Optimal Exit Strategy For A Business Owner}

Submitted by: M&A Critique

Exit Planning is a process involving developing and planning an optimum time to exit a business with the objective to achieve the maximum return out of the accumulated wealth made over the tenure of the business.

I. Planning an exit strategy:

If you are setting up a business you will have a clear vision as to what you desire to achieve out of it. Similarly, to derive the optimum value from the business, you need to have a vision of how and when you will exit the business. Defining and planning an exit strategy is essential at the point of starting a business as this would enable the business owners to mould their business in the ideal shape of the chosen exit option. The way in which the business owner exits can affect the value the shareholders derive from the business, the future success of the business, its expansion plans and its products and services.

When it is considered that the sale of a business is probably one of the most significant events in the life of a business owner, it is surprising that so little organized thought goes into it. One problem is that business owners view the disposal of their business as an event somewhat out of their control that will happen one day, whereas they should consider an exit as a process over which they can exercise considerable control even from the start of the business.

It is important that the structure of the business (with regard to how it is owned and what it does) and the relationships with any co-owners are properly organised so that one does not limit the exit opportunities and does not become liable to pay more tax on the sale proceeds than is legally necessary. Ideally, the structural issues should be addressed from start-up itself, thus ensuring that at the time of exit one is not at a disadvantage.

One needs to evaluate various options while determining an optimal exit strategy. Business owners should not expect to exit successfully without figuring out how best to exit, what preparatory steps to be taken and the value unlocking from the exit.

II. Various Exit Strategies:

Selection of strategy and structure depends on whether it is a partial or complete exit, tax implications, time is taken for completion and optimum transaction cost and acceptability of the structure to the regulators. The transaction should be structured in a way that the seller gets the highest net of tax consideration without having any negative impact on cash flow of the buyer.

Strategic Sale: A strategic sale involves various stages:

The business should be brought into a proper shape by reducing unnecessary overheads, debts, and excess stocks, paying all the taxes and resizing the balance sheet.

Appointing financial and legal advisors

Valuing the business

Identifying and evaluating various potential buyers

Carrying out negotiations with the potential buyers

Completing due diligence

Completing various legal formalities

Obtaining approval from various authorities

Finalizing the sale and transferring ownership

Strategic sale creates the highest value for the seller as the buyer is ready to pay price for intangibles, goodwill, exit either customers etc considering synergies which he can capture from the acquisition

This transaction is that of a strategic sale by erstwhile Satyam Computer Services to Tech Mahindra, whereby Tech Mahindra acquired a 31% stake in Satyam. The deal positioned Tech Mahindra at the fourth position in the IT Industry from the seventh position. The deal enabled Tech Mahindra to move into several geographies using Satyam’s spread and was able to get into other verticals inorganically.

Reorganization of the business for partial liquidity

The business may reorganize for the objective of the seller is to exit either in terms of ownership or in terms of one of the division or strategic business unit (SBU). For that purpose, depending upon the legal entity through which business is carried on, may have to reorganize the capital, refocus on various business units and or create new legal structure.

[youtube]http://www.youtube.com/watch?v=PN5b2xfoZnk[/youtube]

Demerger of Wheels Division of Enkei Castalloy Limited to and in Enkei Wheels (India) Limited

Enkei Castalloy Limited (ECL), was engaged in the business of the manufacture and sale of castings made from aluminum alloys, for automotive and non-automotive applications (the Foundry Division) and manufacture and sale of alloy wheels for automotive applications (the Wheel Division)

The Wheel Division required new and latest technology to improve its competitiveness against the recent entry of globally-positioned competitors and to develop future markets both in India and overseas. It also needed a substantial infusion of risk capital to fund initial losses and expansion. Therefore the Enkei Wheels (India) Limited (EWIL) was the company formed for the purpose of taking over the Wheel Division on an ongoing concern basis from the Demerged company.

