The For Sale sign is staying up at Saskatchewan Wheat Pool.
In the last few months, the pool has sold its stake in Xcan Grain Pool Ltd., Premium Brands and Heartland Livestock Services.
The millions of dollars of cash generated by the sell-off are being used to pay down the financially strapped company’s large debt load.
Chief executive officer Mayo Schmidt said last week the company will be selling more assets “in the near future,” but declined to say which pool company will be the next to go.
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“There’s obviously a lot involved in that process, including people and competitors, and so we’re not prepared to discuss that at this time,” he told a Sept. 13 news conference.
The pool has said it will divest itself of assets that aren’t directly related to its core business of handling and marketing grain and selling farm supplies.
Grain industry analyst David Schroeder of Dominion Bond Rating Service said bankers and investors see such sales as crucial to the pool’s future.
“We expect a lot more (sales) coming in the next few months for the purposes of debt reduction.”
As of July 31, Sask Pool’s books showed $157 million in long-term debt due within a year and $549 million in other long-term debt.
The company reduced its debt obligations under loan facilities and securitizations by $94 million during the past fiscal year and said that through divestitures, cost control and improved operation, the debt issue will be dealt with.
“We’re confident we’ll meet all our obligations,” Schmidt said.
Schroeder, who meets with senior pool officials on a regular basis to discuss details of the firm’s financial situation and future plans, declined to offer any thoughts on what assets the company may dispose of in the next few months.
“I can’t comment on what’s for sale and what isn’t for sale,” he said.
An official with the union that represents pool employees said the prospect of more sell-offs is creating uncertainty throughout the company.
Hugh Wagner, general secretary of the Grain Services Union, said union members have reported “people around looking” at some of the pool’s companies.
He suspects the pool would prefer not to sell so many of its companies, but is under heavy pressure by bankers and investors to do whatever is necessary to reduce its debt load.
He described the sell-off as short sighted and potentially counter-productive.
“If you look at the financial statement, those so-called non-core assets make significant contributions to the pool’s bottom line,” he said.
The recent sales of Xcan, Premium Brands and Heartland put about $90 million in pool coffers. Other assets sold during the past 18 months include Robin’s Foods, Europort Inc. (a company building a grain terminal in Poland) and Pinnacle Farms.
