Commodity firm buys into Canterra Seeds

A new Canadian arm of a Minneapolis commodity firm has signed a deal to buy a 25 per cent stake in Canterra Seeds.

Riverland Agriculture, Ltd. of Calgary will pay $3.125 million for 1.3 million Canterra voting shares and take two seats on the Winnipeg seed company’s board of directors, Canterra announced Wednesday.

Formed only in recent weeks, Riverland is owned by Whitebox Commodities Holdings Corp., which has recently made several investments in terminal capacity in the northern U.S., including several sites in Minnesota and North Dakota and, in June this year, a Buffalo, N.Y.-area terminal previously owned by ConAgra. Its current terminal capacity totals upward of a million tons.

While the Canterra stake marks Riverland’s first agricultural investment in Canada, its parent Whitebox, funded by private equity investors, bills itself as “one of the largest Canadian buyers of oats” this year and also buys Canadian malting barley.

Among the clients of its terminal storage business is Anheuser-Busch, for which Whitebox is the “largest landlord” of the brewing company’s stored grain, according to Riverland president Don Grambsch in an interview Thursday.

Riverland plans to acquire other Canadian assets, said Grambsch, who with Riverland CEO Ron Gorst will become directors of Canterra. (Gorst, an industry consultant, sits on Canterra’s board already; he had also been Canterra’s interim CEO until earlier this month he was replaced by former Cargill marketing manager Richard Kieper.)

The firm’s potential interests include seed genetics and developing and acquiring seed varieties, and becoming involved in identity-preserved (IP) seed contracting, Grambsch said, citing as an example properties in oats and hulless barley that could be used to produce long beta glucan chains and ingredients with a low glycemic index for functional foods.

In terms of its Canterra investment, Grambsch said Riverland also plans to focus on the U.S. market through Meridian Seeds, the U.S. seed company Canterra formed in 2003 with North Dakota Seed Growers.

Given Riverland’s relationships with end-use processors, its Canterra stake will help it to ensure a “secure supply of consistent quality seed,” Canterra said Wednesday.

Canterra, meanwhile, expects to benefit by gaining access to Riverland’s financial assets as well as its storage and handling facilities that are “logistically aligned to serve their customers.”

The deal still depends on approval from Canterra’s shareholders, the company said. Meanwhile, Riverland has placed funds in trust to cover the entire purchase price of its investment, Canterra added.

“This strengthening of our balance sheet will allow us to maintain a sharp focus on our core business while creating new business opportunities for both Canterra Seeds and Riverland Ag,” Canterra president Ken Nelson said in a release Wednesday.

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