Shareholders of North East Terminal (NET) at Wadena, Sask., will vote April 6 on Richardson International’s offer to buy the inland grain terminal.
The $25 million offer, which also includes crop input facilities at Wadena, Kelvington, Foam Lake and Ponass Lake, is scheduled to close April 13.
The proposed sale occurred after NET’s board received an unsolicited offer from another company last June, said general manager Garnet Ferguson.
He said the board was advised, as part of the due diligence process, to identify any other companies that might be interested to ensure it received top dollar.
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Four companies were identified and Richardson’s offer was the best.
Ferguson said the process resulted in an bid 40 percent above the original offer.
Jean-Marc Ruest, Richardson’s vice-president of corporate affairs, said the company is happy with the deal.
“We put in what was an eminently fair offer, one that represents the value that we think the facility has and one that we think offers a premium to shareholders,” he said.
“We certainly recognize that we’re paying top dollar.”
Ferguson said the offer is 7 times the original investment for shareholders, who have also received dividends and the competition for grain handling that was the original reason for construction.
Richardson is buying NET’s assets and not its shares.
There are 750 shareholders who hold nearly 21,000 shares. Cargill, which was the original partner when the terminal was built in 1991, holds 5,900 shares worth 22 percent.
Ferguson declined to say which company made the original offer last summer.
NET competes with Viterra in all four of its locations. Other competition includes an independent ag retailer at Invermay and Foam Lake, Pioneer in Foam Lake, and Parrish and Heimbecker in Quill Lake.
Ruest said that was one of the reasons why the purchase was a good fit for Richardson.
“It’s in a location where we don’t have a strong current presence and it fits nicely to our canola plant in Yorkton.”
Richardson intends to invest another $3 million to upgrade the facilities to improve safety and make them more efficient. Employees will be offered continued employment.
Ferguson said the terminal enjoyed two of its best years ever during the last four. It has a strong balance sheet and little debt. NET sits in one of the regions hardest hit by excess moisture last year.
Ruest said investments of this size are not made with immediate return in mind.
“It’s proven over the course of time to be a very good growing region and we expect it to be that,” he said.
