Cooperative Elevator Co., which is owned by over 1,100 U.S. farmers and operates mainly in Michigan’s “thumb” northeast of Flint, announced Friday it will buy the bean business for an undisclosed sum.

Scoular’s edible bean business includes the former Roy Legumex processing plants at Plum Coulee and Morden, Man. It also has a plant at St. Hilaire, Minn., about 130 km south of the Manitoba border.

Also included in the deal are Scoular’s receiving stations at Grafton and Garske, N.D., both of which are about 90 km south of the Manitoba border.

The sale will allow Cooperative to expand its geographic footprint, while also allowing Scoular to focus on its other core businesses, the companies said.

Scoular bought the edible bean business in 2015, paying $94 million for the special crops division of Winnipeg’s Legumex Walker as the latter company wound down operations.

Cooperative is based at Pigeon, Mich., about 160 km northwest of Sarnia, Ont. It has 11 locations in Michigan and one in North Dakota.

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The company on Thursday announced its “recent purchase” of the Tri-Field Farms elevator at Netley, about 25 km north of Selkirk at the south end of Lake Winnipeg.

Financial terms of the deal weren’t disclosed in the company’s release and a Scoular spokesperson in Omaha wasn’t immediately available for comment Thursday afternoon.

The elevator was built by Manitoba Pool Elevators, which later merged with Alberta Pool into Agricore.

Agricore in turn sold the Netley site in 2000, ahead of its merger with UGG in 2001 as Agricore United. At the time of its sale, the elevator had 2,040 tonnes of grain storage capacity and has had bin space added since then.

Its rail access comes via the Lake Line Railroad, a 50-km farmer-owned shortline of former Canadian Pacific Railway (CP) track running from Gimli south through Netley to Selkirk, where it connects with CP’s track running south to the main line at Winnipeg.

Jeff Vipond, Scoular’s senior Canadian marketing manager in Calgary, said the company is “no stranger to the Netley area” as its Calgary commodity merchandisers have “worked closely” with Tri-Field owner Randy Penner for the past three years.

Scoular, since then, has made “significant investments in the facility to improve the marketability of locally produced grains and oilseeds,” the company said in its release.

Penner and Tri-Field staff will continue to work at the facility as Scoular employees, the company said.

Local growers, Scoular said, will “continue to work with local staff to market their rye, wheat, soybeans, corn and special crops, while gaining the advantage of access to Scoular’s expansive commodity marketing network.”

Privately-held Scoular’s Prairie operations expanded significantly last year when it bought the special crops division of Winnipeg commodity firm Legumex Walker.

“Scoular’s commodity marketing expertise, combined with its people’s relationships with distillers, flour millers, exporters, and railroads, brings value to this operation and the local growers it serves,” Penner said in the same release.

Scoular, Vipond said, has been “actively seeking opportunities to invest in assets and to expand our network in Canada to better serve our customers. We’re impressed with the operation that Randy has established and we’re looking forward to expanding on what he started.” — AGCanada.com Network

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Regina-based Viterra, the grain handling arm of multinational commodity firm Glencore, on Tuesday announced a supply and marketing deal with Pacific Coast Canola (PCC), a next-to-new crush plant at Warden, Wash., about 160 km southwest of Spokane.

PCC until now has been majority-owned by Winnipeg special crops processor Legumex Walker, which recently sold its special crops business to U.S. grain firm The Scoular Co. and began winding down its operations.

In court documents filed Monday, Legumex’s liquidators, Toronto-based KSV Advisory, described PCC — whose main lenders in July called in the crusher’s US$54.6 million senior credit facility — as being in a “distressed financial position.”

Legumex had thus negotiated a deal to shed its 84 per cent stake in PCC for “no cash consideration,” KSV said, other than to be granted a release from PCC’s main secured lenders and lien registrant.

Glencore — whose Glencore Grain Investment arm had already owned the remaining 16 per cent of PCC from the outset — boosts its stake to 50 per cent.

Seattle construction, design and property management firm McKinstry, which was a mechanical and electrical contractor on the construction of the Warden plant, will take up the remaining 50 per cent of PCC in a “limited liability operating agreement” with Glencore.

