Legumex Walker buys U.S. special crops processors

Prairie pulse and special crop processor Legumex Walker has bought its way into the U.S. dry bean and dehulled sunflower seed markets.

The Winnipeg company, formed last summer in the merger of Roy Legumex and Walker Seeds, announced Wednesday it has bought St. Hilaire Seed Co. and the sunflower seed processing assets of Anderson Seed Co. for $12 million and $4.8 million respectively (all figures US$).

Both St. Hilaire and Anderson were founded by Minnesota seed grower and businessman Ron Anderson, who started out with a seed conditioning plant at Mentor, Minn. in 1981.

The sale of the St. Hilaire company — based at St. Hilaire, Minn., about 75 km east of Grand Forks, N.D. — includes about $3.5 million in "net working capital" and the refinancing of about $2.5 million in the company’s long-term debt.

With a staff of about 35 people, St. Hilaire buys and processes pinto and black turtle beans and processes dark red kidneys, great northern, cranberry and small red beans, through a processing plant with about 45,000 tonnes of capacity.

The plant is expected to more than double Legumex Walker’s dry bean capacity, and the sale also includes six St. Hilaire receiving facilities in North Dakota and one in Minnesota, with combined storage space of about 40,000 tonnes.

The sunflower facilities, on the other hand, will still need to be "transitioned and staffed" with an expected roster of about 25 employees. The assets sold include the processing facility at Mentor, about 80 km east of Grand Forks, and two receiving stations in North Dakota.

Legumex Walker said it plans to operate the sunflower business through a new division, Legumex Walker Sunflower.

The St. Hilaire business, considered one of the largest dry bean processing operations in the U.S., "materially increases the contribution from dry beans in our product mix," Legumex Walker CEO Joel Horn said in a release. "It also diversifies our dry bean sourcing and processing through expansion into the American Midwest."

The sunflower seed facilities, meanwhile, "offer us an attractive opportunity to expand the scope of our sunflower seed business," he said.

In all, Horn said, the deal "allows us to further expand and leverage our global sales and distribution network with well-established and well-regarded brands. In addition, it brings us important new relationships with grower communities in Minnesota, North Dakota and South Dakota."

"At risk"

The deal also comes as officials in South Dakota consider whether to suspend Anderson Seed’s grain buyers’ license in that state, citing "financial problems" within the company. The company’s South Dakota operation was not sold to Legumex Walker.

The South Dakota Public Utilities Commission was scheduled to meet Friday (Feb. 17) to consider whether to pull the license.

The commission’s grain warehouse division manager, Jim Mehlhaff, was quoted in a petition from commission staff as saying Anderson’s most recent audited financial reports "confirmed (his) concern" of possible financial problems and that "South Dakota producers were at risk."

"At no time did (the Andersons) indicate they intended to sell assets and they expressly stated bankruptcy was not considered," the petition said of a meeting with Ron and Stephanie Anderson by phone on Feb. 7.

The petition noted the later sale of the Mentor plant and North Dakota stations to Legumex Walker, but also notes Anderson Seed’s "unpaid obligations to South Dakota producers could be in excess of $2.6 million. As such it is appropriate for this commission to take immediate action to prevent further damage."

In a Feb. 7 letter, Mehlhaff said he had been told by Ron Anderson that Anderson Seed was "struggling financially due to losses incurred when grain suppliers failed to (honour) contracts to deliver grain," for losses of over $6 million, and that Anderson Seed was "attempting to re-finance debt and take on additional investors."

Anderson Seed was formed in 1999, following Ron Anderson’s conversion of his Mentor seed conditioning plant to a sunflower cleaning facility in 1992 — the same year he built the seed conditioning plant at St. Hilaire, later modified to handle dry beans and soybeans.

Related story:
Roy Legumex, Walker Seeds merge, prepare IPO, June 8, 2011

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