The more Saskatchewan Wheat Pool bondholders convert their debt to equity, the less the company’s share price is likely to rise.
Under the terms of a deal struck with bondholders last February to save the company, $255 million worth of bonds are convertible to Class B shares.
Since the restructuring was completed, $60 million worth of bonds have been converted, pushing the total number of shares outstanding as of Nov. 30 to 193.4 million.
There were 37.4 million Class B shares before the deal.
Chief executive officer Mayo Schmidt said whenever the share price rises significantly, more conversion takes place and that has created a ceiling on share values.
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“That’s why we’ve been in that range of upper 30s to 40 cents,” he told reporters at the Dec. 11 annual meeting. “The conditions and the financial outlook of the pool are significantly improving and it’s not reflecting in the share price.”
Brian Hardy is a Class B shareholder from Regina. He said a move from 38 to 42 cents, at which the stock traded Dec. 10, doesn’t seem like much but it is strong on a percentage basis. He said shareholders are concerned about the dilution of the shares, but he believes they understand what had to be done.
“Without all the stakeholders making some sacrifices and coming to the table, it wouldn’t have happened and the pool would not have survived,” he said.
Shares closed at 38 cents on Dec. 15. That’s a far cry from the all-time high of $24 in late 1997, and compares to the 52-week high of $1.30 and the low of 17.5 cents.
Schmidt said the dilution is offset by the interest being shown in the company.
“In views I’ve heard, it’s a stock to own when you have good weather conditions.”
