When Canadian Agra Foods Inc. built a canola crushing plant at Ste. Agathe, Man., it was hoped it would prompt other industries to locate in the southern Manitoba town.
Those hopes ended last week with news that CanAgra had been placed in receivership. The Ontario-based company failed to meet a court-imposed deadline to restructure its loans.
The canola crushing plant was built about two years ago, but was never put into full production. Caught in a tide of financial problems, CanAgra was unable to secure the money needed to operate the multimillion-dollar plant at Ste. Agathe.
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“It’s too bad that we’ve kind of sat here for two years watching this whole thing go up and down,” said Jonothon Roskos, president of the Manitoba Canola Growers Association.
“It seems such a shame that all of that infrastructure is sitting there unused.”
About a dozen people are employed at the plant. The employees declined comment Monday, citing instructions from the court-appointed receiver.
The receiver, Richter and Associates of Toronto, was appointed at the request of the Bank of Nova Scotia, CanAgra’s main lender. A representative of Richter and Associates is expected to visit Ste. Agathe early this week.
Helmut Sieber, CanAgra’s chief executive officer and main shareholder, could not be reached for comment.
In an interview last fall, Sieber said the company’s financial headaches stemmed from its reverse takeover of Alberta-based CIC Canola Canada Industries. Unforeseen liabilities from that takeover put a strain on CanAgra’s operations and financing.
That strain was evident in the company’s latest financial report. The report showed Canadian Agra lost $11 million during the fiscal year ending July 31. That was on top of the $34 million it lost the previous year.
Reports last year suggested CanAgra owed close to $29 million to the Bank of Nova Scotia.
Ellis-Don Construction, the main contractor on the Ste. Agathe plant, claimed it was owed about $8 million in unpaid bills. Liens against the plant added to delays in starting production.
Sieber claimed last year that his company had more than $50 million in equity. That included a 17,000-acre farm division in Ontario, an alfalfa dehydration plant in Ontario, and two idle canola crushing plants in Alberta.
The Ste. Agathe plant turns canola into edible oil and canola meal. The facility, which uses a cold press method to extract the oil, will now be sold along with CanAgra’s other assets.
There is some optimism that a buyer can be found for the facility. There are only two other canola crushing plants in Manitoba, both of them owned and operated by United States-based CanAmera Foods Ltd.
“I’m very confident that some company will come in,” said Bob Stefaniuk, reeve for the rural municipality of Ritchot. “That is about a $40 million facility and it’s not going to just sit there and rot.”
Stefaniuk said there was once talk that CanAgra would go on to build other things – such as a feed plant, a flour mill and an edible oil refinery – at Ste. Agathe. Although he said it’s unfortunate that CanAgra was stalled by financial problems, Stefaniuk believes the latest turn of events will let someone else guide the plant out of troubled waters.
Roskos said there is enough canola grown to supply three canola crushing plants in Manitoba.
“From the growers’ perspective, anything is good when we can see another market for the canola.”
