Saskatchewan Wheat Pool is shedding its British grain trading subsidiary SWP Matrix Ltd.
The pool has asked a British court to appoint an administrator, similar to a receiver in Canadian law, to wind up the company’s affairs.
The pool’s chief financial officer Lyle Spencer said Matrix has not lived up to expectations and Sask Pool has been unable to agree with its partners on a restructuring plan for the money-losing trading firm.
“The administrator will go in and run the business, take over the day-to-day management, and try to maximize the value,” said Spencer.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
The administrator will evaluate the company’s assets and will consider a number of options, ranging from selling the company to closing it down.
Regardless of what happens, the pool will no longer be involved.
“We want to get out of it, so one way or another what we want to do is maximize the value of the assets that are there,” Spencer said.
The pool said it will allow for a potential loss of $3 to $4 million against earnings for the second quarter of the 1999-2000 fiscal year. However, Spencer said that won’t necessarily be the final cost to the pool.
“The provision is an estimate. We hope it won’t be any more than that, we hope it may be less.”
The final figure will depend on how much value the administrator is able to extract from assets like inventories and accounts receivable.
The pool’s involvement in the company dates back to late 1997, when it bought a one-third equity position in Matrix Trading Co., Ltd. of Newark, England. At the time, former chief executive officer Don Loewen said the deal would help the pool position itself to market grain into eastern and central Europe. It was all part of the pool’s strategy of globalization, designed to originate product for the grain terminal being built by the pool at Gdansk, Poland.
Chief executive officer Mayo Schmidt said in a news release that the pool will develop a new support structure for its offshore assets and markets.
“We will focus on building key relationships which are a necessary component to our international grain trading operations,” he said.
Spencer said the activities envisioned for Matrix will still have to be performed. It’s just a question of how they’ll be carried out, and by whom. It could be anything from creating a new company, setting up a joint venture or getting into an alliance with an existing trader.
Matrix also supervised and managed a farm supply and service business in Russia, but Spencer declined to discuss that aspect of the company’s operations.
