BROOKS, Alta. – A group of pork producers is challenging an investment firm’s bid to become a partner in Fletcher’s Fine Foods.
The Extra Levy Group, joined by Pig Improvement Canada of Acme, went to an appeal tribunal March 30 and 31 to prevent Vencap Equities Alberta Ltd. from entering the deal.
The appeal tribunal heard arguments by lawyers representing the Alberta Pork Producers Development Corporation, Vencap and the Extra Levy Group. Four more days in April have been set aside for further argument.
The tribunal is an independent body set up by the Alberta Products Marketing Council, which governs commissions and marketing boards like the pork producers.
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Producer plebiscite
Andy Vannessen, a member of the group appealing the transaction, said they want full disclosure of the investment proposal, as well as a producer plebiscite to accept or decline the Vencap offer to buy into Fletcher’s.
Ray Price of Pig Improvement Canada said producers should have three options: An outright sale to the highest bidder; a transitional ownership by a venture capital company like Vencap; or a producer-owned company.
“To us, it’s not critical which decision it is, as long as the producers have that ability to make a decision,” said Price.
Vannessen and Price said most producers had no knowledge about the investment deal with Vencap until it was announced by the pork board.
Following a plebiscite in 1992 the Alberta Pork Producers Development Corporation board, which owns Fletcher’s, agreed to turn ownership of the Red Deer-based company over to eligible producers.
To be eligible, shareholders had to have sold hogs between 1981-85 when they paid an additional surcharge on each animal sold in order to buy the company. This is called the extra levy period.
Efforts to raise enough cash to turn the company ownership over to producers stumbled, until Vencap, a private sector venture capital company agreed last December to invest.
The transaction is expected to be finalized June 22, said Alberta Pork Producers Development Corporation chair Jurgen Preugschas.
As the deal stands, the majority shares valued at $1.71 each, would be distributed to producers, followed by Vencap and a small percentage to the management of Fletcher’s.
In a public notice filed March 31, the board said VenCap and management will invest $11.6 million in Fletcher’s in return for a mortgage and shares.
Preugschas said the injection of money by Vencap is a way to boost Fletcher’s competitiveness.
“If the deal doesn’t go ahead we lose an opportunity to make Fletcher’s a world class packing plant,” said Preugschas.
Vencap spokesperson Frank Stack said the appeal is not surprising since large deals are often challenged.
“The vast majority of producers are in favor of this deal,” he said.