McKinstry, in return, has released its lien on the crush plant, Legumex said in a separate release Tuesday. AgCountry Farm Credit Services, as the representative for PCC’s lenders, agreed to repayment terms for its credit facility, which has now been “repaid and terminated,” Legumex added.

PCC, which opened at Warden in 2013 and had previously dealt with Scoular for its canola supply, is billed as the largest expeller-press canola processing facility in North America, with crush capacity for 1,100 tonnes of canola per day.

The company’s product lines include non-GMO, Halal- and Kosher-certified oils, plus canola meal as feed for dairy cattle and other livestock.

“We look forward to helping PCC achieve its full potential, through delivery of consistent seed supply, expansion of our existing relationships with thousands of canola producers to include local PCC market producers, our focus on continuous improvement, and connections with domestic and international end-users,” Viterra’s CEO for North America, Kyle Jeworski, said in a release Tuesday.

Viterra in recent years has snapped up a pair of Canadian oilseed crush plants, including the former Canadian Agra cold-press canola plant at Ste. Agathe, south of Winnipeg, and, in late 2015, the former TRT-ETGO canola and soybean crushing and refining plant at Becancour, Que., near Trois-Rivieres.

Tuesday’s deal also effectively shuts the book on Legumex Walker, which was created in 2011 from the merger of two family-owned Prairie companies, Tisdale, Sask.-based Walker Seeds and Roy Legumex of St. Jean Baptiste, Man.

The two companies had brought their special crop processing assets and the plan for the PCC plant into the new firm, which later expanded to take in Canada’s biggest sunflower processor, Keystone Grain of Winkler, Man., and stakes in the U.S. dry bean and sunflower seed markets, with deals for St. Hilaire Seed Co. and the sunflower processing assets of Anderson Seed Co.

Legumex, which in March announced it would explore “strategic alternatives” to “maximize shareholder value,” changed its legal name to LWP Capital after completing the sale of its special crops arm to Scoular in November.

The company in November said it expected to have $1.69 to $1.98 per share available for distribution to shareholders after taxes and other expenses were paid down.

LWP said Tuesday it has formally adopted its liquidation and dissolution plan, its shares were delisted from the TSX effective last Thursday and it “no longer carries on as an active business.” — AGCanada.com Network

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This marks the end of Legumex Walker’s journey as one of the largest special crops processors in Canada. Over the past four years, it has come to operate special crops processing facilities in the Canadian Prairies, the American Midwest, the U.S. Pacific Northwest, and China. It also owns 84 per cent of Pacific Coast Canola, “the largest commercial-scale canola oilseed processing facility west of the Rocky Mountains.” PCC is also on offer and with its sale, Legumex Walker will wind up operations.

Legumex Walker took off in 2011 when it united several locally-owned special crop processors in Saskatchewan and Manitoba into a larger public company. It went on to purchase facilities in the American Midwest and in China while at the same time setting up Pacific Coast Canola, an entirely separate division, in Warden, Washington.

The outlook was optimistic: an international company with larger capacity could “play in the global marketplace” and create more opportunities for Canadian producers in a way that smaller companies couldn’t. Legumex Walker CEO Joel Horn and others emphasized the benefits of consolidation: lower shipping rates; access to wider markets; distribution of risk by working with a wider variety of crops and a larger growing area. Farmers and shareholders would both be better off.

But things seemed to go south, particularly with the newly-launched Pacific Coast Canola. The months-long railway delays in 2013 had a huge impact. So did low exchange rate, low prices for canola oil and other economic factors. Soon, a major creditor demanded repayment.

In March, 2015, a review was launched to come up with “strategic and financial alternatives” to maximize plummeting shareholder value. That review recommended the sale of the Special Crops Division. Though sales slumped in 2015, the SCD was still performing well. On September 14, 2015, Legumex Walker announced its intention to sell the division to The Scoular Company.

Over the past four years growers have jumped from dealing with a smaller, locally owned company to a larger, Canadian-owned company, and now to very large U.S.-owned company. Now what is in store?

