Legumex Walker’s Pacific Coast Canola crushing plant subsidiary has defaulted on a $54.6 million loan, putting operation of Pacific’s plant in Warden, Washington, at risk.
The news caused Legumex shares to plunge 64 percent in Toronto to 89 cents July 31.
Winnipeg-based Legumex said that AgCountry Farm Credit Services has demanded Pacific repay the loan, but that Pacific cannot comply. If Pacific can’t refinance its debt, the canola plant will cease operation, Legumex said in a statement.
Legumex spokesperson Lawrence Chamberlain said the plant is currently running. It has the capacity to crush 379,500 tonnes of canola annually.
Legumex said the situation does not affect its special crops division, which processes crops in-cluding lentils and sunflower seeds in 14 plants in Canada, the United States and China.
Legumex owns 84 percent of Pacific Coast Canola. Glencore Grain Investment LLC owns the rest.
The plant is located in a state that doesn’t grow much canola. As a result it has had to import most of its needs from Canada and North Dakota.
In March, Legumex said that it might sell itself or make other strategic moves because its share value did not properly reflect the company’s inherent value.
In May when discussing the company’s first quarter results, Joel Horn, president of Legumex Walker, blamed slumping margins for the disappointing results in the company’s oilseed division.
“The entire North American canola crush industry is working within one of the lowest crush margin environments since we commissioned the canola plant in 2013,” he told investment analysts during a conference call.