Saskatchewan Wheat Pool has continued its efforts to pay down debt by selling long-time asset Heartland Livestock Services Ltd. for $32.9 million.
Alberta-based Nilsson Brothers Inc. bought the 10 Heartland auction marts to expand its Saskatchewan holdings and move into Manitoba.
The pool owned 89.8 percent of Heartland. Agricore owned the remainder and its share is included in the deal.
“The sale allows the pool to generate premium value from our long-term investment in the cattle industry,” said pool chief executive officer Mayo Schmidt.
“It is also consistent with our objective to reduce debt through divestitures and return the company to profitability as quickly as possible.”
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The pool had owned Heartland since the 1940s and marketed more than 800,000 head of cattle a year, along with bison and horses.
It keeps other assets in the Heartland group – CanGro Aquaculture, Heartland Pork Management and Heartland Feeds.
Heartland Livestock’s 11 percent share in Pound-Maker Ag Ventures Ltd., the Lanigan, Sask., feedlot and ethanol plant, is being retained by the pool and Agricore.
The deal is expected to close by mid-September. Heartland Group president John LaClare will move to Nilsson Bros. as chief operating officer of the new acquisitions.
Brian Nilsson, co-CEO of Nilsson Bros., said it will be business as usual at the 10 facilities, located in Lloydminster, North Battleford, Prince Albert, Swift Current, Moose Jaw, Regina and Yorkton in Saskatchewan, Virden and Brandon in Manitoba, and Red Deer in Alberta.
He said he did not anticipate job losses at this time.
“We’re very excited about the performance that Heartland has done and we’re very committed to making Heartland grow to serve the producers more.”
Nilsson Brothers also owns the beef slaughter plant in Moose Jaw, which it bought last year from the Saskatchewan government.
Schmidt said the sale generates substantial value for the pool. The company will record a pre-tax gain of $6.4 million in the first quarter of fiscal 2002, or $4.1 million after taxes.
The pool has been selling subsidiaries that don’t fit the core business of grain handling and agri-product sales as it tries to get a handle on its large debt.
“Moving into next year, we see an opportunity to further reduce the debt, whether it be through dispositions or an increase in earnings,” Schmidt said.
In June, he predicted the company would be back in the black by 2002.
Last week he admitted the drought might affect that prediction.