Continuity

The Scoular Company’s chief operating officer Bob Ludington says that, despite the change in ownership, it’s business as usual. “The producers will deal with the same people; they’ll call the same phone numbers.” By buying the Special Crops Division, Ludington believes, “What we’re really getting are the people — the employees, the customers. The people are what make the business.” Over the past 60 days, teams from Scoular have visited the offices and the facilities in Saskatchewan and Manitoba and met with the approximately 330 employees.

For Ludington, a smooth transition means harnessing current employees’ skills, knowledge, and passion. He is glad that they will now have “a nice stable work environment.” With security comes possibility and optimisim: “They can build and grow with us. That is pretty empowering.”

Farmers can be reassured that all contracts on the books have integrity. “The only thing that will change is the name on the cheque.” And, Ludington says, farmers should know that it’s coming from “a stronger entity — a company that has been in agriculture for over 120 years.”

The Scoular Company was founded in Nebraska in 1892. Today, it is one of the largest private companies in the U.S., with yearly sales of $6 billion. It operates 90 facilities internationally, employing more than 850 people. Scoular in the “business of buying, selling, storing, and handling grain and ingredients as well as managing transportation and logistics worldwide.”

Scoular has been in Canada since the mid-1990s, quietly maintaining an office in Calgary and awaiting the right market opportunity. Expansion became possible with the dismantling of the Canadian Wheat Board. Ludington says, “We’ve been looking to get into specialty crops since about 2000.”

Scoular has a wide range of customers demanding products that Canadian farmers can supply, including peas, lentils, and flax. Scoular’s presence means wider market opportunities for Prairie producers and also more competition.

Ludington is optimistic about the growth of the special crops market. “We’ll look at introducing other specialty programs as our customers demand, for instance, growing specific varieties that have unique milling qualities.” Ludington sees growth opportunities in handling and processing.

Much of what the Scoular Company wants to achieve echoes Legumex Walker’s aspirations four years ago. Perhaps Legumex Walker laid the groundwork. And now we hope The Scoular Company is in a position to deliver.

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Winnipeg-based Legumex reported Monday that shareholders representing just over 76 per cent of its stock have voted 99.6 per cent in favour of selling the company’s special crops division to the Scoular Co.

Participating shareholders also voted 89.7 per cent in favour of the company’s voluntary liquidation and dissolution, as per the deal announced in September and the proposal laid out by company management Oct. 15.

All necessary federal and provincial regulatory approvals are in place for the sale to Scoular, Legumex said Monday in a release. The special crops assets include plants in Western Canada, the U.S. and China.

The deal, worth $174.6 million ($94 million plus net working capital) is now expected to close by Nov. 30, pending other third-party approvals and other closing conditions, the company said.

Legumex said in a separate statement Oct. 26 it “continues to make progress” toward a sale of its other major asset, an 84 per cent stake in the Pacific Coast Canola (PCC) crush plant in Washington state.

An agreement in principle is in place with the plant’s unnamed “prospective acquirers,” Legumex said, subject to approval from PCC’s secured lenders.

If a deal closes successfully, one of the closing conditions will be the termination of PCC’s supply and marketing agreement with Scoular, under which the U.S. company was to source canola for the plant and market its output.

Legumex said it “does not expect to receive any value” from the sale of its stake in PCC.

Publicly-traded Legumex also said Oct. 26 its distribution guidance from its asset sale and liquidation will depend partly on whether the company is on the hook for $1.2 million in severance obligations at PCC and/or for a US$1.5 million payment to Scoular stemming from the end of the PCC supply and marketing agreement.

Legumex Walker was created in 2011 from the merger of two family-owned Prairie companies, Tisdale, Sask.-based Walker Seeds and Roy Legumex of St. Jean Baptiste, Man., bringing their special crop processing assets and the plan for the PCC plant into the new firm.

