Saskatchewan Wheat Pool has not asked the provincial government for a bailout, nor will it, says chief executive officer Mayo Schmidt.
CBC Radio reported Sept. 21 that the pool had asked the province for half a billion dollars after the banks threatened to cut the company’s $400 million operating loan by $100 million. The story quoted “several independent sources.”
Schmidt called the report erroneous.
“I can clearly tell you that there has been no request for a bailout, nor will there be any request,” he told reporters.
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He stopped short of saying Sask Pool had not requested a loan or other financial assistance from the government, perhaps through an investment in one of the pool’s processing companies.
“My job is to be involved in strategic opportunities throughout our group of businesses,” Schmidt said. “At any one time we’re discussing opportunities for strategic supply agreements, alliances and other things.”
The government refused to comment. Staff had prepared a written response, but then did not release it.
Schmidt said the radio story contained other errors.
“Our equity levels are more than five times higher than what was reported and our debt level is less than half of what was reported,” he said.
And, Schmidt said the banks have not withdrawn support of the pool.
“Our financing is currently underutilized at the moment in terms of what’s fully available to us,” he said. “We certainly are looking for growth in our businesses and, if that’s the case, then our financing needs will expand. I’m sure the banks, based on performance, will be more than interested, as they have been for 75 years of this organization, in supplying us that type of financing.”
Share price drops
Pool shares, which trade on the Toronto Stock Exchange, dropped 19 cents to $2.61 the day the CBC story aired. They closed at $2.66 Sept. 25.
Schmidt would not say if the pool would take legal action against CBC.
The pool was scheduled to release its year-end financial results Sept. 26. It reported losses of $65.6 million after the third quarter.
Traditionally, the fourth quarter is the strongest. Schmidt noted that a good portion of this year’s losses is specifically related to restructuring charges. He said grain movement into pool facilities has been strong and processing companies are running at or near capacity.
Meanwhile, the Saskatchewan Party said the government could help the pool by amending legislation to allow Class B shareholders to vote. Now, only Class A shareholders, or farmer-members, can vote.
