Que. producers still on hook for Colbex loan

Quebec dairy and cattle producers who bought in on Eastern Canada’s main cull cattle slaughter plant will keep paying for it through 2014.

Producers are now receiving their invoices for the ongoing $53.86-per-head levy on incoming cull cattle, on which the Federation des producteurs de bovins du Quebec (FPBQ) borrowed $32 million in 2008 to recapitalize and upgrade the Levinoff-Colbex beef plant at St-Cyrille-de-Wendover.

The levy, however, is now paying down loans on a plant that went into receivership May 31, shortly after shutting its doors indefinitely.

Offers to buy the facility, whole or for parts, are being accepted at the Montreal office of receiver RSM Richter until 11 a.m. on July 25.

The FPBQ emphasized in a recent statement to producers that the levy will continue only to pay down the $32 million loan, on which the balance sits at almost $20 million as of June 1.

The levy will not go to pay the plant’s other creditors through the receivership process, the FPBQ said. The loan is an FPBQ debt, not held by the company.

The loan is still expected to be paid in full by the end of 2014, the federation said, but the exact end date will depend on cull cattle inventory in Quebec, interest costs on debt, and court costs related to collecting bad debts.

The FPBQ hasn’t yet said whether it will be involved in trying to buy or restart the Colbex plant’s operations, but noted margins between cow prices and boneless beef values remain "very difficult" at the moment.

Average prices for cull cattle are still stable in the province and throughout most of Ontario, but down slightly in eastern Ontario, the FPBQ said.

"En bloc"

RSM Richter’s June 27 call for tenders includes both the St-Cyrille slaughter plant and Colbex’s assets at the 25,000-square foot further-processing plant it leased in Montreal.

The 56,156-square foot plant at St-Cyrille had a slaughter capacity of about 4,750 head per week at shutdown and had employed over 200 staff, RSM Richter said.

Shutdown procedures at the company’s facilities were "carefully planned and executed in order to enable production to resume with minimal effort," RSM Richter said.

"Since then, the equipment has been secured and maintained, and environmental monitoring is ongoing."

That said, the receivers reiterated June 27 that they’re looking for purchasers to buy the Colbex assets either "en bloc" or on a piecemeal basis.

Related stories:
Que. beef plant to go for sale, whole or in pieces, June 16, 2012

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