A couple of questions arise from the comments we have received concerning the Monrovia Nursery issue. Commenter CD asks," "What happened to all of the money from the Azusa land. I grew up 15 minutes away from there and at the time they sold it I am guessing they received at the least $100 million dollars. That is a very low estimate for the peak of the market which is when they sold it. 500 acres at at least $200,000 an acre. I believe the property was 600 acres and they kept 100 acres. That money is somewhere in the Rosedale family bank accounts. So instead of asking struggling retail nurseries to bail them out why donâ€™t they dip into their own deep pockets, cut costs, and buckle down like everyone else is doing. That letter makes me sick." I remember taking a tour of that Azuza land. Beautiful property overlooking the valley below. At the time housing prices we're still rising and the thought of that historic old nursery being paved over was depressing, yet understandable. So CD's question remains, what happened to that money? Commenter JB mentions, "'GE Capital, Corporate Finance today announced it provided a $100 million asset-based credit facility to Monrovia Nursery, one of the worldâ€™s largest producers of container grown plants. The loan will be used for working capital needs. GE Capital Markets served as co-lead arranger.'" He continues, "when Monrovia purchased Wight and Berryhill nurseries the press release specifically says that Wight and Berryhill would not sell the Monrovia brandâ€¦â€œ'The Monrovia Nursery Division, which included the California, Oregon, and North Carolina operations, focused on Monroviaâ€™s branded products, while the new Wight Nurseries Division used the Georgia and Ohio facilities to produce non-branded products for retail, wholesale, and landscape customers'â€.
"Hmmm in their letter to the garden center owners itâ€™s interesting they mention that the creditors are providing strategy advice to sell to the box stores? when itâ€™s obvious that they would tell them to cut costs first. Bank advisers have pushed Monrovia, which has sold exclusively to independent garden centers, to strongly consider selling through the big box channel. And while itâ€™s a last resort, Rosedale says if any material ever does go through the big box channel, it would not have the Monrovia brand on it. (Wight and Berryhill donâ€™t sell branded items.)"
"They must think their buyers just fell out of the coconut trees. Large nurseries must have a place to lay off excess inventory and it smells like Monroviaâ€™s was Wight and Berryhill. Why donâ€™t they just dump it in China like many of the large Oregon nurseries are doing. Maybe they are but something else is out of whack here."
"How bout all the IGCâ€™s signing a letter that asks Monrovia what they did with the 100 mil and what theyâ€™ve done recently to reduce costs? Also, what did they do for the garden centers in Oregon who had a spring wipeout. Were terms extended? How did they handle that? Anyone know? This just doesnâ€™t sound right. Threatening their long term customers (partners?) is backfiring. Oregonâ€™s spring was a disaster. I wonder how Monrovia extended their hand to help."
Commenter Keith Miner say's, "Monrovia Nursery has spent millions of dollars trying to brand themselves in an industry that doesnâ€™t respond to brands very well. They have ads in all of the garden magazines, commercials on gardening programs, lots of point of purchase signage, picture labels, custom containers, wood kiosks and sign holders, starting a tool line and soil line,â€¦.etcâ€¦â€¦.This costs millions of dollars a year. All of this leads to expensive plants for their customers who pass that on to the consumer. Although generally their quality is exceptional and selection unmatched."
"I donâ€™t think this investment in themselves has paid off. But, donâ€™t you think for a second that their plan all along was to market to the chain stores under another brand. Because you canâ€™t put out all that money to all of those consumers without making your plants available to a large share of the market which just happens to be chain stores. Oh, Iâ€™m sure they will have an untouchable plant line that the chain stores canâ€™t get and will only be available to the independent nursery, and that will be the plan to keep the independent nurseries happy."
Finally Patrick say's,"Word on the street is that Lowes has already signed a contract with Monrovia and Home Dept was at one of their sites last week. I believe that they are already planning on selling to the big box stores and its already too late. The letter that was sent out is more of a damage control measure."
These are some good comments and questions. What happened to the money from the land sale? Where has the money loaned from GE gone? Did Monrovia plan all along to sell to the boxes, and are using the current economic downturn to facilitate that? If Patrick is correct, and they have already made arrangements to sell to the box stores, that would change the entire dynamics of the letter sent to the independents. What's your take on all this?