HS Fresh Food: Owner of Houston’s Farm sold to competitor after entering voluntary administration

HS Fresh Food, the Tasmanian-based owner of Houston’s Farm, has been bought by a rival business after entering voluntary administration last month. What happens next >>

FTI Consulting‘s Joanne Dunn, who is one of the administrators of troubled Tasmanian-headquartered business HS Fresh Food. Picture: FTI Consulting

HS Fresh Food, a Tasmanian food manufacturer with headquarters in the state, has been bought by a competitor after going into voluntary administration last month – but it’s not clear how many of the company’s hundreds of existing employees will be retained under the new ownership.

The troubled business specialises in bagged salads, salad bowls, and ready-made meals and has about 430 staff across the country, including in Tasmania. Among its brands are homegrown Houston’s Farm, as well as Sunfresh and JMark.

FTI Consulting was appointed as voluntary administrator in June after a series of adverse events, beginning with the Covid pandemic, brought HSFF to its knees.

HS Fresh Food includes the Sunfresh brand. Picture: Supplied

The administrators have confirmed that they signed an agreement on Monday to sell the business to PMFresh, which describes itself as the nation’s leading producer of fresh convenience foods.

The sale is expected to be completed by July 31.

“Until this time the business will continue to operate under the control of the administrators,” FTI Consulting’s Ben Campbell, Joanne Dunn, and Vaughan Strawbridge said in a joint statement.

“The sale process resulted in a number of expressions of interest and non-binding indicative offers being received, but the PMFresh offer was the best offer received.”

The administrators said HSFF staff were notified of the sale in meetings held on Tuesday.

“However, the final number of employees being offered future employment under the sale has yet to be communicated, as this will not be known until transition plans are finalised which are expected to be done over the next three weeks,” they said.

The sale comes after a leading fund manager defended its decision to cut ties with HSFF, a move the business says forced it to enter voluntary administration.

Tanarra Capital, which manages about $3bn worth of assets and was founded by prominent investment banker John Wylie, was the company’s senior lender but opted to stop funding HSFF.

Former HSFF chairman Mike Wallas told the Mercury that the board had received an offer from a large trade buyer to buy the business in March and had last month signed off on a deal that “provided for all employees’ entitlements”.

Former chair of Tasmanian-based HS Fresh Food Mike Wallas. Picture: Supplied

But he said the company’s chief lender, Tanarra, had refused to support this and subsequently ceased funding HSFF altogether.

It was at this point that the board was left with no choice but to put the business into administration, according to Mr Wallas.

However, Tanarra chief investment officer Michael Phillip said the HSFF board did not advise the fund manager that there was “an unconditional purchase offer that could be actioned”.

John Wylie, investment banker and founder and CEO of Tanarra Capital. Picture: Stuart McEvoy

“A draft conditional purchase offer presented to us prior to administration was limited in employee entitlement coverage and did not ensure future employment of the entire workforce,” he said.

Mr Phillip also shed light on why Tanarra had decided to end its relationship with HSFF.

“Despite repeated extensions and additional capital provided by us, HSFF did not meet the agreed criteria to unlock additional financial support,” he said.