A Toronto company that plans to build a $90 million transportation and logistics hub at Northgate, Sask., near the United States border is looking for investors’ money to pay for its project.
Ceres Global Ag Corp. announced Sept. 29 that it intends to raise $70 million through a rights offering open to investors who already hold shares in the company.
Ceres officials told the Western Producer that the financing plan — which still requires regulatory approval — will offer Ceres shares at $5.98 per unit, a 15 percent discount on the Sept. 26 closing price of $7.04 per share.
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In addition, an existing bridge loan valued at US$20 million will be replaced with a new five-year senior secured loan valued at $30 million.
Together, the rights offering and the loan will allow the company to proceed with construction of the transportation hub, which will include grain handling facilities, oils transloading infrastructure and a 120-car train loop.
“These financing proposals are critical milestones for Ceres as it ramps up the construction and development of Northgate,” said Ceres president and chief executive officer Patrick Bracken in a Sept. 29 news release.
“They will provide the needed capital for the construction of the remaining rail infrastructure as well as the temporary and permanent grain transload facilities at Northgate.”
Ceres announced plans to build the Northgate facility in early 2013.
Initially, the company said it would build the facility in partnership with U.S. grain company Scoular, which owns grain handling facilities throughout the United States and has commodity sales programs worth more than $6 billion per year.
But in early 2014, Ceres announced that it had terminated its partnership agreement with Scoular and would construct the facility on its own, in consultation with Ceres’ subsidiary company Riverland Ag.
Riverland Ag Corp. owns and operates 10 grain storage and handling facilities in Minnesota, New York, Wisconsin and Ontario, having total storage capacity of 51 million bushels. Ceres board chair Doug Speers said the company has already completed its 120-car rail loop at Northgate and has connected the loop with a spur line owned by BNSF railway.
The BNSF connection provides a direct rail link to American markets via the Burlington Northern Santa Fe (BNSF) network.
BNSF operates in 28 American states and has a 50,000 kilometre rail network with access to Pacific and Gulf of Mexico port facilities.
Speers said Ceres has already established a temporary grain handling facility at Northgate.
The temporary facility, which consists of two 2,000 bu. steel storage bins, will begin taking deliveries of farmer grain later this month, Speers said.
Northgate’s first shipments of Canadian grain will likely be moved south across the U.S. border in late October, Speers added.
Ceres has also approved the construction of a $42 million high-throughput concrete elevator at the site.
Contracts for construction of that facility are already in place with completion expected within the next two years.
Ceres also has a 25 percent ownership interest in Stewart Southern Railway (SSR), a 130 km short-line railway in southern Saskatchewan that owns track between Richardson and Stoughton.
