate projected losses after White’s assets are liquidated, as expected by BWAC.

James F. Bere, Borg-Warner’s chairman and chief executive, said that there was “no question” that the parent company’s corporate earnings would be hurt. He added that he was confident that other operations would reduce the impact of the loss.

White has 900 employees working in its Oak Brook offices and plants in Charles City, Iowa; South Bend, Ind., and Hopkins, Minn. Several hundred workers are employed by White’s Canadian operation, White Farm Manufacturing Ltd.

White has 900 dealers across North America.

Terry agreed with BWAC’s assessment of the farm-machinery industry. “The farm-equipment business is the absolute pits,” he said.