030111 Creekstone Buys Future Beef Operations Plant

Denver, CO - The Denver bankruptcy court trustee overseeing the liquidation of the former Future Beef Operations plant and assets in Arkansas City, Kan. has accepted an offer from Creekstone Farms Premium Beef LLC to purchase the high-profile beef processing plant. The offer is subject to court approval on Jan. 10. Future Beef Operations was placed into Chapter 7 bankruptcy proceedings in August 2002 and was auctioned on Jan. 8 in Denver.

The company will use the facility to process its fresh and cooked Black Angus beef products. Creekstone Farms Premium Beef LLC is a privately held producer and marketer of Creekstone Farms Premium Black Angus Beef based near Louisville, KY.

The $100-million, 400,000-plus-square-foot processing plant incorporates many highly innovative technologies for harvesting, processing and cooking beef.

Ownership of such a state-of-the-art processing facility is a major step toward vertical integration for the Creekstone Farms Black Angus branded beef program, which was founded seven years ago by John and Carol Stewart on their 1,100-acre purebred Black Angus farm near Louisville. The Stewarts' overall business model has been to develop their own unique, high-quality Black Angus genetics with the intent of becoming the world's premier producer and marketer of Black Angus beef. Creekstone Farms had been processing its beef at the former Future Beef Operations plant -- named "Plant of the Year" by Food Engineering magazine -- in the months prior to Future Beef's Chapter 7 filing and subsequent closing in August 2002.

"This is a significant milestone for us," said John Stewart. "Having our own dedicated processing facility gives us control of our future brand development in terms of volume, processing capability, technology and, most importantly, food safety.

"This facility allows us to realize the full potential of our business model and maximize our branding strategy. It's a dynamic fit for us."

Creekstone Farms Premium Beef LLC is anticipated to take ownership of the plant within a few days. It is anticipated the plant will reopen in March 2003. Stewart projects that the plant, which had more than 900 employees when it first opened, will initially employ approximately 500 people.

John Stewart will be CEO of the venture. Meat industry veteran, Bill Fielding, former president of Farmland Industries' refrigerated foods group and past chairman of the American Meat Institute, has been retained by Creekstone Farms to assist with the company's rapid expansion.

When it was completed in August 2001, the Future Beef plant was recognized industry-wide for having the most technologically advanced beef processing systems in the world. "During its year of operation, the plant's safety and sanitation record was second to none," said Stewart. "This key area, food safety, is a very important and critical part of our selling proposition. Today, more than ever before, food safety must always be our top priority."

Creekstone's program is unique in the beef industry because it combines family-owned superior genetics, healthy and humane cattle management, carefully controlled high-quality feeding and premium processing for maximum food safety. Creekstone Farms beef is one of a few branded programs certified by the USDA's Agricultural Marketing Service (AMS). This certification requires that USDA graders examine each individual carcass to assure that it meets Creekstone Farms Premium Black Angus Beef quality and certification standards.

Creekstone Farms cattle are given plenty of room to roam and are mandated extra space during finishing in Nebraska under an exclusive arrangement with one of the nation's most respected cattle-feeding operations.

Creekstone Farms Premium Black Angus genetics are developed at the purebred facility in Kentucky for commercial use in specialized breeding programs in conjunction with the company's network of producer- partner farms. Creekstone Farms plans to supply 1000 head per week of the plant's needs upon opening, similar to the level it processed at the plant prior to its closing. This number is projected to more than quadruple by the end of 2003.

Though the plant was designed to process 1,650 head per day, Creekstone Farms plans to begin with a volume threshold of 1,000 head per day in order to adhere to the company's strict quality and safety standards.

In addition to its technologically advanced processing systems, the plant also has state-of-the-art cooking and case-ready facilities that are unique in the industry. Creekstone Farms plans to make use of these facilities to increase value-added product development and production.

Creekstone Farms fresh beef products are distributed throughout the United States and in Asia. Customers of fresh and fully cooked products include regional and national restaurant chain accounts, regional and national retail grocery chains, food service purveyors and distributors, convenience stores, club stores and retail distributors.

Fresh Creekstone Farms Premium Black Angus Beef is served in restaurants across America. Fine- dining restaurants featuring Creekstone Farms beef include Aqua, Farallon and LuLu in San Francisco and Bellagio, MGM Grand and New York-New York in Las Vegas. Plans are to increase the distribution of fresh meat nationwide as capacity increases.

The company also sells three varieties of frozen Creekstone Farms Fully Cooked Premium Black Angus Beef Patties in 16 states through such well- known grocery retailers as Winn-Dixie, Drager's, Albertson's, Costco, King Soopers, Publix, Kroger, Weis Markets and Sheetz convenience stores. It has plans for significant expansion of its value added products business over the next 18 months to include deli and innovative entree products.

Internationally, the company distributes fresh beef in Japan with distribution partner Sumitomo Corporation and in Hong Kong and mainland China with distribution and marketing partner Hormel Foods.

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