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Pork partnership clears final hurdle

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Published: July 13, 1995

CALGARY – Vencap Equities Alberta has become a partner with Fletcher’s Fine Foods in a multi-million dollar deal.

The deal involves some members of Fletcher’s management and the investment company Vencap. The transaction, sealed June 30, went ahead despite protests from some hog producers who object to Vencap’s participation. Vencap is a publicly traded Alberta venture capital firm.

A tribunal set up by the Alberta Marketing Council heard both sides of the argument this spring and ruled the deal to receive a cash injection from Vencap was acceptable.

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The $11.7 million arrangement saw Vencap contribute about $10 million while Fletcher’s managers paid the remainder, said Bryan Perkins, chair of Fletcher’s.

Shares of Fletcher’s, formerly held by the Alberta Pork Producers Development Corporation, will be transferred to eligible pork producers this summer. They are worth $1.71 each.

As part of the reorganization, Fletcher’s repaid $2.65 million of a $5-million loan guaranteed by the province.

The Red Deer-based hog slaughtering and processing company has been in negotiations for several years as the Alberta Pork Producers Development Corporation board sought ways to turn over all company shares to the province’s hog producers.

Producers voted several years ago to take over the shares but there wasn’t enough equity in the company for the deal to take place. Vencap agreed last December to invest.

Protesting against the deal were hog producers including Dick Price of Pig Improvement Canada at Acme and Andy Vanessen of Picture Butte. By forcing the question before the tribunal, they were able to air some concerns.

“In the end, the deal improved from where it began and it provided producers with more time to ask questions … not to say we were entirely satisfied with where it ended up, but it gave people a chance to have a look at it,” said Price.

Those opposed to the deal want a stable organization with committed owners who will get on with the business of selling hogs. Their concern is partly over rumors that Vencap may be for sale and may not be a stable owner.

A dispute over an additional $5 million in equity will be settled by a mail-in vote among producers at the end of July. They will decide if those shares will be distributed among extra levy producers or 1994 producers, said Brian Rhiness of the marketing council. The $5-million equity is the equivalent of 2.9 million shares.

Extra levy producers paid a $2-per-head checkoff from 1981 to 1985 to provide the Alberta Pork Producers Development Corporation board with enough money to buy Fletcher’s.

Vanessen is one of a group of producers arguing against the pleb-iscite, saying the equity should go entirely to the extra levy producers rather than current producers.

“This has got to be the only company in the world that declares a dividend and gives it to the suppliers instead of the shareholders,” he said.

About the author

Barbara Duckworth

Barbara Duckworth

Barbara Duckworth has covered many livestock shows and conferences across the continent since 1988. Duckworth had graduated from Lethbridge College’s journalism program in 1974, later earning a degree in communications from the University of Calgary. Duckworth won many awards from the Canadian Farm Writers Association, American Agricultural Editors Association, the North American Agricultural Journalists and the International Agriculture Journalists Association.

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