Parent company of Farmfest, Dakotafest files for bankruptcy
MITCHELL, S.D. -- Exhibitors who signed up for Dakotafest got a surprising message from Cygnus Farm Shows, the event's organizer: news that Cygnus Business Media -- which oversees Cygnus Farm Shows -- has filed for bankruptcy and subsequent reorganization.
But Todd Benz, Dakotafest manager, said Cygnus Business Media's financial restructuring under Chapter 11 of the U.S. Bankruptcy Code is "a wonderful thing" that would not have any effect on Dakotafest, which ended its three-day run Thursday on the southern edge of Mitchell.
"It has absolutely no effect on vendor payments (and) no punitive effects on anybody," Benz said Monday as equipment was being loaded onto the Schlaffman farm outside of Mitchell. "It's nothing buton the plus side."
According to Benz, 24 companies had invested in Cygnus through a private equity firm. As economic conditions tightened, Cygnus' debt rose to $180 million, causing the companies to exercise their right to exchange debt for stock equity.
Cygnus reached an agreement with 23 out of 24 lenders, but the single holdout meant the company had to implement its plan under Chapter 11 instead of through out-of-court means.
Benz said the term "bankruptcy" often carries a negative connotation, but he said the company is actually stronger because of the plan.
Debt, he said, has been reduced from $180 million to $60 million. A new board of directors has been appointed and a CEO will be officially announced in the coming weeks.
"They put us in a position of unbelievable potential relative to profitability and net income," Benz said.
Benz believes the company was legally obligated to notify exhibitors of the reorganization, but said the company would have gotten word out regardless. Cygnus notified Dakotafest vendors by mail.
"It's a very positive way of doing things rather than trying to cover it up," Benz said. "People pay a lot of good money for a show such as this. They want to make sure that you're here (and) that you're operational."