The Daily Southerner, Tarboro, NC

Local News

March 13, 2008

Farmtrac talks with Montana Tractors

BOB BENEDETTI

More than 300 farm implement dealers across the nation have been negatively impacted by the mid-January closing of Tarboro-based Farmtrac North America.

Lack of warranty and parts support has left Farmtrac dealerships scrambling to support customers and supply revenue to keep doors open.

But due to recent talks in the Middle East, that may change soon.

In a March 6 newsletter published by Springdale, Ark., farm equipment manufacturer Montana Tractor, Vice-Chairman and Co-Owner Ted Wade stated that a team of its representatives recently met with the parent company of Farmtrac, Escorts, Ltd. to "discuss the possible business options available between the two companies."

The meetings were held in New Delhi, India; home of Escorts, Ltd.

During the same timeframe, undisclosed Farmtrac employees stated that Farmtrac Marketing Head Shenu Agarwal and Chief Financial Officer Alton Cobb were also in India.

During a Wednesday phone conversation with Wade, the Montana Tractor leader did not confirm nor deny direct discussions with Agarwal or Cobb, but did express an interest in "helping" the financially ailing Farmtrac by "representing its warranty, parts and service" segments.

Farmtrac was placed in receivership by an Edgecombe County court in late February.

Wade said talks were productive enough that parties had reached an "agreement in principle," that Montana officials "have sent drafts" of a proposed agreement and are awaiting their completion. Wade added that "there's always an 11th hour" and that "we've been disappointed before."

Wade said processing paperwork usually takes "about two to three weeks" and indicated that "we want to move on this" and will "continue to be very aggressive in growing Montana's market share" in what is anticipated to be "a very challenging compact tractor market this year."

Should the move go through, it would be mutually beneficial to Montana and to Farmtrac deals across the country.

A confirmed plan to provide tractor warranties, parts and service would give Farmtrac dealers a huge lift. Without a manufacturer warranty to protect against breakage, customers have been unwilling to purchase tractors. In the short term, that reluctance has caused a backup of equipment on retail lots, a lack of two months worth of cash flow and a threat that hard times may drag on.

With an economy that is already struggling, the added lack of sales is an added kick to some dealers that are down. Farmtrac dealers report they've had to dig into their savings to stay afloat.

A longer term concern for dealerships is the prospect of being unable to return or liquidate the blue Farmtrac units if the company becomes defunct permanently.

One Louisiana Farmtrac dealership said, "I have a $100,000 worth of equipment tied up in this. I can't afford to take that loss."

At present, Farmtrac dealers across the nation have reported their only contacts from headquarters have been two faxes: an initial notice of the company's initial closing and another when attorney Jim Marrow of Tarboro was assigned receivership by a county court.

According to Edgecombe County Superior Court documentation, Textron Financial Corp. filed a complaint on Feb. 12 against Farmtrac is "not less than $13,309,056 plus interest plus attorney's fees of $1,996,358 and additional contingent obligations."

According to a Claim and Deliver affidavit dated Feb. 12, the actual value of Farmtrac property is "approximately $12 million."

Farmtrac Chief Financial Officer Alton Cobb failed to respond to calls inquiring on the company's status. Farmtrac dealerships across have also reported the company's failure to respond.

Approximately 180 persons were unemployed after Farmtrac closed its production facility in Tarboro.

Montana Tractors, a privately-held corporation that originated in 2004, distributes tractors throughout North America. Montana currently employs approximately 70 persons and holds a distribution network of over 250 dealers in North America, including 10 retail locations across North Carolina. It is the fastest growing brand of compact and utility tractors in North America.

Although Montana has no dealerships in Edgecombe County, it owns 80 acres adjacent to Farmtrac headquarters in Tarboro – land that Wade said could be used as an East Coast distribution center.

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