WINNIPEG – Another grain handling co-op plans to convert members’ equity into shares.
But the proposal being considered by Alberta Wheat Pool doesn’t go as far as the one adopted by its sister pool in Saskatchewan or United Grain Growers.
When Alberta Pool delegates gather in Calgary Nov. 27 to Dec. 1 for their annual meeting, they’ll be asked to approve a proposal to offer preferred shares for sale to people who have “payable equity” in the company.
The proposal is currently being discussed by members at district meetings, but Alberta pool vice-president John Pearson says he’s confident it will get the go-ahead.
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“I’m thinking the delegates will give approval to it,” he said last week after outlining the proposal to the annual meeting of Manitoba Pool Elevators held here Nov. 6-10.
Unlike the share offering in the works at Saskatchewan Wheat Pool, the Alberta pool shares wouldn’t be publicly traded and would not carry voting rights.
Under the plan, which has approval of the company’s board of directors, three classes of shares would be offered for sale:
- Class A shares would be available for members and staff who have money invested in a variety of company loans and savings programs. These would be committed to the pool for one year. The investment would also be eligible for dividend payments.
- Class B shares would be available to active members with equity which the pool is committed to pay to them. Members will be encouraged to buy the shares in return for preferred rates of interest and dividends.
- Class C shares would be available to members aged 70 or older to whom equity reserves are due to be paid out. This equity would be payable over four years.
Pearson says the share proposal is designed to keep within the pool money the company is committed to pay out at some point in the future.
“It’s a structure that allows us to take some of our payable equity and attract it back into the pool again and use it as capital,” he said last week. “We don’t want to force them into doing it; we want to to attract them into doing it.”
By changing debt into equity, the restructuring also improves the pool’s balance sheet, making it easier to borrow money.
Old ways outdated
Pearson told delegates attending the annual meeting of Manitoba Pool Elevators the changing business, trade and regulatory environments mean the old ways of doing things aren’t good enough any more.
Meanwhile, the company is proceeding with plans to raise $80 million in debt financing. Pearson said pool delegates recently gave their consent for the sale of bonds to large institutional investors.
“Our thoughts are that most of it will be taken up by the annual meeting,” he said.
