A Saskatchewan potato company voluntarily entered receivership May 3, putting millions of taxpayers’ dollars at risk.
Lake Diefenbaker Potato Corporation, of Lucky Lake, has been experiencing money troubles since late last year.
A company spokesperson did not return telephone calls, but Terry Kremeniuk, Farm Credit Corp.’s vice-president of agri-business, confirmed the company’s action.
Farm Credit, Royal Bank and Sask Water are all creditors. FCC provided long-term financing for equipment and buildings worth $8 million. The Royal Bank provided an operating line of credit.
Local investors also hold equity.
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Sask Water’s exposure is about $8 million. The government corporation sold a potato storage terminal to its tenant, Lake Diefenbaker, in January for $5.81 million. Sask Water financed the sale through a $3 million long-term debenture and a $2.81 million mortgage.
The remainder of the $8 million is overdue rent.
In the provincial legislature, the opposition demanded some answers.
Saskatchewan Party agriculture critic Bob Bjornerud worried Sask Water was not a secured creditor.
Maynard Sonntag, the minister responsible for Sask Water, said the buildings are secured by the mortgage. He said recent low potato prices contributed to Lake Diefenbaker’s problems.
“The numbers that were presented to us by the Farm Credit Corporation and by the Royal Bank and by Lake Diefenbaker Potato Corporation showed a very, very reasonable workout,” he said of the decision to sell the storage terminal to the corporation three months ago.
