Garth Gish could hardly believe it had finally happened.
An Agricore United grain terminal at Vancouver had been sold by a trustee appointed by the federal Competition Bureau, four years and five months after the “for sale” sign first went up.
Gish’s company, Prairie West Terminal, is part of the group that will take ownership of the 102,070 tonne facility at the end of June.
“For me, this has been a long haul,” he said last week. “I first opened a file on this 27 months ago.”
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At that time, PWT was part of a different group trying to buy the terminal. That bid failed and PWT eventually teamed up with five other grain handlers to create Terminal West Ltd., which was selected last week by the trustee to take ownership of the AU terminal.
The sale, for an undisclosed price, is expected to close June 30.
“It’s been a long and convoluted process, but we’re just about at the finish line,” said Gish.
“We’ve always believed in this project. We’ve never let up and we’re very happy to have a successful outcome.”
The other members of the consortium are Paterson Globalfoods, Parrish and Heimbecker, Weyburn Inland Terminal, North West Terminal and Great Sandhills Terminal Marketing Centre. The last two, along with PWT, were members of Terminal One Vancouver, which launched the earlier unsuccessful bid.
AU was ordered to sell the old UGG terminal in October 2002, after the bureau determined that the 2001 merger of Agricore and United Grain Growers that created AU gave the new company too big a share of the Vancouver grain handling market.
AU was unable to find a buyer for the facility by the bureau’s deadline, and the sale was turned over to a trustee in May 2006.
Terminal West spokesperson Keith Bruch, vice-president of operations for Paterson, said the injection of new blood, including farmer investment, into the Vancouver grain handling industry will be good for producers and smaller shippers.
“The rationale for the group is to ensure competitive access to port facilities at Vancouver,” he said. “All of the partners are making the investment to position themselves for the future.”
Some companies were concerned about the impact of consolidation in the grain industry and changes to the Canadian Wheat Board on their ability to have competitive access to export terminals.
The five big terminals at Vancouver have been owned by four companies – AU, Saskatchewan Wheat Pool, Cargill and JRI International. That number will be reduced to three once AU is sold to either SWP or JRI.
“We felt we needed to ensure access to port facilities rather than rely on competitor’s facilities and services,” said Bruch.
The sales process was conducted in secrecy, with the trustee declining to say how many players were bidding to buy the terminal.
Farmers of North America, a Saskatoon-based farmer-owned organization, had set up a company to collect memberships from farmers interested in investing in grain handling at the West Coast. Confidentiality rules imposed by the trustee prevented FNA from saying whether it was bidding on the AU terminal.
FNA vice-president Glenn Caleval maintained that stance last week, but did say the company was disappointed that the terminal had been sold to Terminal West.
Caleval said the money collected from farmers for the project will be returned.
One of the big question marks with the earlier unsuccessful bid by Terminal One Vancouver was whether it could generate the roughly 1.8 million tonnes of grain annually necessary to make a profit. That won’t be a problem for Terminal West.
“We feel we have enough origination to make the terminal economically viable,” said Bruch, although he declined to reveal specific figures.
The six companies have a combined licensed storage capacity of 885,000 tonnes (with P&H and Paterson accounting for 655,000 tonnes between them.)
Based on an elevator turnover rate of five to six times per year, that could theoretically move as much as five million tonnes of grain annually.
