The Saskatchewan government, in announcing a “Saskatchewan First” policy for future investment by its Crown corporations, is mulling the sale of its stake in Ag Dealer.
Ag Dealer, headquartered in Ottawa, is an online and print service for sales of new and used farm equipment and other ag supplies. SaskTel, the Crown telephone and phone-based Internet company, invested $8 million in Ag Dealer in 2001 and 2002, the government said Tuesday.
The province on Tuesday put its Ag Dealer stake on a list of “investments to potentially be divested,” saying the investment and others like it “do not support operations in Saskatchewan in a significant manner.”
Ag Dealer’s head office and sales departments are in Ottawa, though the company lists its subscription and accounting and administration functions as being handled by DirectWest, a SaskTel subsidiary based in Regina.
However, the province said in a release Tuesday, “actual sales by this company have been less than one 10th of what was originally expected when (SaskTel’s) investment was made, yet the government refused to get out of a bad investment, and owns the investment to this day.”
Control of the provincial government changed hands from the New Democrats, who had held power since 1991, to the Saskatchewan Party in the November 2007 election.
Ken Cheveldayoff, the provincial minister in charge of Crown corporations, announced the “Saskatchewan First” investment policy on Tuesday after the release of a study highlighting a number of money-losing investments made by Crowns under the NDP.
The province’s new policy framework calls for Ag Dealer and other listed investments to be “divested in a thoughtful manner with a goal to maximize returns.”
The KPMG study reviewed 16 active and 10 “exited” investments by Crowns including SaskTel, Crown utilities SaskPower and SaskEnergy and the Crown auto insurer SGI.
The active investments “have produced a negative return mainly due to the former government’s investments through SaskTel,” Cheveldayoff said. “Of the four Crowns, SaskTel has made the most investments outside Saskatchewan.”
Those included DirectWest Canada, Hospitality Network and Navigata, all of which are now on the province’s list for potential divestment. By comparison, the province pointed to another SaskTel investment, residential and commercial security firm SecurTek, which employs over 100 people in the province, “supports in-province operations” and is headquartered in Yorkton.
The government also noted other out-of-province investments that it said support in-province operations, such as SaskEnergy’s investment in Manitoba’s Swan Valley, which it said spreads the cost of the utility’s systems to customers in Manitoba. Similarly, SGI’s investments in Manitoba, Alberta and P.E.I. subsidiaries and in Toronto-based insurer Coachman allow for “geographic spread of risk.”
In all, the province said, it has put $465 million into the 26 investments KPMG reviewed, and “the capital remaining in the active investment portfolio is approximately $300 million.”