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Zelenka Nursery Weighs Options
Zelenka Nursery, one of the world’s largest wholesale growers of nursery and ornamental plants that’s now weighing bankruptcy as an option to save the company, owns 2,500 acres of land in rapidly growing Ottawa County. The concern is what may occur to the landscape of Ottawa County should the numerous parcels Zelenka Nursery owns not continue in agricultural production and end up getting sold for development.
“We haven’t seen the full extent of what this could mean for our community yet,” said Tricia Ryan, vice president for economic development at The Chamber of Commerce in Grand Haven.
The Grand Haven-based Zelenka Nursery ceased operations Sept. 3 when the company’s senior lending group, consisting of four banks, “declared they are no longer interested in funding Zelenka Nursery,” company President Richard Brolick said.
By week’s end, the company’s owner — Franklin Street Equity Partners of Chicago — was looking to file Chapter 11 bankruptcy in a latch-ditch effort to save Zelenka Nursery. Chapter 11 would give Zelenka Nursery an opportunity to sell to a buyer that would maintain the operation, although liquidation could still occur, Zelenka Chairman Tom Ablum said.
“It’s now up to the court to decide if that’s the way it’s going to go or if they’re going to unemploy everybody and sell the land,” Ablum said Friday. “We’ll let a court and judge decide how and what’s going to happen.
“We’ve tried everything we know,” he said.
The banks — Bank One, Comerica, Fifth Third and Standard Federal — removed all cash from Zelenka’s accounts and demanded that the company turn over all assets in three states for liquidation. A spokesman for Fifth Third Bank in Grand Rapids said he could not comment on the situation.
Beyond putting the 58-year-old company on the verge of extinction, the banks’ decision, which Brolick termed as “short sighted,” puts more than 1,000 people out of work — an immediate job loss that Ryan termed as “truly staggering.” Her office has been working with Zelenka executives for months to connect them with new investors and explore other options that could help the company.
“This is a very significant loss for us,” she said. “It’s very sad when you see this happen to a company that’s been here as long as it has.”
Zelenka had found a “very capable” buyer whom the banks “have refused to finance,” Brolick said in a statement. The purchase proposal would have enabled Zelenka to pay all of its creditors in full and “allowed the company to operate as in the past.”
Brolick said the company had never missed an interest or principal payment and had sufficient cash to meet its obligations, despite the higher fees and interest rates charged.
Zelenka ran into trouble two years ago following the Sept. 11 terror attacks. The subsequent bankruptcies of Kmart and Frank’s Nursery, as well as the closure of regional nursery departments at Target stores, worsened the situation.
But Zelenka, with annual revenues of $60 million, has since overcome the financial problems, and was “extremely profitable,” Ablum said.
Mark Knudsen, Ottawa County’s planning director, hopes that if Zelenka’s property holdings are put up for bid or sale, other nurseries or agricultural operations that make up Ottawa County’s sizable farming economy will step up and acquire them for their own expansion.
“I’ve got to believe that with the amount of nursery stock that is in the ground, there is some value there to somebody from an agricultural perspective,” Knudsen said.
If not, “The land use implications are huge,” he said. “It could have a significant impact.”
Zelenka grows more than 10 million nursery and ornamental plants annually that are sold in some 5,000 retail and landscape store in 42 states. Plants are grown on about 5,000 acres of fields in West Michigan, about half of which are leased, with far smaller operations in Tennessee and North Carolina.