Mustard Capital Inc. will close its doors May 4 unless a last-minute deal is struck to keep the Gravelbourg, Sask., company in business.
A restructuring process has not gone as well as the company had hoped. Interest was shown, but no firm offers were made.
“I am surprised,” said chief executive officer Tom Halpenny April 25. “There is no question we created value with our business.”
He said producers and customers strongly supported the company, so he was disappointed in the outcome.
Mustard Capital opened in 2007 to clean, process and mill mustard for clients around the world but was undercapitalized from the start.
In 2010, it undertook a $1.3 million expansion project at Vanguard, Sask.
“We never fully realized the potential that we created from the time that we commissioned into the building,” said Halpenny.
That was directly related to being undercapitalized, he added.
He attributed the unsuccessful restructuring to the industry’s focus on Glencore’s takeover of Viterra and the fact that mustard acres are largely concentrated in southwestern Saskatchewan.
“There was lots of interest from the finance community and from our industry and outside our industry in the grain sector,” Halpenny said, but that didn’t translate into interest in investing.
A $250,000 loan from Granosa AG of Switzerland to help fund ongoing operations during the restructuring was “independent of any involvement they might have going forward,” said Halpenny.
Granosa, trustee Ernst & Young and law firm MacPherson Leslie & Tyerman are priority secured creditors. It’s possible that interested parties are waiting until MCI goes to a receiver in the hope of picking it up for a better price, Halpenny said.
“It’s not uncommon for these things to get resolved in the last minute,” he added.
The company’s 18 employees have been given notice of the May 4 closure.
Meanwhile, farmers who delivered to MCI before Feb. 1 were paid in full through the Canadian Grain Commission’s producer payment program. MCI hasn’t been licensed since that time.
Halpenny also said the company appreciated the strong support of farmers and the customers who remained with it.