Shares in a Swift Current, Sask. agricultural manufacturing company will soon trade on the Alberta Stock Exchange.
Batco Manufacturing Ltd. last week announced its intentions to go public as negotiations for a reverse takeover of Ultra Capital Inc. neared completion.
The five-year-old company makes a line of belt conveyors originally designed for peas, lentils and beans, which must be handled gently to prevent shattering.
American corn and soybean producers discovered the conveyors and sales took off. General manager Gary Anderson said sales have multiplied eight times in the last three years and the company now does business in more than 30 states.
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“Forty percent of our total sales are exported to the U.S.,” he said. About 25 percent of sales are in Saskatchewan.
One customer in Arkansas liked the product so much, he asked to become a dealer, Anderson said. He is using it for rice.
Anderson said sales are so brisk the company is 74 units behind – and this is the slowest time of the year. Staff has increased to 31 from 18 since the beginning of the year.
The rapid growth brought on the decision to go public, said Rob Stenson, Batco’s vice-president.
The company was previously financed through borrowings from South West Credit Union, Business Development Bank, Saskatchewan Opportunities Corporation and private investment by Stenson and his brother Art, who is president.
Stenson said the company had to either slow down or expand in a big way.
A reverse takeover allowed Batco to get on the stock exchange quickly and cheaply. Ultra Capital is a shell company that has already gone through the regulatory process necessary to become listed on the exchange. Enough shares will be issued to allow Batco to take control.
“Ultra Capital is a junior capital pool,” Stenson explained. “It’s a type of corporation set up to help small businesses like ourselves get on the market with a simplified prospectus, which can be lengthy and cost prohibitive. To go on Toronto (stock exchange) you could be talking $150,000 to $200,000 just to get out of the starting gate. With this, legal fees and everything involved, it might cost us $50,000 total.”
He admits there are risks, but says it will be worth it to see the company grow faster.
“You are giving up equity, and at some point in the future you could get tossed out of management and lose control of this place, which we’ve built from scratch,” Stenson said.
“But it’s like a democracy. With a public company, at some point if you drop the ball you’re going to be ousted, but in my view that’s probably best for everybody concerned.”
He said the shares will likely be isued at about 50 cents. Most will be privately placed, but about two million shares will be free trading.
Jack Lee, of Ultra Capital, said the shell company has already committed $500,000 in private share placement.
Batco also announced expansion to its Swift Current facilities. Details are not final, but 14,400 sq. feet are expected to be added either at the existing site or a new one in the city’s industrial park, Anderson said.
The expansion plan also calls for Batco to acquire smaller companies with complimentary grain handling product lines.
“We’re not talking taking a run at John Deere by any means,” Stenson said. “We think we can be a stronger, larger company that’s not as susceptible to aggression from competitors.”
The name of the public company will be changed to Ag Growth Industries.
