The bankruptcy of an American-based forage seed company has left stranded a group of Alberta farmers and company employees.
Nevada-based AgriBioTech Ltd. declared bankruptcy in February. Its Canadian operation, ABT Canada, is now up for sale.
Pickseed Canada has a letter of intent to buy the Canadian arm but company spokesperson Shannon Summers said it was premature to comment further.
A court date is set for July 11 to hear the bankruptcy case in Canada.
ABT Canada’s general manager Ron Kowalski described the situation as chaotic.
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“We’re all in a state of turmoil,” he said from head office in Bowmanville, Ont.
The company formed two years ago when AgriBioTech purchased Oseco Canada and Rothwell Seeds. Both were established companies dealing in turf grass and forage seeds.
“Two viable companies are going to be gone,” Kowalski said.
Oseco Canada was about 70 years old while Rothwell Seeds was a family operation started about 40 years ago.
“There is a lot of bitterness among the growers, staff and management,” he said.
Kowalski said there are no answers for Alberta farmers who were contracted to grow alfalfa seed for ABT. He worries unsold seed could be released into the market as common seed, driving down prices.
About two-thirds of the southern Alberta growers were recently paid in full for their seed through an escrow agreement. They received $1.25 per pound.
However, the remaining farmers are still holding uncleaned seed in their bins waiting for a court decision, said Jim Burton, a private seed contractor in Brooks, Alta. He acted as an agent for the company. Prior to that he dealt with Osceo.
In Nevada, AgriBioTech, Inc. announced May 8 that it has reached an agreement to sell its American turf grass seed assets and specialty division for approximately $65 million. The purchasers are former president and chief operating officer of ABT, Ken Budd and the J.R. Simplot Company.
As part of the sales agreement, the buyers are expected to assume the company’s obligations under contracts with its growers and other contracts. The growers’ contracts call for the company to purchase existing turf grass seed inventory in the growers’ possession.
AgriBioTech was a relatively new company in the grass seed business. It went into high gear, acquiring 34 companies in the United States and Canada in a short time. A downturn in prices, oversupply of seed and slow cash flow pushed the company into voluntary bankruptcy.
