Revised, Dec. 18, 2013 – Two Saskatchewan farmers have quit the board of Weyburn Inland Terminal in disagreement over their fellow board members’ plans to sell the independent grain company.
The Weyburn, Sask. company’s board confirmed Friday it’s hired Regina-based Johnson Advisory Services to consult on “exploring and evaluating strategic options” and plans to “develop and negotiate a definitive transaction agreement.”
The move to negotiate a sale follows several “non-binding expressions of interest” to buy some or all of the farmer-owned business, WIT said Friday.
WIT didn’t name any proposed buyer and emphasized there’s “no firm timetable” to reach a deal, nor any guarantee a deal will be concluded. If such a proposal meets the board’s approval, WIT said, it would then go to a shareholder vote.
However, two of the company’s farmer-directors, Dale Mainil of Weyburn and Allan Richards of Regina, have now cast their votes on the plan by quitting the WIT board.
In both cases, WIT said in a separate release Friday, the reason given involved “a fundamental disagreement with the strategic direction adopted for the corporation by the board of directors.”
WIT said Friday it’s now also amended its contract with its current CEO, Rob Davies, “to ensure continuity and support during the strategic review process.”
The revised agreement allows him to quit anytime after Jan. 15, 2014, but also provides for a “retention payment” equal to 15 months’ salary, plus a “pro-rated bonus.”
“Reduced revenue streams”
WIT’s plans come at a financial low tide for the company, which in its third quarter ending Sept. 30 booked losses attributable to shareholders of $313,000 on $41.67 million in revenues, down from a $207,000 loss on $25.14 million in revenues in the year-earlier Q3. For the nine-month period, however, earnings attributable to shareholders are in the black at $1.16 million on $167.85 million in revenues, up from $1.14 million on $97.93 million in revenues in the year-earlier period.
WIT’s grain, special crop and livestock feed pelleting operations are still running “significantly ahead of last year, as a result of the return to more normal levels of crop production in 2012 and 2013 after two years of reduced volumes due to flooding,” the company said in its third-quarter report.
Those two consecutive years of flooding in Saskatchewan’s southeast led the company to cut its dividend to stakeholders in 2012.
The federal government’s 2012 deregulation of the Canadian Wheat Board’s single marketing desk for Prairie wheat and barley “has reduced some revenue streams,” WIT said in its recent Q3 report, but it’s expected that “merchandising revenue will help to bridge that gap.”
The CWB’s transition to an open market was also cited as a reason for last year’s closure of WIT’s satellite grain elevator at Lake Alma, about 90 km southwest of Weyburn near the U.S. border.
WIT noted last year it was able to serve customers in the province’s deep south “long after others had left that market,” but said the fixed storage, handling and freight regimes that had allowed WIT to maintain the Lake Alma site were “no longer viable” in the post-single-desk environment.
In its last full fiscal year ending Dec. 31, 2012, WIT booked net earnings attributable to WIT shareholders of $2.08 million on $150.4 million in revenues, up from a $246,000 loss attributable to shareholders on $109.3 million in revenues in 2011.
Founded by local farmers in 1976, WIT today runs its 105,490-tonne capacity grain terminal near Weyburn, retail facilities for seed, chemicals and fertilizer, and its Pro-Pellets facility, which can produce about 10 tonnes of feed pellets per hour.
The company’s holdings also include stakes in Vancouver’s Alliance Grain Terminal, Weyburn-area ethanol processor NorAmera BioEnergy and seed company Alliance Seed Corp. -- AGCanada.com Network
CLARIFICATION, Dec. 18, 2013: Previous versions of this article reported figures for net income and/or loss from WIT’s quarterly and annual reports based on the line item for “total comprehensive income (loss)” — a figure which includes losses attributable to non-controlling interests in businesses where WIT holds a controlling stake, rather than net earnings (losses) attributable to WIT shareholders. We regret any confusion.