Now under creditor protection, Saskatchewan’s largest hog production company has filed in court for an extension to hand in its restructuring plan to its lenders.
Lawyer Jeffrey Lee on Friday filed a notice of motion in Court of Queen’s Bench in Saskatoon on behalf of Big Sky Farms and its related companies, to extend its creditor protection through to just before midnight on Feb. 1, 2010.
The stay of proceedings granted to Big Sky on Nov. 10 is due to expire Thursday (Dec. 10), since which time the company has reached an agreement in principle on its “plan of arrangement” with Scotiabank, BMO, National Bank of Canada, Farm Credit Canada, Big Sky founder-turned-creditor Florian Possberg, Saskatchewan provincial investment agency CIC Asset Management and others.
Big Sky requires an extension to “finalize the drafting” of its plan for presentation to its creditors at meetings it proposes to hold in February, Lee wrote in his motion.
In an affidavit filed along with the notice of motion, Big Sky’s chief financial officer, Saskatoon accountant Canute Tagseth, said the company has been involved in “intensive negotiations” with its lenders, including three days of face-to-face meetings in Toronto and long conference calls during business hours, evenings and weekends.
The drafting process is “well underway,” Tagseth wrote, but the final text of the plan is “anticipated to be a complex commercial document comprising several dozen pages and will require a great deal of careful drafting, attention to detail and additional dialogue (with creditors) before it will be in a position to be filed with the court” and handed over to creditors and stakeholders for review.
The company’s “current intention” is to finalize the plan and file it in court by Dec. 23 and get a further court order allowing the company to circulate the plan, then schedule meetings for “proven creditors” to vote on the plan in early February.
Tagseth also noted that out of 415 local grain farmers who are owed money by Big Sky for previous deliveries of feed grains to its Saskatchewan and Manitoba facilities, 168 are now taking part in the company’s “grain delivery incentive program.”
Under that program, affected farmers would agree to deliver grain at a premium price in exchange for a pledge of continued deliveries in the future. Farmers taking part in the program would be paid for feed grain within seven to 14 days of delivery, Tagseth wrote.
So far, Tagseth’s affidavit noted, Big Sky has take delivery of about 400,000 bushels of feed worth about $1.2 million under the program as of last Tuesday (Dec. 1).
Farmers, many of whom are owed thousands by Big Sky for deliveries made before the company entered creditor protection, have in recent weeks marched on a Yorkton feed mill and on the Saskatchewan legislature in Regina demanding payment, according to various reports.
The provincial government, through numerous loans and investments, has wound up holding a stake in Big Sky estimated in some reports to be worth as much as 70 per cent.
Big Sky’s total secured and unsecured debt now sits at $95.93 million, according to the list of creditors the company filed in November.
Secured creditors are owed $81.22 million, including $71.18 million on the company’s senior credit facility, held by several major banks, and $4.41 million owed to the province through CIC Asset Management. Farm Credit Canada and the Golden Opportunities Fund are each owed about $2.5 million.
Unsecured creditors, meanwhile, are listed as being owed a total of $14.71 million, in amounts ranging from tens of dollars to the hundreds of thousands, the latter list including feed brokers and major grain companies.