Its later expansions included Canada’s biggest sunflower processor, Keystone Grain of Winkler, Man., and stakes in the U.S. dry bean and sunflower seed markets with deals for St. Hilaire Seed Co. and the sunflower processing assets of Anderson Seed Co. — AGCanada.com Network

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Scoular last week agreed to pay $94 million for the special crops division of Winnipeg-based Legumex Walker, including 14 plants in Canada, the U.S. and China.

The acquisition will allow Scoular to start selling lentils, peas and sunflowers to markets as far away as India and Turkey and within the U.S., said COO Bob Ludington, in a phone interview from Overland Park, Kansas.

The next step will be upgrading those plants, which process crops such as peas, lentils and sunflowers and whose competitors include AGT Food and Ingredients.

A step into Western Canada’s grains and oilseeds sector will follow, Ludington said. He expects Scoular to announce an acquisition or partnership within a year.

“There are existing players open to partnering with the right kind of company,” he said. Scoular’s role is helping manage back-office functions, as well as supply-chain and risk management issues, while letting partners deal with traditional customers.

Western Canada is the world’s biggest canola growing region and a major wheat producer.

Grain-handling is dominated in the region by Richardson International, Viterra and Cargill, but smaller players are more open to taking on partners, Ludington said.

Mining and trading company Glencore, which owns Viterra, is looking for partners for its agriculture assets, but Ludington said he did not see a good fit between the companies.

He declined comment on any interest in Legumex’s remaining asset, a Washington state canola plant.

Omaha-based Scoular, which has 72 U.S. grain-handling facilities, had $5.9 billion in sales last year. The company is owned by its employees and controlled by the Faith family through voting shares.

Scoular is also a frequent target to be acquired.

In May, the chief executive of Richardson said he was interested in Scoular, and Glencore has also been a rumored suitor.

Potential buyers have inquired about a takeover annually for the last 15 or so years – including this year, Ludington said.

“They call, and we say, ‘no.'”

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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Winnipeg-based Legumex plans to sell its special crops division, which includes 14 plants in Canada, the U.S. and China, to private U.S. grain-marketing company Scoular for $94 million. Including Legumex’s working capital, the deal is valued at $174.6 million.

Legumex also said it is negotiating the sale of its 84 per cent interest in Pacific Coast Canola (PCC), a crushing plant in Washington state. Glencore PLC owns the rest.

Legumex shares (TSX:LWP) rose 140 per cent to $2.16 on Monday in Toronto.

In July, Legumex said PCC had defaulted on a $54.6 million loan. The company was hampered in 2014 by railway congestion limiting delivery of canola seed, and more recently weak industry margins and plunging crude and soyoil prices.

“It’s really been difficult and that’s why all the independent canola crushers have sold,” Legumex CEO Joel Horn said in an interview. “None of the independents were able to survive pretty amazing macroeconomic events.”

Two other canola crushing plants, Felda’s TRT-ETGO facility in Quebec and Pico Holdings’ Northstar plant in Minnesota, were sold this year to Glencore’s agriculture segment Viterra and to CHS Inc. respectively.

Potential buyers for Legumex’s canola plant are Glencore and U.S.-based oilseeds crusher Archer Daniels Midland, Cormark analyst Marc Robinson said in a note.

Those are “two good guesses,” Horn said, but declined to identify the company Legumex is talking with.

Once the processing plants are sold, Legumex will wind down operations and expects to pay its investors $2.50-$2.75 per share. It will then cease trading on the TSX.

Scoular chief operating officer Bob Ludington said in a statement that the acquisitions will expand its U.S.-based grain-handling network, allowing it to sell to more crop buyers globally.

“We expect to operate Scoular Special Crops much like (Legumex) operates the business today, but with the financial capacity to expand operations, product lines, and distribution channels.”

Legumex Walker formed in 2011 as a merger of two family-owned Prairie companies, Tisdale, Sask.-based Walker Seeds and Roy Legumex of St. Jean Baptiste, Man. Both brought their special crop processing assets and the plan for the PCC plant into the publicly traded firm.

Legumex in 2012 bought Canada’s biggest sunflower processor, Keystone Grain of Winkler, Man., and bought stakes in the U.S. dry bean and sunflower seed markets with deals for St. Hilaire Seed Co. and the sunflower processing assets of Anderson Seed Co.