Demerger of the Engines and Auto Components Business of Kirloskar Oil Engines Limited to and in Kirloskar Engines India Limited

The Demerged Company was a Company engaged in the business of manufacture and sale of diesel engines, generator sets, bimetal bearings, bushes and bimetal strips. The Demerged Company being engaged in the Wind Mill Business and as an investment company and focusing on new business opportunities demerged its Engines and Auto Components Business to and in Kirloskar Engines India Limited by way of a Scheme of Arrangement.

Recapitalization of business: The equity shareholders may recapitalize by re-leveraging the equity, replacing equity with more debt in order to extract cash from the company

Before a complete sale or inviting a strategic partner, the business owner has to take out surplus /non-strategic assets and cash so that the buyer gets what he is interested in.

Merging the business to enhance value and marketability: Merging the business involves the steps similar to a strategic sale

Reliance Natural Resources Ltd. (RNRL) Reliance Power (R-Power)

On July 05, 2010 RNRL merged with its sister concern R-Power in an all-stock deal with a swap ratio of 1:4. The merger will accelerate R-Powers plans to set up a 10,000-Mw gas-based power plant, set in train with its Gas Supply Master Agreement with Mukesh Ambanis Reliance Industries Ltd. The move will also help R-Power accelerate its backward integration plans as a pure thermal power generation company to quickly venture into other value chains of the energy business.

Transferring the business to family, management or employees

Gifting the business to meet personal or tax planning goals

Liquidating or partially liquidating the business

IPO

Sale of a stake to partners, strategic buyers, competitors, international buyers or to the public

Angel Investors Exit: Angel Investors invest at the early stages of a business. Therefore from an Angel perspective, a company can either:

Obtain financing from a venture capital fund

Be sold

Go Public

Private Equity/Venture Capitalist Exit: Venture Capitalists/private equity investors normally look for exit by either going public or through a strategic sale

3is Stake Sale in Pipe Maker Welspun

The UK-listed private equity (PE) firm 3i sold off one of its early investments in India in steel pipe maker Welspun Gujarat Stahl-Rohren. 3i, which had picked up about 6.6% equity stake in Welspun Gujarat for about Rs 350 crore in 2007 through the private-investment-public equity route, sold this portfolio due to limited growth opportunities in the pipeline industry. The firm has been realigning its portfolios across the world after the liquidity crisis and has even closed down its buyout fund in India and shifted people to its more active infrastructure fund. Source Economic Times, 21st September 2010

Leveraged Buy Out:

A leveraged buyout, or LBO, is an acquisition

of a company or division of another company financed with a significant amount of debt

. Later, the acquired company’s profits are used for the repayment of the loans. This acquisition method became very popular in the U.S. in the 1980’s when easy financing was available through innovative securities like junk bonds.

Exit Strategies

Usually, the acquired in a leveraged buyout takes the target company private through the transaction. That means it will buy out the entire stake held by the public and delist from the listed stock exchange if the target is a public company. This can give the acquirer the freedom to execute major changes in the acquired business. After the reorganization of the business, acquirers such as specialized LBO funds usually exit from the company.

Various types of methods are used for the exit. One is selling out the company to a strategic buyer. Another exit strategy is making a fresh IPO if the company has been taken private for realizing the gains. Another option is the recapitalization of the acquired company in a manner that the buyers can extract money from it.

LBOs in India

LBOs completed in India are different from those in the U.S. and other developed countries which are normally carried out by specialized investment funds. In India, LBOs are carried out by business groups or companies to acquire foreign companies with the help of new found sources for providing a large amount of credit as a result of the liberalization of the Indian economy. Moreover, the target companies are usually many times bigger than the Indian acquirers.

The first global LBO in India was the acquisition of Tata Tea’s acquisition of UK-based tea company Tetley in March 2000. After that, two other companies under Tata Group made similar transactions. They were the acquisition of Corus Group by Tata steel and Jaguar by Tata Motors.

