Woodstone Foods Corporation of Portage la Prairie, Man. continues to travel a rocky financial road, with the Court of Queen’s Bench acting as traffic cop.
In April the company applied for bankruptcy protection and by November a meeting of creditors had secured debt restructuring agreements from all but one creditor.
Woodstone produces food fibre from yellow peas and has had multiple owners and major shareholders in its 15-year history. In the past few years it has struggled to expand, obtaining $600,000 from the federal western diversification program and $970,000 through Manitoba’s Grow Bonds, a provincially guaranteed community bond issue project.
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The province was forced late last year to bail out the debt-encumbered business by paying out community bond holders for nearly $1 million as part of a November restructuring plan. A provincial auditor’s report suggested the Grow Bond program failed to communicate effectively with Woodstone and said the program did not obtain enough information from the company before the issue.
Government paid
The Manitoba government has exchanged the bonds for $900,000 of preferred Woodstone shares.
Unsecured creditors agreed to accept a 15 cents on the dollar offer recommended by Woodstone and its receivers, while preferred and secured creditors will receive up to 100 percent of their money. Shareholders and directors are to exchange their shares for equity in the company.
The city of Portage remains in negotiations with Woodstone for approximately $1 million in outstanding property taxes, water and sewer fees.
Sources close to Woodstone say negotiations are also taking place with a Minneapolis company surrounding a deal to assume control of Woodstone in exchange for paying out the province’s new shares.
That information was confirmed by sources in provincial finance minister Eric Stefanson’s office.
More than a year ago, Woodstone lost its Canadian Grain Commission licence to purchase grain directly from farmers, when it failed to meet conditions of its bond. The CGC was forced to pay out the bond to farmers who hadn’t been able to collect their money.
Woodstone closed its doors last year for several months, laying off 45 workers. The company reopened last May and now employs 27 people.
Woodstone president Gary Nickel was not available for comment.
