Leucadia National Corp., the investment firm run by Richard Handler, plans to shut a beef-processing facility with 1,300 workers, citing poor performance.
The closure in Brawley, California, will result in an impairment of a “substantial portion” of the $93 million in long-lived assets at the plant as of Sept. 30, the company said today in a regulatory filing.
Leucadia agreed in 2011 to pay $867.9 million for a majority stake in National Beef Packing Co., which processes and delivers fresh and frozen meat. Profit at the unit declined to $55.1 million in the nine months ended Sept. 30, from $71.3 million a year earlier, as the price for cattle increased and the company lost an account with Wal-Mart Stores Inc.
“The Brawley facility has performed below expectations,” Leucadia said in today’s filing. The plant “is now expected to generate operating losses for the foreseeable future. Closing the facility should enhance operating results at National Beef, increasing Leucadia’s return on its investment.”
National Beef had 9,300 employees at the end of 2012, according to New York-based Leucadia’s annual filing. The company said it would work to find jobs for staff at other National Beef facilities. Production is scheduled to stop at Brawley on April 4.
The United Food and Commercial Workers International Union will work with the company to relocate or retrain its members, said Amy Gray, a spokeswoman for the group. “We will be going back to the table with the company to take care of the workers,” Gray said by phone.
Leucadia also has taken stakes in companies that originate mortgages and manufacture lumber. Handler, chief executive officer of Jefferies Group LLC, sold the investment bank to Leucadia last year and became CEO of the combined firm.
The impairment charge will be included when the company announces full year results for 2013, Leucadia said. The company dropped 1.6 percent to $27.07 at 10:34 a.m. in New York. The stock has gained 9.3 percent in the past 12 months.