The Saskatchewan taxpayers’ investment in Big Sky Farms has been written down to zero after a volatile year that saw the hog company restructure under court protection.
CIC Asset Management Inc. (CIC AM), which manages investments for the province, had valued Big Sky at $21.9 million at the end of 2008.
The write-off contributed to CIC AM recording a $32.8 million loss last year. Another agricultural investment, Performance Plants, was also written off, contributing $7.6 million to the loss.
The losses were reported in the 2009 annual report released last week.
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CIC AM communications director Jan Carter said the Big Sky investment was written off after the company entered creditor protection last November.
“We anticipated the possibility that we would get nothing in return for our investment at that time and recorded a nil value,” she said.
The Saskatchewan government had invested $29.9 million in Big Sky over the years. Creditors approved a restructuring proposal in March, and the company continues to operate.
The restructuring resulted in CIC AM’s ownership stake in Big Sky dropping to 43 from 63 percent. That could drop further.
“They have certain dates upon which they must make loan payments, and if they don’t make all their loan payments, it’s possible the bank would be in a position to take more equity in the company and reduce the percentage of equity that we have,” Carter said.
However, CIC AM’s book value would increase if Big Sky’s fortunes improve.
CIC AM wants to sell all of its assets, and the Big Sky assets have been for sale for some time.
The corporation, previously known as Investment Saskatchewan, was renamed July 1, 2009, and its mandate is now to manage its existing portfolio while it divests in an orderly fashion.
Agricultural investments make up a significant share of the portfolio.
Performance Plants was an early stage biotechnology company that worked on yield protection technology. However, it never got off the ground. Carter said CIC AM and other equity shareholders decided they could no longer continue to support the company and closed its operations in Saskatoon and Quebec.
CIC AM has also invested $8.1 million in Can Pro Ingredients, which is developing canola fractionization technology and has a plant in Arborfield, Sask., that is not yet operating. Book value is set at $3.6 million because the company hasn’t yet gone to market with its product.
MCN Bioproducts is in a similar situation. The company has a pilot scale plant in Saskatoon, where it is working on adapting canola for use in feed, food and cosmetic products. CIC AM invested $1.7 million and shows a book value of $1.5 million.
It is holding the book value on its $8.7 million investment in Targeted Growth Inc., which is working on gene modification to improve yields. The Washington-based company is working on corn, soybeans, canola and camelina.
A $13.1 million investment in Foragen Technologies Limited Partnership helps provide seed capital for companies that want to commercialize advanced agricultural technologies.
A $23.9 million loan to Terra Grain Fuels is still on the books as the company works toward full operation. CIC AM shows the book value as $22 million.
After Universal Energy bought the ethanol plant and Just Energy bought Universal, the province ended up with shares in Just Energy for which it paid $700,000.
CIC AM sold those shares this year and will report a gain on investment of $2.5 million.
