$94.6 million | Two Weyburn board members against the sale resigned, saying it was a disservice to farmer shareholders
One of Western Canada’s first and largest farmer-owned grain terminals could soon be turned over to a private-sector grain company.
Weyburn Inland Terminal an-nounced Jan. 24 that it has agreed to sell all outstanding shares in the company to Parrish & Heimbecker for $94.6 million, or $17.25 per share.
Rob Davies, chief executive officer of WIT, said the agreement with P&H is expected to boost WIT’s grain handling volumes and ensure that its customers have reliable access to world markets through P&H.
He said board members are unanimously recommending the sale to shareholders.
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He added that the $17.25 per share valuation represents a 33.7 percent premium over WIT share prices as of Dec. 12, 2013, the day WIT board members announced they were considering offers to sell.
Parrish & Heimbecker is a 105-year-old Canadian company involved in most aspects of the grain business.
Davies said the company’s reputation and its experience in the industry were important considerations.
“P&H is a company that we have a lot of respect for,” he said.
“They’re very experienced in a lot of areas and they have very good channels in both domestic processing and international markets…. The things that we felt were important to ensure a strong competitive environment were all there.”
WIT has 1,500 shareholders who own 5.5 million outstanding common shares.
The company’s assets include a 105,000 tonne concrete grain terminal at Weyburn, fertilizer and farm input retail operations and a specialty crop processing and marketing firm near Sedley, Sask.
WIT also has a controlling interest in NorAmera BioEnergy Corp., an ethanol production facility in Weyburn, which has recently been identified as a drain on its overall profitably.
The deal to sell the company is subject to approval by two-thirds of WIT shareholders.
Approval will be sought at a meeting scheduled for late February or early March.
Support among WIT investors is not a sure thing.
In mid-December, shortly after WIT announced that it was considering expressions of interest from potential buyers, two members of the WIT board — Allan Richards of Rouleau, Sask., and Dale Mainil of Weyburn — announced their resignations, citing fundamental differences with other directors.
Mainil said earlier this week that he feels a decision to sell the company would be a disservice to farmers and investors.
“I’m totally not in support of either the price or of selling … the Weyburn Inland Terminal,” said Mainil.
“The Weyburn Inland Terminal over its history has had a lot tougher issues than this to tackle, and it has come out stronger every time when it (bases its decisions on) the overall shareholder base,” he said.
“That’s what built this company. It was a bunch of farmers and good local investors that built it and it’s turned out to be a very profitable business … so why would we sell it for a minimal short-term gain?”
Mainil disputed statements suggesting that the $17.25 share valuation represents a significant premium over mid-December values of less than $12 per share.
He said WIT shares were trading at $16 per share as recently as last week.
He said P & H is a well-respected company, but that is no reason to sell a farmer-owned company whose operations outside of ethanol have consistently generated positive returns.
Shareholder liquidity is a concern for all publicly traded companies from time to time, he added, but those could be addressed through other means.
Parrish & Heimbecker vice-president John Heimbecker said in a news release that the acquisition of WIT would be a good fit.
“WIT will fit very well within P & H’s existing network of grain assets…. We expect the proposed acquisition to be beneficial both to producers and the Weyburn community.”
