SASKATOON – The political decision to create a radically different Saskatchewan Wheat Pool has been made.
Now it’s up to the financial people at the pool to make it a reality.
“We thought we’d get a bit of a break this week,” pool treasurer Erin Canham said a few days after the historic vote to convert farmer-owned equity into publicly traded share capital.
But that didn’t turn out to be the case, as financial planners and senior corporate officials quickly turned their attention to the nuts and bolts of implementing changes the delegates voted for.
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The first order of the day was to send official notice to the clerk of the provincial legislature that the pool will be presenting the government with a request for changes to the Saskatchewan Wheat Pool Act. It remains to be seen whether the government will hold a fall session; if not, it will be next spring before the amendments can be passed into law.
The biggest job over the next few weeks and months will be preparing a detailed prospectus that will be made available to potential investors in the company. Canham said the prospectus will tell people just about anything they want to know about the pool.
“It will describe the business operations, the organizational structure, associated companies and other financial, legal, accounting and taxation aspects of the company,” he said.
When United Grain Growers Ltd. went to the stock market last year, it published a 54-page prospectus that included everything from an overview of world grain markets and Canadian agricultural policy to detailed financial results and projections to biographies of senior managers to unsettled lawsuits.
Canham said it will take two to three months to complete the prospectus, which must be approved by provincial securities commissions.
At the same time, the pool will be seeking advice from investment dealers on exactly how to handle the share conversion, including the in-house trading period and the eventual listing on the stock exchange. To date, the pool has been dealing with RBC Dominion Securities.
The in-house trading period will last about three months, said Canham. Three to four weeks will be needed to get things organized and send the information and forms out to members. They will then have four weeks to decide whether to sell some or all of their equity, keep what they have or buy more shares. Another three or four weeks will be needed to match up the buyers and sellers and give employees a chance to buy.
RBC Dominion Securities will soon begin the process of placing a value on the pool’s assets.
Pool officials have said the conversion will proceed only if the valuation results in a share value in excess of the current value of $1 per share. That valuation, plus an assessment of the pool’s future earnings potential, will be the main factors in determining the price at which shares are eventually listed on the stock exchange.
Canham said $10 is a “reasonable expectation” for the share’s opening price. (UGG opened at $8 last summer, climbed to $11 in the winter and is now trading around $7.50.)
After conversion, a member will own, for example 20,000 shares worth $1 each. However those shares will then be consolidated into units of 10 for the purposes of trading on the stock exchange. If the shares are listed at $10, then the member will own 2,000 shares worth $10 each.
The consolidation is designed to produce a more stable and more substantial price and make the shares easier to sell, said Canham: “Dollar stock is not as attractive an investment.”
