Foreclosure? • Iconic flour mill working with key creditor to avoid Nov. 29 trustee sale.
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The cash strapped Lehi Roller Mills is slated to go on the auction block in November to satisfy a $1.45 million debt incurred by one of its major creditors.
But there still might be a way out of the financial mess for the Utah flour mill with deep bonds to local wheat growers whose distinctive architecture has made it an icon in art and film.
Its main creditor, the Williamson family of neighboring American Fork, have their own history of selling wheat to the 107-year-old flour mill.
Brian Williamson of Oregon, speaking for the private lender Williamson Farms, said the family is hopeful the mill will not have to be sold to satisfy the debt "but this is a matter of being paid what we are owed. If we are paid, we'll happily move along."
The trustee's auction is slated for Nov. 29.
Said attorney Rick Knuth, who is representing Williamson Farms. "It is our desire to see the Mills survive and thrive. But they made a loan and unfortunately, it has fallen into default."
Mill owner Sherm Robinson said this week's newspaper-advertised notice of trustee's sale has harmed his business, but he's doing everything he can to repay the loan, which originally totalled $2 million.
"We've had a lot of bad news that isn't a confidence builder for our customers," said Robinson, the third generation mill owner. "One by one, we've had to overcome these challenges. Yes, we've been slow in paying people. Some people are willing to work with us and some are not."
The Roller Mills' financial woes came to light in July when several workers staged a street protest highlighting that they and other employees had missed several paychecks. That same month, the Labor Department filed a complaint in U.S. District Court for Utah seeking to force the Mills to halt all shipments to its customers including Kentucky Fried Chicken, which has been purchasing flour since the 1950s.
The department withdrew its complaint after all workers were paid in full.
Robinson said that debts have been piling up since 2003 when federal officials began investigating an Ogden feed lot and a former Mills' customer. The Mills, in turn, was forced to notify banks of the investigation when asking for business loans. Even though no charges have been filed against the Mills, investigators based in Missouri have refused to say whether the 9-year-old investigation has been completed.
Robinson said he was able to secure a loan from America West, but when state regulators closed the Layton bank in 2009 Mills' assets were frozen meaning he had no collateral to obtain a loan elsewhere.
The Mills had to make do with a purchase-order loan at an interest rate of 35 percent that wiped out profits and ate up operating cash. With so-called asset financing nicknamed Pay Day lending for businesses Robinson said he could only obtain working capital for orders already sold.
Some customers such as Winco, Walmart, Costoco and Winn-Dixie Stores have dropped the Mills because of delayed or unfilled orders. But Associated Food Stores, a cooperative of 400 independent grocers that includes Harmons, has remained a buyer.
The Mills have been a boon to local wheat farmers for generations, it does not qualify for any agricultural loans, federal officials have said. Such loans are earmarked for rural areas, and Lehi is located along the populous Wasatch Front.
"It's the only market for our wheat," said Jim Smith who farms 7,000 acres in Cedar Valley on the west side of Utah County. "The Roller Mills has treated us good. We work closely with them on growing the wheat they need, and they pay us a premium."
Smith still has a check from the Mills made out to his grandfather, Earl Smith, from Robinson's grandfather, George Robinson, dated 1916.
Lehi Roller Mills
Founded • 1905 at its present site, 833 E. Main St., Lehi
All in the family • In 1910, George Robinson purchased the mill; grandson Sherm Robinson is current owner
Products • Wholesale flour, mixes for pancakes, brownies, cookies and muffins sold by grocery chains and others
Retail store hours • 9 a.m. to 6 p.m., Monday through Saturday