Legumex said in March it would review its “strategic and financial alternatives” for “maximizing shareholder value” — an announcement to which Legumex shares responded at the time by jumping above $3.

The deal with Scoular — which last year signed a separate deal with Legumex to source canola for the PCC plant and market its oil and meal output — still needs approval from Legumex’s shareholders at a special meeting on Nov. 9.

Legumex’s senior officers and directors and members of Roy Legumex’s founding Sabourin family, who together hold about 15.5 per cent of Legumex Walker, have all committed their stakes to the deal.

The deal, Legumex said Monday, will also be subject to federal approval under the Competition Act and provincial approvals as per Manitoba’s Farm Lands Ownership Act and Saskatchewan’s Farm Security Act.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg. Includes files from AGCanada.com Network staff.

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Pacific Coast Canola, a cold-press canola crushing operation at Warden, Wash., about 160 km southwest of Spokane, is 84 per cent owned by TSX-traded, Winnipeg-based Legumex, and 16 per cent owned by commodity giant Glencore.

Legumex announced Friday that PCC has been served notice for demand of repayment of “all amounts due” under its senior credit facility — a total bill estimated at US$54.6 million.

The notice, citing PCC’s default on the terms of the facility, came from Fargo, N.D.-based AgCountry Farm Credit Services, as the agent for the lenders involved.

PCC was in “active discussions” with AgCountry and is “considering various alternatives,” Legumex said Friday.

The credit facility in question is secured by a first lien on “all assets and undertaking” of PCC, but Legumex said it’s not yet aware what actions AgCountry plans to take.

PCC hasn’t got access to funds to repay the loan in full, Legumex said, and if it can’t refinance the loan, the crusher “will cease its operations” and “would no longer have any equity value.”

Legumex emphasized Friday that PCC’s credit facility isn’t guaranteed by the Winnipeg parent firm or any other Legumex arm. However, Legumex said it recently provided PCC with a US$2 million letter of credit, which it expected AgCountry will draw down.

Legumex also said it doesn’t expect PCC’s default or AgCountry’s demand to affect the parent’s pulse and special crops processing arm, which runs facilities in Manitoba, Saskatchewan, North Dakota, Minnesota and China.

PCC has been a project of Legumex Walker’s since it formed in 2011 from the merger of Saskatchewan’s Walker Seeds and Manitoba’s Roy Legumex. Billed as North America’s largest expeller-pressed canola plant, PCC was built with capacity to crush up to 380,000 tonnes of canola per year.

Getting canola in the U.S. northwest during North America-wide rail congestion later became a problem for the plant, though in fiscal 2014, PCC boosted its full-year crush by 83 per cent from 2013 levels, to 242,300 tonnes.

PCC last year also entered a strategic alliance with grain firm Scoular Co., in which the Omaha company would source canola for PCC and market PCC’s canola oil and meal.

Legumex CEO Joel Horn said in March that PCC is “working to significantly improve its financial performance, when additional non-GMO and local canola seed should be available with the new crop in September.”

Legumex, in a separate release Tuesday, said PCC’s issues won’t affect the parent company’s strategic review, which its board launched in March to “identify and consider strategic and financial alternatives.”

Such possibilities, the company said at the time, could include “strategic financing” from outside investors, a “business combination” such as a merger, or the sale of the company, whole or in parts.

The board’s special review committee “expects to provide an update in the coming weeks as the process nears its completion,” Legumex said Tuesday, but emphasized there’s “no certainty that any transaction or alternative will be undertaken” coming out of the review. — AGCanada.com Network

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Richardson, which now owns two U.S. mills, is interested in Andersons Inc. and private companies Bartlett and Scoular, as well as co-operatives, CEO Curt Vossen said in an interview at the company’s Winnipeg head office.

Andersons’ shares on Nasdaq spiked as much as 13 per cent shortly after Vossen’s comments were published, touching a three-month high.

Vossen said Richardson has had no discussions with those companies and that it was unclear if they are willing to sell.

