Investors sought | Toronto-based Ceres Global Ag Corp. has already set up a temporary grain handling facility
A Toronto company that plans to build a $90-million transportation and logistics hub at Northgate, Sask., near the U.S. border is looking for investors’ help to pay for the project.
Ceres Global Ag Corp. announced Sept. 29 that it intends to raise $70 million through a rights offering.
It is open to investors who already hold shares in the company and, according to Ceres, is backstopped by a pair of investors that will ensure the $70 million offer is fully subscribed.
Ceres officials said 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,” Ceres president Patrick Bracken said in a 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 early last year.
It initially said it would build the facility in partnership with U.S. grain company Scoular, which owns grain handling facilities and has commodity sales programs worth more than $6 billion per year.
However, Ceres announced early this year that it had terminated its partnership agreement with Scoular and would build the facility on its own, in consultation with Ceres’ subsidiary company Riverland Ag Corp.
Riverland owns and operates 10 grain storage and handling facilities in Minnesota, New York, Wisconsin and Ontario, and has total storage capacity of 51 million bushels.
Ceres board chair Doug Speers said the company has already completed the rail loop at Northgate and has connected it with a spur line owned by the Burlington Northern Santa Fe railway.
The BNSF connection provides a direct rail link to American markets.
BNSF operates in 28 American states and has a 50,000 kilometre rail network with access to Pacific and Gulf of Mexico port facilities.
Ceres has also set up a temporary grain handling facility at Northgate.
The temporary facility, which consists of two 2,000 bu. steel storage bins, will begin taking grain deliveries later this month, Speers said.
Northgate’s first shipments of Canadian grain will likely be moved to the U.S. in late October, he added.
The temporary facility will allow the company to transport grain while a permanent grain elevator is built.
The permanent facility, which is a high-throughput concrete facility, will cost $42 million to build and should be operational in 2016, Speers said.
Contracts for construction of that facility are already in place and groundwork has begun.
“The board of Ceres has approved construction of a $42 million grain elevator that will allow us to load shuttle trains of 110 or 120 cars,” Speers said.
“Obviously, that’s going to take a while to build … so in the meantime, we started a number of months ago to build a temporary grain loading facility and … that facility will be ready to load grain by mid-October.”
Speers said a general manager has been hired to oversee operation at the temporary facility. Offers to buy grain should be in place shortly.
He said Ceres has an agreement with BNSF to supply up to 72 rail cars per week once the grain program at Northgate hits full stride.
