In October 2002, the For Sale sign went up on the Agricore United grain terminal at Vancouver. Two years later the sign is still there, with no indication of when it might be coming down.
Speculation about the fate of the terminal occasionally arises, but the only people who really know what’s going on are saying little.
“We are in active discussion with potential buyers,” said David Carefoot, AU’s vice-president of corporate finance and investor relations.
“The process is ongoing and beyond that I don’t really have any other comment.”
Read Also
Phosphate prices to remain high
Phosphate prices are expected to remain elevated, according to Mosaic’s president.
The company has engaged an unnamed third party to help it find a buyer.
Competition bureau officials, who are kept informed about AU’s sales efforts, will say only that the company is abiding by the Oct. 17, 2002, agreement under which the sale is being conducted.
“Everything so far has proceeded as required under the consent order,” said Chuck Stevenson, senior competition law officer at the bureau.
Some industry sources say it appeared something might be happening earlier this year.
“From the scuttlebutt and rumours in the trade, we really thought there was going to be a deal done in the early spring,” said a senior grain industry official who spoke on condition of anonymity.
“Then it went dead and I haven’t heard anything since, which I suppose is interesting in itself.”
The president of the Grain Workers Union in Vancouver said people who looked like prospective buyers visited the terminal in the spring, but nothing similar has happened since.
“The company is really secretive about it,” said Robert MacPherson, adding it’s not the kind of information that is likely to leak out ahead of time.
“I tell our people, ‘when they tell us it’s sold, then you’ll know it’s sold.’ It’s not the kind of thing you’ll hear through the grapevine.”
The sale was ordered by the federal competition bureau following the merger of Agricore and United Grain Growers that created AU.
The merger left AU holding a 51 percent ownership stake in three terminals, which together accounted for 63 percent of Vancouver’s grain handling capacity.
The bureau decided that would result in a substantial lessening of competition at the port, and ordered AU to sell either the old UGG terminal or its 70 percent stake in Pacific Elevators. The company also held a 50 percent share of Cascadia Terminal.
AU initially refused to comply, offering instead to sell part of Pacific, but after months of legal wrangling, it finally agreed to sell one of the two terminals, eventually settling on the 102,070-tonne capacity UGG facility.
The consent agreement included a confidential deadline by which AU must dispose of the terminal, after which the commissioner of competition would appoint a trustee to find a buyer.
Some grain industry observers say they’re surprised that the terminal is still on the market.
“Two years ago I really would have thought that terminal would have sold by now,” said David Schroeder, who tracks the grain industry for Dominion Bond Rating Service.
But two years ago, he added, he didn’t foresee the tough times the grain industry has had to face.
With the combination of poor crops, reduced exports, continued regulation and excess capacity on the West Coast, potential buyers are unlikely to be lining up to invest tens of millions of dollars in a grain elevator.
“It is poor timing to find a buyer for an asset like that given the weakened state of many of the potential buyers,” said Schroeder.
Carefoot said he doesn’t think the state of the grain economy is a big issue.
“Given the size of the asset, I don’t think any interested party is just going to be looking at the most recent couple of years,” he said. “They’re all going to be informed and sophisticated buyers who will look at the long-term value of the facility to them.”
Based on interviews with a number of grain industry officials and observers, the list of potential buyers isn’t long.
The competition bureau’s earlier decision precludes any of the companies that already own terminals at Vancouver, which eliminates Saskatchewan Wheat Pool, Cargill and James Richardson International Ltd.
Smaller companies that don’t own terminal facilities at Vancouver, like N. M. Paterson and Sons, Parrish & Heimbecker and the network of farmer-owned inland terminals, would have trouble on two fronts: financing a purchase and originating enough grain in the country to keep the terminal busy.
Foreign-owned grain companies, such as Louis Dreyfus or ConAgra, are thought to be unlikely candidates because of their reluctance to invest in a Canadian industry they see as overregulated. Officials with both those companies did not return phone calls.
Another possibility is that a company not directly involved in the grain industry could buy the terminal, similar to Mission Terminal in Thunder Bay.
Finally, some have suggested the Canadian Wheat Board might be interested, but the board is prohibited by law from owning physical assets like elevators.
“If we had the ability to do so, I think it would be interesting to look at,” said board chief executive officer Adrian Measner.
“But we just don’t have a mandate to do it.”
MacPherson said the workers at the terminal are understandably anxious about their future and don’t really care who buys the facility.
“At the end of the day, all I want to see is two million tonnes of grain moving through there so our members are still employed,” he said.
