Patrick Springer, Published July 16 2013
Aldevron offers $5.1 million for part of shuttered PRACS facility
The trustee’s motion, filed Tuesday morning in U.S. Bankruptcy Court in San Antonio, involves Aldevron’s offer to purchase about half of the sprawling complex at 4801 Amber Valley Parkway.
The PRACS research center, which tested drugs in clinical trials for the pharmaceutical industry, abruptly closed on March 23 and soon after filed a Chapter 7 liquidation petition.
PRACS had 544 beds for participants in drug trials and employed about 400 in its Fargo center at the time it shut down.
Aldevron’s “stalking horse bid,” which establishes a minimum bid price and involves a $500,000 deposit, positions the Fargo firm as the first and leading bidder in an auction expected in August.
“The PRACS facility is an ideal global headquarters for Aldevron,” Michael Chambers, Aldevron’s chief executive officer, said in a statement. “The laboratories are very well designed and can easily accommodate Aldevron’s rapid growth.”
Chambers, who was traveling Tuesday and could not be reached for comment, has said Aldevron is experiencing rapid growth and is expanding its production capacity to service new lines of products.
“My colleagues at Aldevron have done an incredible job in building the company,” he said in the statement, adding that the PRACS buildings would give the firm a “world-class facility.”
Aldevron, established in 1998, provides laboratory and production services for research labs and biotechnology companies, including DNA vaccines, oncology and agriculture.
Before the PRACS buildings became available through the bankruptcy sale, Aldevron had been planning to expand in the former Woodrow Wilson school near downtown Fargo.
Planned renovation of the former school is on hold pending the outcome of Aldevron’s offer for the PRACS facilities. Aldevron, which also has operations in Madison, Wis., and Germany, has between 55 and 60 employees in Fargo.
The bankruptcy trustee has requested a July 22 hearing on the auction motion, with an auction to follow on Aug. 1. The bankruptcy judge must decide the motion and will schedule the dates.
Aldevron’s purchase offer involves two of three former PRACS buildings: 4801 Amber Valley Parkway, 116,775 square feet and an appraised value of $10.6 million; and 4901 Amber Valley Parkway, 8,400 square feet, appraised at $781,400.
A third building, 4837 Amber Valley Parkway, 127,735 square feet, with an appraised value of $8.7 million, according to city records, is owned separately and is not part of Aldevron’s offer.
Jim Carlson, PRACS’ founder and chief executive at the time it was thrust into bankruptcy, said Tuesday he still is trying to find a group of investors that would enable him to resurrect operations in Fargo.
But Carlson acknowledged the path is a difficult one, and doesn’t know if he can succeed, especially given the possible auction. His plan for reviving PRACS calls for using the entire complex, which he said would be needed.
“I’m still trying,” he said, adding that his efforts now are focused on trying to form a “Dakota region” group of investors.
“My effort may have been nothing more than an effort in futility,” Carlson added. “I don’t know where I’m at.”
The mammoth PRACS compound, with a total of 252,886 square feet of space, is a highly attractive research facility, he said. The buildings were built starting in 2000.
The auction of two of the buildings, with combined space of 125,151 square feet, should draw keen interest from bidders locally, nationally and perhaps internationally, Carlson said.
“There are other bidders waiting in the weeds,” he said. “Once that auction starts you’re going to find the interested parties.”
Meanwhile, to “wind down” the former PRACS operation, the bankruptcy judge has approved about $2 million to handle the costs of preparing the property for sale, handling records, transitioning research projects and security.
Before the bankruptcy, which Carlson has said caught him by surprise, he had disposed of five of eight properties that had been used by Cetero, which had combined several contract research firms, including the original PRACS, which Carlson co-founded in the 1980s.
Each of those five operations cost between $2 million and $3 million to “wind down,” Carlson said. He believes the investors who owned the PRACS that succeeded Cetero were given poor advice by a consultant who grossly underestimated the cost of winding down a large, multisite contract research firm.
Had the investors and lenders known, they might have allowed a few more months for Carlson to turn around the company, he said, adding that he believes PRACS could have turned the financial corner if allowed to continue another four months.
“We were within months of profitability,” he said.
PRACS, which consisted of several related business entities, was owned by Freeport Financial of Chicago, which now is part of Stark Financial, based near Milwaukee.
The bankruptcy filings list $16.9 million in assets – $10.5 million of which is part of the Fargo complex at Amber Valley Parkway – and liabilities of $85.2 million.
Those liabilities are claimed as assets by Freeport Financial, of which $45.8 million is unsecured, according to bankruptcy records.
Readers can reach Forum reporter
Patrick Springer at (701) 241-5522