Knudsen Foods will sell its Hawaiian dairy.

The troubled dairy operator said it has agreed to sell its operation in Hawaii for $13 million to a group that includes some of the unit’s former managers. Knudsen Foods, the parent of Knudsen Corp. and Foremost Dairies Inc., was once the largest dairy concern in the West. But it has been shedding assets since seeking protection from its creditors under federal bankruptcy laws last year. The Hawaii operation employs some 170 persons and produces frozen, cultured and fluid-milk products. It will be purchased by Foremost Foods Inc., a Hawaiian corporation. The purchase must be approved by the federal bankruptcy court.