Palama Meat
bankrupt

One of Hawaii's oldest
meat companies says trouble
began with 9/11

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By Lyn Danninger
ldanninger@starbulletin.com

One of Hawaii's oldest meat slaughtering, cutting and wholesale businesses, Palama Meat Co., filed for Chapter 11 bankruptcy protection yesterday, along with two related sales and distribution companies. Combined debts of the three companies will total somewhere between $15 million and $25 million, said company attorney Simon Klevansky. Assets are in the same range, he said.

The largest unsecured creditor is Bank of Hawaii, which is owed about $15 million on loans and a line of credit. The company also owes nearly $1.5 million each to Marwit Capital Co. LP, of Newport Beach, Calif., and LEG Partners SBIC LP, of New York. Among local businesses, Unicold Corp. is owed $291,613 and Campbell Hawaii Investor is owed $143,097 for lease rent and taxes.

Joseph Azarro Sr., president of Palama, H&W Distributors Inc. and H&W Foods Acquisition Corp., said a steady decline in business began with the 9/11 attacks and was later compounded by the threat of war with Iraq. Finally, the war itself exacerbated the companies' financial problems.

Azarro said he hopes to emerge from the bankruptcy in under a year.

"(The decline) has been constant since 9/11. This is our way of protecting our customers and our employees so we can be stronger going forward," he said.

Azarro acquired H&W Foods in late 1995 and followed with the purchase of Palama Meat in 1997 when longtime owner Donald Lau wanted to retire.

At the time of the purchase, Azarro said he had more than 30 years in the meat business in California before buying H&W and moving to Hawaii. When they were bought, each company had revenues of about $34 million a year.

In 2000, Palama opened a new 80,000-square-foot processing plant and headquarters in the Kapolei Business Park, helping it increase total meat production by 50,000 pounds a week. At its old facility in Ewa, it had been processing about 600,000 pounds of meat each week, Azarro said.

The plant was expected to ad up to 140 jobs to the 170 already working for the companies.

About 90 percent of all the ground beef consumed in Hawaii was processed at the new facility, the company said.

The new facility became possible when the Legislature approved a $10 million special-purpose revenue bond that allowed the company to raise the money to build the $8 million plant. The company has 30 years to pay off the bonds. Bond payments are current, Klevansky said.

The company has 120 days to file a re-organization plan with U.S. Bankruptcy Court.