GSBDC Finances Building Acquisition for Giovanni Food Co., Inc.

Posted 04.12.10

Loan: SBA 504

Giovanni Food Co., Inc. (GFC), a manufacturer of tomato-based products was started in Oswego, NY nearly 70 years ago as a neighborhood business, selling its popular spaghetti sauce to customers.  They began manufacturing spaghetti sauce in the early 1950s and expanded slowly into other tomato-based products over the years.  GFC remained in their original facility until their purchase and relocation to a facility at 4645 Crossroads Park Drive in Liverpool, NY in May 2006.

Due to continued growth, GFC, with the assistance of Alliance Bank, N.A. and Greater Syracuse Business Development Corp. (GSBDC), recently took advantage of an opportunity to purchase an existing tomato sauce manufacturing plant owned and occupied by Ventre Packing Co., Inc. (VPC) located at 6050 Court Street Road, Dewitt, NY.  The building, constructed in 1991 provides 29,000-square-feet for warehouse, 28,000-square-feet for processing and bottling functions and 9,300-square-feet for office space.  In addition to the real estate purchase, GFC also purchased VPC’s production equipment which includes three manufacturing lines for sauce and juice.  This represents a significant upgrade in the amount of equipment GFC has had access to, as they previously operated with one production line.

GSBDC provided the financing for the purchase of real estate using the SBA 504 program.  The 504 program provided 20-year fixed rate second mortgage on 37 percent of the purchase price.  A provision of the economic stimulus program provided relief from a large portion of the SBA fees.  According to Louis DeMent, general manager of GFC, “The 504 program proved to be an integral element of our total financing structure.  During these times of ‘cautious lending’ the GSBDC/SBA participation was critical to the success of our acquisition and expansion objective.”

Alliance Bank, N.A. provided 37 percent of the financing for the real estate in a first mortgage position.  They also provided financing for new equipment that will finish the needed upgrade.  A note from the seller completed the financing package.  According to Dana Loucks, senior vice president, Commercial Banking, “Utilization of the GSBDC and the SBA 504 program was an essential component of the total financing package.  It was important to provide Giovanni Food Co. with the proper debt structure to assure its future success.  The overall approval process of the GSBDC was smooth and timely, also crucial given the tight time frame for this transaction.”

GFC currently employs 39 full-time and 5 temporary employees.  Once settled in the new facility, they expect to add an additional 10 full-time positions.