Saskatchewan Wheat Pool’s days as a farmer-controlled company will likely be over within a month.
Delegates representing class A shareholders at a Feb. 21 meeting voted 54-26 in favour of a recapitalization plan that will see them relinquish their voting shares.
On March 23, class B shareholders and bondholders are expected to approve the same proposal.
When that happens, a single class of shares will be formed, Saskatchewan Wheat Pool Inc. will be the likely result, and the Regina-based grain company will be on its way to its strongest financial position ever, said chief executive officer Mayo Schmidt.
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“Right now our way is clear,” he told reporters after the vote.
“We have an opportunity here to convert a substantial amount of debt, to raise new equity. We have strong support from both the bondholders and the class B shareholders and the process will be complete in March and then we’ll move on to raise equity.”
But the support from delegates was not as strong as he might have hoped. The meeting went well beyond the two hours company officials had predicted and in the end the company’s future was decided by one vote.
The plan required the approval of 66.67 percent of delegates to pass; it garnered 67.5 percent.
“It’s so disappointing. It actually feels like someone ripped the inside of you today, because if you believe in the true co-operative aspect of this company, this was a no brainer. We would never support this,” said Rama delegate Darrell Dutchak, who has often been offside with company direction.
Had it not been for six people who changed their minds at the last minute, he said, the vote would have been different.
“We were in the room last night with delegates that were solid ‘no’ supporters and there were individuals that flipped today,” he said. “That absolutely floored us.”
Director Kyle Korneychuk of Pelly, who also voted against the deal upon direction from a 70-member meeting he held in his district, said he was more disappointed for farmers than for himself.
In an interview, he said the business needed to expand, but it also needed to be farmer friendly. He said there is now nothing to differentiate the pool from its competition.
The new structure does include a farm leadership council to replace the delegate body, but Dutchak dismissed it.
“It’s a joke,” he said.
Other members see things differently.
Vice-president Thad Trefiak of Leross said it wasn’t an easy decision but he voted in favour of the resolution because the chance for a stable grain company was more important than the loss of the co-op.
“In the end, all of the arguments opposing the resolution could not counter the ability to raise $150 million to reduce debt, provide a healthier company to offer goods and services to Saskatchewan and western Canadian producers,” he said. “When you look at the money it’s pretty hard to argue against it.”
The company already has agreements from noteholders representing 37.7 percent of the outstanding convertible notes to vote for the proposal.
Schmidt said once the other votes are complete, the company will be able to convert $174 million in notes to shares and raise $150 million in equity. He said that “takes us from approximately 65 percent debt down to approximately 30 percent debt, which makes us a very strong and robust company to go forward.”
He also said the company will be a less likely target for another company looking to take it over.
Pool president Terry Baker said he believed delegates who were opposed to the decision would respect it and help the company move forward.
“Obviously there are those who would view this as a bit of a sacrifice but I think we needed to do what we did to get to where we need to be,” he said.
After the vote, pool shares trading on the Toronto Stock Exchange went up three cents, closing at 53 cents and a new two-year high.