Many other Indian companies have carried out LBO transactions after 2000. Birla Group company Hindalco Industries’ acquisition of Canada-based aluminum producer Novelis, Chennai-based oilfield equipment producer Aban Offshore’s acquisition of 33.76% stake in Norwegian oil rig producer Sinvest, Vijay Mallya’s UB Group’s acquisition of Glasgow-based whiskey maker Whyte & Mackay, Dr.Reddy Lab’s acquisition of German generic drug maker Betapharm, Wind power major Suzlon’s acquisition of Germany-based RePower Systems are various examples of LBOs carried out in India.

III. Considerations on sale of a business:

Before selling the business, a business owner needs to consider the following carefully and accordingly plan for the exit:

What is the net worth of my business?

What is the optimal time for the exit?

What is the optimal exit strategy for the business?

What are the legal/financial and other hindrances on the exit of a business?

What are the various regulatory compliances and approvals to be undertaken?

Whether shareholders (including minority holders) can object to the exit?

What will be the tax liability on exit and whether there are options available to reduce the tax liability?

What are the synergies available from the exit?

What would be the appropriate valuation matrix?

Who are the potential buyers of the business?

Whether proper due diligence of the buyers has been carried out?

IV. Valuing the business:

When considering an exit strategy, it is important to understand the value of the business, as the sale price will influence both the current and post-sale plans.

Key considerations while valuing the business are:

Reviewing the revenue and the business models

Projecting the financials and cash flows of the business

Reviewing risk and returns

Tax considerations

Which assets and liabilities are taken ove

What would be the structure of the deal

Legal and financial implications

V. Conclusion – Benefits of a planned exit:

Every step along the complex path of executing an exit strategy demands advice from professionals who are experts in the area and who know the opportunities and the pitfalls. Advice from these experts would help the business owner plan the exit in the most efficient manner and avoid any potential risks. The employment of a team of professional and experienced advisors will add a cost of say 3-6% of the transaction, but will potentially add considerably more value by:

Mitigating against a failure of the transaction

Expediting the transaction completion process

Intermediating the process to eliminate the risks associated with direct negotiations between the business owners

Increasing the negotiation value of the transaction

Providing a team of professionals to structure and execute the transaction

Therefore an exit strategy should involve a carefully planned activity considering the advice of the experts.

About the Author: M&A Critique is the only magazine, News published from India which gives M&A News, Mergers and Acquisitions News, Analysis, Restructuring, Takeovers, and JV.Read More:-

mnacritique.mergersindia.com/

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Preparations for inaugural Bathurst International Motor Festival begin

Wednesday, February 22, 2006

The Bathurst Regional Council has begun preparing the Mount Panorama motor racing circuit for the inaugural Bathurst International Motorsport Festival (BIMF) to be held between April 13 and 16, 2006. The Mount Panorama motor racing circuit is considered to be the home of motorsport in Australia.

Council’s staff have been busy cleaning the facilities, erecting signage, checking pedestrian bridges and inspecting the track surface for the past few days.

The BIMF will be the first event to be held at the 6.2 kilometre circuit over Easter since 2000. In 2000, Event Management Specialists held the first motorcycle racing event since 1990, but due to EMS going bankrupt a short time after their 2000 event was ran and the inability of the then Bathurst City Council to find another promoter, the Easter event was canned.

The BIMF is inspired by the Festival of Speed and Goodwood Revival in the United Kingdom. The Bathurst Regional Council and event promoter Global Entertainment Team promise that the event “will cater for all motoring enthusiasts, collectors and historians”.

According to the BIMF website, the on-track program consists of:

  • Manufacturers showcasing their vehicles and track times
  • Historic touring car races
  • Aussie racing car races
  • Australian GT sports car
  • Parade laps by car clubs
  • Parade laps and races by “Legends of Motorsport”
  • Stunt car and bike events
  • Rally cars
  • Displays of cars from all eras of Mount Panorama’s history
  • The chance for patrons to purchase a ride around the circuit in a race car.

Off the track, the organisers have promised manufacturer displays, merchandise stands, music, joyflights, Off-road demonstrations and joyrides, autograph sessions and interviews with influential people in the Australian motor industry.

