How to do a salvage job

Hank Hayes • May 7, 2018 at 8:30 AM

KINGSPORT – If at first you don’t succeed, don’t just try, try again.

Salvage the situation.

That’s apparently the mindset of the Kingsport Economic Development Board (KEDB) as it attempts to get something out of two failed business ventures the board had invested in.

The first involves the former Pure Foods facility in the Gateway Commerce Park.

What happened at Pure Foods?

The 88,000-square-foot manufacturing facility was set to produce nutrient-dense and reduced-fat snack foods for distribution in Canada, the United States and Mexico.

The NETWORKS Sullivan Partnership, the city of Kingsport, the state of Tennessee, the Kingsport Chamber of Commerce and KEDB collaborated to put a deal together so Pure Foods could get up and running.

Pure Foods said it had $22 million invested in the grounds, equipment and facility when it opened in January 2016. Over a five-year span, the company expected to hire as many as 275 employees.

Then came a January 2017 Chapter 11 filing in U.S. Bankruptcy Court, and the company announced its assets were up for sale.

There were two bidders. One was Memphis-based Brim’s. The other was California-based Anita’s Mexican Foods.

“Anita’s thought they had the property bought, Brim’s evidently undercut them and ended up with the assets,” said Gorman Waddell, KEDB’s legal counsel. “They negotiated a lease with us under the name Kingsport Foods and that’s the lease currently in operation on that property. In the meantime, Brim’s turned around and entered into negotiations with Anita’s to sell what they had bought and Anita’s has agreed to buy it.”

Anita’s had been designated and approved as the “back up bidder” by the U.S. Bankruptcy Court with a bid of $3.1 million for the assets, mainly the chip-making equipment.

An order to dismiss the bankruptcy case was signed in March.

KEDB, at its May meeting, approved the Anita’s lease for the building.

“I think it is a better situation because we had no guarantee on the Kingsport Foods lease, we had no parent company guarantee but with the one we have now, a new entity who will be the tenant at that building, the parent company has given us a very strong guarantee,” Waddell told KEDB members.

KEDB Chairman Bill Dudney noted: “I actually feel we are in a better position.”

What was the other failed venture?

KEDB approved a separate lease for what Waddell called “the infamous winery building” located on the MeadowView Marriott property.

The building is now vacant, but the prospective tenant is an entity called Golf Amplified LLC, who plans to operate an indoor simulated golf experience.

“If you had a meeting with an hour and a half break, you could go in there and hit golf balls at the Old Course at St. Andrews,” Dudney said of how the business would operate.

Reedy Creek Vineyards and Cellars had occupied the building.

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