Richardson is also looking to expand to Latin America, Australia and Eastern Europe, where more crop is produced than can be consumed domestically.

But the U.S. “is the logical growth direction,” Vossen said. “We don’t have to be the largest, but we have to be meaningful.

“There’s no point in acquiring small businesses if they don’t move the EBITDA needle for the organization in an effective way.”

Vossen said if Andersons, long considered by analysts as a takeover target for its grain storage and rail cars, Bartlett or Scoular are willing to sell, Richardson would have to outbid North American and Asian competitors.

Andersons spokeswoman Debbie Crow said the company does not comment on speculation. Bartlett and Scoular spokespersons could not be reached immediately.

Andersons, which has a $1.2 billion market cap, has an attractive size, but also significant family ownership that could complicate a transaction, Vossen said.

Richardson is interested in U.S. assets in grain-handling, processing and crop inputs, mainly in wheat-growing areas, he said.

The company may build U.S. assets once it acquires a critical mass, he added.

Legumex Walker previously said it is open to a sale. Vossen said he is not interested in Winnipeg-based Legumex’s Washington-state canola crushing plant and is undecided about its special crop assets.

Richardson, the largest division of privately-held Winnipeg firm James Richardson and Sons, has a share of Western Canada’s grain handling capacity similar to that of Glencore’s grain handling arm Viterra .

Richardson is currently trying to close one acquisition in Western Canada and one in Eastern Canada, Vossen said, declining to give details.

Richardson’s last big deal was its $900 million purchase of certain Viterra assets when Glencore bought the Canadian company in 2012.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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The publicly-traded Winnipeg company said Monday its board of directors has set up a review committee to “identify and consider strategic and financial alternatives… with the ultimate goal of maximizing shareholder value.”

Such possibilities, the company said, could include “strategic financing” from outside investors, a “business combination” such as a merger, or the sale of the company, whole or in parts.

Legumex said its board and management believe the value of its shares (TSX:LWP) has “not been reflective of the fundamental value inherent in the company” — and that such a review is timely given its recent “strategic shift to the high-value specialty food ingredient market.”

Legumex shares by Monday afternoon had jumped about 40 cents from Friday, peaking at $3.21 then settling slightly to $3.12.

That “strategic shift” has included expanding its high-oleic Omega-9 canola oil program with Dow AgroSciences Canada, and its non-GMO canola oil and meal programs with Scoular Co., CEO Joel Horn said in a release.

The review follows expressions of interest from “a number of qualified parties,” Legumex chairman Bruce Scherr, who will chair the review committee, said in the same release.

Those parties, he said, “are interested in exploring various transactions with us in certain of our markets, including the specialty food ingredient market, and we expect that this process will unlock (Legumex’s) value and allow the company to fully capitalize on these opportunities.”

Further “higher-margin” products from canola and special crops are involved in Legumex’s talks with potential partners, Horn said.

“No certainty”

Formed in 2011 as a merger of Saskatchewan’s Walker Seeds with Manitoba’s Roy Legumex, the company’s assets today include 12 crop processing and packing plants in Manitoba, Saskatchewan and Minnesota and two in China, plus receiving stations in Manitoba, North Dakota and Minnesota.

It also holds an 84 per cent stake in Pacific Coast Canola, a U.S. cold-press canola processing facility at Warden, Wash., which opened in 2013 with crush capacity for over 350,000 tonnes of canola seed per year.

Legumex, in its release, stressed there’s still “no certainty” any deal, merger or takeover will come out of the review process, and no decision on any option has yet been reached. It also said the committee hasn’t set a “definitive schedule” to complete its review.

Robert Buetel, president of Toronto investment holding company Oakwest Corp., and Marty Thrasher, president of London, Ont.-based advisory firm FMT Consulting, have both resigned from Legumex’s board, the company said Monday.

Legumex on Monday also announced a promotion for its corporate controller, Rosemary Brisson, to chief financial officer.

Brisson replaces CWB director and ex-Viterra CFO David Carefoot, who left Legumex in November to become CFO for Winnipeg-based retail chain Princess Auto. — AGCanada.com Network

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