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Massachusetts lawmakers enact plan for universal health coverage

Friday, April 7, 2006 Legislators in the Massachusetts General Court, their name for the state legislature, approved legislation on Tuesday, April 4, that would make it the first state in the United States to require all residents to have health insurance and impose penalties for non-compliance. Massachusetts Governor Mitt Romney, a Republican who is expected to run for U.S. President in 2008, is expected to sign the bill.

The bill passed the lower house, the Massachusetts House of Representatives by a vote of 155-2, and unanimously by the state senate. The Democratic Party holds supermajorities in both houses of the legislature.

Among the bill’s provisions are these:

  1. Businesses that employ more than 10 people are required to provide health insurance for all staff or face fines of $295 per year per uninsured worker.
  2. Individuals will be required to enroll in a health plan by July 1, 2007, or face tax penalties.
  3. Health insurers will provide partially to fully subsidized coverage for low-income residents.

At least one other state (Hawaii) requires employers to provide employee health insurance, but no other state holds individuals accountable for coverage.

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U.K. doctors successfully transplant a beating heart

Monday, June 5, 2006

British doctors have successfully transplanted a beating heart into the chest of a 58-year old man, the first operation of its kind in the United Kingdom.

The “trial” surgery was performed at Papworth Hospital just outside of London, England in Cambridge. The operation could be “equivalent if not superior” to the current transplanting methods, doctors said. The method has only been performed two other times, in Germany.

Usually hearts would be injected with potassium, which stopped the heart from beating, after which it would be covered with ice. This put the heart in “suspended animation” but gave doctors only a six-hour window to examine and transplant, doctors said.

“Normally the heart is in suspended animation but they still start to deteriorate,” said Professor Bruce Rosengard, head of the team of doctors who operated on the man.

The new method involves connecting the heart to a machine that pumps warm, oxygen enriched blood through the heart. The heart is able to keep beating with this method. The new process allows surgeons to look more closely and longer at the heart for any signs of damage. It also allows them to find a match for whoever may need it.

“Once hearts are hooked up to the device, which takes about 20 minutes, any deterioration is fully reversed. If we look at resuscitating hearts that are currently unusable, the number of transplants could be tripled or quadrupled,” added Rosengard. “The goal of this trial is to demonstrate that this is at least equivalent if not superior,” he added.

The director of transplants in the United Kingdom Chris Rudge also says that doctors are working on using the same new method with different human organs.

“In the longer term it is not just hearts that can be handled by such systems but other organs too, particularly the liver,” said Rudge.

The 58-year old man is doing “extremely well. At his exam one week after the operation, all his functions were absolutely normal,” Rosengard said.

At least 19 more operations are planned in the U.K. and in Germany.

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Germany legalises medical use of cannabis

Friday, January 20, 2017

Yesterday, the German Bundestag passed a law to legalise cannabis drug for medicinal purposes. The law is to come under effect in March.

“Seriously ill people must be treated in the best ways possible” ((de)) German language: Schwerkranke Menschen müssen bestmöglich versorgt werden. , German health minister Hermann Gröhe tweeted. Doctors can prescribe marijuana — cannabis — for patients suffering from multiple sclerosis, chronic pain, or loss of appetite or nausea from cancer’s chemotherapy treatment.

Christian Democrats (CDU) lawmaker Rainer Hayek said this law would still prevent recreational use of cannabis. The cost of cannabis is to be covered under health insurance. Patients can buy dried buds or cannabis extracts from pharmacies with a prescription or get synthetic derivatives from other countries, though possession of the drug in large quantities is not allowed.

Cannabis cultivation is to be monitored by the government. Germany has joined other European countries such as Austria, Spain, France, Italy, Portugal and Netherlands in legalising the drug to some extent.

In October, a 53-year-old multiple sclerosis patient showed cannabis was the only solution to reduce his pain, and the court granted him permission to grow as many as 130 plants in one year for personal use. Purchasing, rather than growing, medical cannabis at the time cost about €15 (US$16.85) per gram.

