When Puratone entered creditor protection in the middle of September the hog production company owed millions of dollars to companies and people throughout Manitoba, including $46,000 to Stewart Floyd of Arborg, Man.
Floyd, a grain farmer, hasn’t received payment for oat sales and he doesn’t expect to see a dime, even though Maple Leaf Foods bought Puratone last week for $42 million.
“I don’t expect that Maple Leaf should or would pay that debt,” said Floyd, who explained he is also a shareholder in Puratone. “I’m not under the expectation that Maple Leaf would cover it. The banks are owed more money that they’re going to get from the sale, so I don’t expect to get paid anything. I sure would like to, but I don’t know who will pay it.”
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Puratone, which produced 500,000 hogs annually and operated three feed mills in Manitoba, including one in Arborg, owes $86 million to three secured creditors. The Bank of Montreal is owed $40.9 million, Farm Credit Canada $40.3 million and Manitoba Agricultural Services Corporation is owed $5 million.
However, there are dozens of unsecured creditors in Manitoba who may never receive full or partial payment, including Stan Yaskiw, a grain producer from Birtle, Man.
Yaskiw may lose an unspecified amount after selling barley and wheat to the company this fall. Yaskiw contacted two lawyers about the debt but he received conflicting legal advice.
“I got two separate accounts from two different lawyers. Almost a 180 degree difference. (But) from my experience with debts… my expectations are pretty low.”
Like many producers who sold grain to Puratone, Ken Foster of Arborg is frustrated the company accepted grain deliveries from farmers just days before filing for creditor protection.
“We delivered the last load (of wheat) on a Monday, of the week they asked for protection,” said Foster, who is out $33,000. “A lot of producers were delivering (grain) the same week they went bankrupt…. I suspect that Puratone, when they were receiving that wheat (knew) there was a good chance that those farmers weren’t getting paid.”
Foster hopes that Maple Leaf covers producer losses, partly because the company has to continue to conduct business with Manitoba farmers in the future.
“If they’re operating these hog (barns) they’re going to need feed in the future,” said Foster, one of more than a dozen farmers around Arborg on the Puratone creditor list.
Floyd, though, said the affected grain producers should be frustrated with the financial institutions, not Maple Leaf.
“I’m probably more upset with the banks than anybody,” he said, adding the banks have been running Puratone for quite a while. “Incurring debt, that they knew they weren’t going to be paying, if anything, it’s on the banks…. They don’t have to share the money that they got from Maple Leaf. But, essentially, they’re the ones that were calling the shots and they’re the ones that are leaving us hanging.”
While he may lose a substantial amount of money, Yaskiw said Maple Leaf’s decision to buy Puratone is positive news.
“If that business was just to go to mothballs, it would be devastating for the economy.”
