The assets of Natural Valley Farms will likely be up for auction later this fall after unsuccessful efforts to sell the slaughter facility and processing plant.
The Court of Queen’s Bench recently approved an amendment to the receivership order from last fall allowing the sale of assets through a breakup auction, if necessary, said receiver Clark Sullivan.
According to an affidavit filed in court, offers for the company were extremely low.
“The best was an offer which, in the opinion of the receiver and the principal secured creditors, did not reflect anything more than the break-up value of the assets,” Sullivan said in the affidavit.
Negotiations were underway with a potential purchaser until this summer, when the offer was withdrawn.
“We have concluded that it is unlikely that a sale can be achieved at a price which reflects any significant going concern value for the assets,” he wrote in an Aug. 25 letter to creditors and shareholders.
Sullivan has proposals from two auctioneers to conduct an auction of the assets later this year. They expect the assets could sell for between $2 and $4 million.
Natural Valley owes more than $9 million to its main secured creditors, Farm Credit Canada and Conexus Credit Union.
It also owes $8 million in unpaid construction liens to subordinate secured creditors and $7 million in unsecured debt to trade creditors.
“Based on the results of proposals and offers received to date, it is clear that an eventual sale of the assets will result in a significant shortfall to the primary secured creditors and there will therefore be no recoveries available to subordinate secured creditors, unsecured creditors or shareholders,” said Sullivan’s letter.
The other creditors include the town and rural municipality of Foam Lake, Flying D Cattle Co., John Deere, Clifton Associates and others.
Natural Valley was established as a beef processor in Wolseley, Sask. in 2005; the slaughter plant for naturally raised beef opened later north of the community in October 2006. But just months afterward it was having trouble paying producers who shipped to the plant.
It ventured into horse slaughter for European markets after the beef business didn’t produce the expected cash flow, and came under controversy after animal rights groups complained about the pratice of using horses as food animals and for accepting horses from the U.S., where horse slaughter plants are illegal.
Natural Valley went into receivership a year ago and the facilities closed for good last January.