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Marketing Strategies For Your Handmade Jewelleries}

Marketing Strategies for Your Handmade Jewelleries

by

Luke Wildman

A number of books, magasines and websites feature and discuss some marketing strategies for big and small businesses such as jewellery making.

Here are 10 selected practical, workable and helpful marketing tips:

1.Create varied quality designs that your audience can quickly and easily choose from, this would save them time from mall hopping just to find one that appeal to them and suit their taste.

2.Display your jewellery designs in as many local events as possible, i.e. tradeshows, bazaars and festivals so that it will gain local exposure. But be selective; choose an event that would be an appropriate market for your items, one that would promote a positive image for your jewelries. Have a list of these events to calendar your display sites.

3.Come up with unique jewellery designs that can be given an appropriate catchy name that excites and intrigues. Specialised designs can have specific theme created to attract a specific age group. i.e. my-only-love jewellery design can become popular to single and married couples. An added explanation of the meaning behind the design could make it a gift item intended to send a specific message or to symbolise a personal feeling. With this, you will create a specific receptive market of your merchandise.

4.Lend some of your attention-getting jewelleries to selected friend; have them wear it on a regular basis. This is a free public display and marketing campaign. Provide them brochures and calling cards to be given to persons who will compliment the jewellery. For every sold item, your friend gets a commission.

5.Network with professional women who love to use sets to go with their professional wardrobes. Sell your items directly in their offices, home or parties. Offer to give talks in their organisations on topics related to jewellery business like jewellery making, selecting jewelleries and wearing jewelleries. Word-of-mouth is an effective and free marketing campaign.

6.Approach fashion boutiques such as bridal boutiques, beauty salons, spa, massage and fitness centers who might be interested to display your jewellery items. You can offer to provide them designs which they can brand with their store name, but only if you are not interested to build a brand for yourself. You can sell your pieces at wholesale price.

7.Use the internet to market your merchandise to online buyers. Professional quality, clean and sharply focused photos of you jewellery designs on the internet will entice customers to buy your items.

8.Professionally designed brochures and business cards for store owners and professionals who might be interested in jewellery making and jewellery business. Offers for consignment arrangements or a benefit from commission are marketing options which can be considered.

9.Display your products in high traffic sites in your area. A corner booth is the best spot to display. Displaying mirrors must be available for customers to see how it will look on them.

10. However, the most important tip which cannot be overlooked is to create designs that are updated and fresh. People always want something trendy, in style and new. This is the best thing about jewellery making; slow selling items can be redesigned, reused and recycled into a new fashionable piece for increased profitability.

Jewellery making is fun and profitable. There are several free jewellery making tutorials found on websites. These are sites that teach skills and techniques on jewellery making. Once mastered, jewellery making can be a profitable part-time or full time job.

If you want to learn more marketing strategies for your handmade

jewellery making

, visit: http://www.daisybeads.co.uk

Article Source:

Marketing Strategies for Your Handmade Jewelleries }

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Predictable random number generator discovered in the Debian version of OpenSSL

Friday, May 16, 2008

A major security hole was discovered in the pseudo-random number generator (PRNG) of the Debian version of OpenSSL. OpenSSL is one of the most used cryptographic software, that allows the creation of secure network connections with the protocols called SSL and TLS. It is included in many popular computer programs, like the Mozilla Firefox web browser and the Apache web server. Debian is one of the most used GNU/Linux distributions, on which are based other distributions, like Ubuntu and Knoppix. The problem affects all the Debian-based distributions that were used to create cryptographic keys since the September 17, 2006. The bug was discovered by Luciano Bello, an argentine Debian package maintainer, and was announced on May 13, 2008.

This vulnerability was caused by the removal of two lines of code from the original version of the OpenSSL library. These lines were used to gather some entropy data by the library, needed to seed the PRNG used to create private keys, on which the secure connections are based. Without this entropy, the only dynamic data used was the PID of the software. Under Linux the PID can be a number between 1 and 32,768, that is a too small range of values if used to seed the PRNG and will cause the generation of predictable numbers. Therefore any key generated can be predictable, with only 32,767 possible keys for a given architecture and key length, and the secrecy of the network connections created with those keys is fully compromised.

