CUDWORTH, Sask. – It wasn’t the kind of comment designed to rally pool members behind the proposal to take their company public.
More than 50 farmer members of Saskatchewan Wheat Pool had gathered in this town about 100 kilometres northeast of Saskatoon to talk about the idea of selling shares in the pool on the stock exchange.
The proposal and the reasons for it were explained by Mich Ozeroff, a farmer from Langham and a member of the pool’s board of directors.
But when it came to time to sum things up, Ozeroff made one thing clear – he doesn’t like the idea of going public one darn bit.
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“I hated it from the first time I heard it,” he said. And later, after a largely negative question period, he said it again, telling the members, “I detest it as much as some of you do.”
Ozeroff hastened to add that even though he doesn’t like the idea, something has to be done to improve the pool’s financial position and provide new funds to build new elevators and continue diversifying.
“There is a problem that has to be addressed,” he said, and going public is one option.
He urged the members to go home, talk it over on coffee row, think about it on the tractor and come to their own conclusions about what the pool of the future should look like.
“There are no secrets or surprises,” he said. “We’ve laid everything on the table and there it is. Come back in the summer and decide what to do.”
Some members skeptical
During a lively question period, it was clear that many in attendance didn’t want their equity turned into publicly traded shares.
When one member asked what would prevent the value of those shares from taking a dive once they’re listed on the Toronto Stock Exchange, Ozeroff’s answer was a straightforward “nothing.” But he said nor is there any absolute guarantee that equity will always be paid out in full: “I’ve seen co-ops go bust and everybody loses their equity.”
Alain Tremel, a 65-year-old farmer from Bruno, came to the meeting with his son, Jean. Both were uneasy about the prospect of turning equity into shares, saying it’s too risky for farmers who have been counting on a payout as a retirement fund.
“I was always under the impression that at 65 you get (the equity) out,” Alain said after the meeting. “It was a good feeling.”
Cash wanted
Ben Lucyshyn of Cudworth has no interest in owning pool shares if they’re traded on the stock exchange.
“If they turn it into shares, I’d sell,” he said. “I don’t want the shares, I want the cash. What if the value goes down?”
Verdun Duterte, a 77-year-old retired farmer from Wakaw and a pool member for more than 50 years, worries that any share offering will inevitably weaken member control of the organization.
“Some time down the road someone will put pressure on to come up with voting privileges (for non-members),” he said.
The proposal says the shares sold to the public will be non-voting. Only active farmers will be eligible to own a single membership share, which will make them eligible to sit on the board of directors and determine company policy.
Limited voting shares
However an information sheet presented at the meeting said that may change. If the non-voting shares are not popular with investors, it said, “a limited voting share structure may be required to attract larger institutional investors and, hence, larger sums of money.”
While most of those who spoke at the two-hour meeting were unenthusiastic about the idea of equity financing, at least one member thought the pool was being too cautious.
Gregor Kehrig of Bruno said the company should simply go ahead and sell shares to the public and worry later about the equity conversion.
“The idea is to raise new capital and there’s only one way to do that,” he said. “Put a value on it and sell it. Go ahead and do it.”
Ozeroff said member equity must be converted to share capital to attract investors. Money markets treat member equity in a co-operative as debt, which results in an unacceptably high level of debt in the pool.
“Would anyone want to invest in a company with an 83:17 debt ratio?”
