SASKATOON (Staff) – Alberta Wheat Pool is getting out of the brewing business.
Drummond Brewing Co. Ltd. of Red Deer, which is 50 percent owned by the pool, has sought formal protection from creditors and is up for sale. If no buyer or partner can be found to keep the brewery in business, the firm will be liquidated.
Even if new investors are found and want to keep the company going, the pool will no longer be involved.
“We will definitely be out of it, no matter what happens,” said Alberta Pool spokesperson Trish Jordan.
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By seeking full protection under federal bankruptcy law, all creditors’ claims against Drummond were frozen Aug. 4. The financial firm Ernst and Young has been appointed to assist in keeping the company running while it seeks a buyer and puts together a payment plan to show creditors.
Search for investors
A spokesperson for Ernst and Young said there are “significant” outstanding claims from creditors, but declined to release details of Drummond’s financial status. He said the search for new investors or a buyer will take six to eight weeks.
Geoff Southwood, chief financial officer for Alberta Pool, said massive deregulation in the Alberta retail liquor business undermined Drummond’s competitive position in the market.
The company has been losing money and June results showed sales and market share were slipping even further, he said.
Drummond’s other shareholders besides the pool are private individuals and employees. Southwood said the pool will definitely lose money, but the final numbers won’t be known until the company is sold or closed.
Alberta Pool bought into Drummond in 1990-91 as part of a strategy of diversification.
The strategy has changed in the last couple of years. The pool is now concentrating on its core businesses of buying grain, providing marketing services and selling farm inputs.
However Southwood said that wasn’t a factor in the decision to pull the plug on Drummond.
“We would have persisted with Drummond had it been a money-making operation with a reasonable future.”
Drummond was established in 1986 and is Alberta’s third-largest brewery. It employs 49 people and produces about 20 million litres of beer annually.