These lines were removed as “suggested” by two audit tools (Valgrind and Purify) used to find vulnerabilities in the software distributed by Debian. These tools warned the Debian maintainers that some data was used before its initialization, that normally can lead to a security bug, but this time it was not the case, as the OpenSSL developers wrote on March 13, 2003. Anyway this change was erroneously applied on September 17, 2006, when the OpenSSL Debian version 0.9.8c-1 was released to the public.

Even though the Debian maintainer responsible for this software released a patch to fix this bug on May 8, 2008, the impact may be severe. In fact OpenSSL is commonly used in software to protect the passwords, to offer privacy and security. Any private key created with this version of OpenSSL is weak and must be replaced, included the session keys that are created and used only temporary. This means that any data encrypted with these keys can be decrypted without a big deal, even if these keys are used (but not created) with a version of the library not affected, like the ones included in other operating systems.

For example any web server running under any operating system may use a weak key created on a vulnerable Debian-based system. Any encrypted connection (HTTPS) to this web server established by any browser can be decrypted. This may be a serious problem for sites that requires a secure connection, like banks or private web sites. Also, if some encrypted connection was recorded in the past, it can be decrypted in the same way.

Another serious problem is for the network security software, like OpenSSH and OpenVPN, that are used to encrypt the traffic to protect passwords and grant the access to an administrative console or a private network protected by firewalls. This may allows hackers to gain unwanted access to private computers, networks or data traveled over the network, even if a not affected version of OpenSSL was used.

The same behavior can be applied to any software or protocol that use SSL, like POP3S, SSMTP, FTPS, if used with a weak key. This is the case of Tor, software used to offer strong anonymity on the TCP/IP, where about 300 of 1,500-2,000 nodes used a weak key. With 15-20% of weak Tor nodes, there is a probability of 0.34-0.8% circa to build a circuit that has all tree nodes weak, resulting in a full loss of anonymity. Also the case of only one weak node begin used may facilitate some types of attack to the anonymity. The Tor hidden services, a sort of anonymous public servers, are affected too. However the issue was speedly addressed on May 14, 2008.

The same problem also interested anonymous remailers like Mixmaster and Mixminion, that use OpenSSL to create the remailer keys for the servers and the nym keys for the clients. Although currently there is no official announcement, at least two remailer changed their keys because were weak.

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US unemployment rate remains unchanged at 9.5% in July

Sunday, August 8, 2010

The United States unemployment rate remained unchanged at a high 9.5% as employers and companies remained nervous about hiring new workers and the public sector laid off 143,000 temporary 2010 US Census workers during July. State and local governments, facing major budget deficits, also laid off many people.

Overall, the 131,000 jobs lost during July far exceeded economist’s predictions of 65,000 jobs lost. The private sector added just 71,000 jobs during July, also less than the 90,000 economists predicted. Around 200,000 gains each month are needed just to hold the unemployment rate steady against first time entrants into the job market. Including the Census workers, the government laid off 202,000 people at federal, state, and local levels.

Though the unemployment rate remained at 9.5%, many discouraged job-seekers have given up looking for a position. Those who have given up are not counted as unemployed. The workforce participation rate, which counts those people as not participating in the workforce, dropped to 64.6% from 64.7% in June. The underemployment rate, which counts part-time laborers looking for a full-time job and those discouraged workers, was flat at 16.5% from June.

The Labor Department also revised their job report for June. The new version now states that 221,000 jobs were lost in June, worse than the previous estimate of 125,000. The previous estimate also said that 83,000 private sector jobs were created, however the new estimate says that just 31,000 private positions were filled.

Despite this, most economists were fairly confident that though there would be slower growth in the future, the country wouldn’t slip into another recession.

“Slower growth looks certain, but it’s not a double dip,” said Wells Fargo economist Mark Vitner. Economists Jim O’Sullivan and Dean Maki say that jobs gains will pick up to 170,000 a month by the fourth quarter. Vitner says that jobs will gain at 87,000 per month for the rest of 2010.

The manufacturing industry has added 183,000 jobs this year including 36,000 in July. Some American companies are shifting overseas manufacturing jobs back to the US, primarily citing rising costs of doing business in China and decreased wages in the US, among other considerations such as long supply lines and difficulty protecting intellectual property rights in Asia. GE has relocated production of their new energy efficient water heaters to the US, while Ford Motor has brought 2,000 jobs to the US from suppliers, including those from overseas.

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California meat packing firm recalls 143M pounds of beef

Sunday, February 17, 2008

I am dismayed at the in-humane handling of cattle that has resulted in the violation of food safety regulations at the Hallmark/Westland Meat Packing Company.

In a press release today, California-based Hallmark/Westland Meat Packing Co. indicated that it has voluntarily recalled just over 143 million pounds (65 million kilograms) of raw and frozen beef products, which is considered to be the largest single recall of beef products in U.S. history. The move follows an investigation by the United States Department of Agriculture (USDA) into allegations of animal cruelty and mishandling of cattle destined for the human food chain.

The USDA’s Food Safety and Inspection Service (FSIS) had determined that beef products produced by the Chino, California company were unfit for human consumption as the cattle had not received “complete and proper inspection.”

The recall has been designated as Class II, which the USDA describes as “a health hazard situation where there is a remote probability of adverse health consequences from the use of the product.”

On Friday, Secretary of Agriculture Ed Schafer indicated that charges had been laid against employees of the plant alleged to have taken part in the mistreatment of cattle. “Today [Friday], the San Bernardino District Attorney filed felony animal cruelty charges against two employees who were terminated by Hallmark/Westland Meat Packing Company,” said Schafer. “It is regrettable that these animals were mistreated and I am encouraged and supportive of these actions by the San Bernardino District Attorney in response to this mistreatment.”

The USDA learned of the possible inhumane handling of non-ambulatory (disabled) cattle at the packing plant on January 30 and has since suspended activities at the plant. “We continue to conduct a thorough investigation into whether any violations of food safety or additional humane handling regulations have occurred,” said Secretary Schafer in a press release. “On February 8, our Office of the Inspector General took the lead on the investigation. At that time, USDA extended the administrative hold on Hallmark/Westland Meat Packing Company products for the National School Lunch Program, the Emergency Food Assistance Program and the Food Distribution Program on Indian Reservations while the investigation continues,” said Schafer.

The FSIS reported that Hallmark/Westland had not contacted the FSIS public health veterinarian, as required, when cattle became ill or disabled after undergoing ante-mortem (slaughter) inspection, putting the company out of compliance with FSIS regulations. “Because the cattle did not receive complete and proper inspection FSIS has determined them to be unfit for human food and the company is conducting a recall,” explained Secretary Schafer.

The cruelty charges stem from an undercover video that reportedly showed sick cattle being moved by crews using forklifts.

“Words cannot accurately express how shocked and horrified I was at the depictions contained on the video that was taken by an individual who worked at our facility from October 3 thru November 14, 2007,” said Steve Mendell, President, Westland Meat Co. and Hallmark Meat Packing. “We have taken swift action regarding the two employees identified on the video and have already implemented aggressive measures to ensure all employees follow our humane handling policies and procedures. We are also cooperating with the USDA investigators on the allegations of inhumane handling treatment which is a serious breech of our company’s policies and training.”

The USDA stressed that it is “extremely unlikely” that the cattle involved were at risk for Bovine spongiform encephalopathy (BSE) or mad-cow disease due to the employment of multiple safeguards. The USDA felt the recall was required, however, as the plant had allegedly violated USDA regulations.

The recall involves raw and frozen beef products produced on various dates from February 1, 2006 to February 2, 2008. For further information about the recall, consumers, media, and distributors are encouraged to contact Hallmark/Westland’s Plant Manager Stan Mendell or Food Safety Consultant Steve Sayer at (909) 590-3340 or the FSIS website, www.fsis.usda.gov.

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