The board of Mainline Terminal Ltd. in southeastern Saskatchewan is looking for ways to keep the facility operating profitably and may have to sell the farmer-shareholder minority interest to do so.
The board recently took out legal advertisements in newspapers saying the terminal is operating in a highly competitive environment that affects its profitability.
“This situation has required the directors of MTL to consider alternative ownership structures to continue operation of the facility,” the advertisement said.
“MTL is currently soliciting the interest of a select number of firms regarding the ownership of MTL.”
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Owen McAuley, a Manitoba farmer who sits on the terminal’s board, said directors are trying to maximize shareholder value.
When the facility in Moosomin, Sask., was built, the plan also called for the establishment of full agricultural retail products and services. However, Cargill, which at the time was a 50 percent owner and is now the majority shareholder, wasn’t able to carry through with those plans because of agreements it had with nearby retailers.
The terminal began operating in 1997 and struggled through the wet years of 1998 and 1999, accumulating large losses before gaining some strength, McAuley said.
There is value in the company but it needs retail services to realize full value for shareholders, he added. The money to do that isn’t likely to come from current investors.
“We can see that it’s going to be tough to extract any more money from the shareholders,” he said.
“We want to maximize the return on investment if possible.”
The annual general meeting was planned for Nov. 25 and McAuley said if no potential investor or owner had stepped forward by then, the board would ask shareholders how they want to proceed.
“Maybe we’ll do nothing. At least we can probably go back to Cargill and see if they’re interested in trying to come to a different arrangement.”
Cargill declined to comment and a spokesperson would not divulge the company’s ownership share.
Cargill included its elevators at Langbank, Sask., and Wapella, Sask., in the original deal, along with cash. It took a majority ownership position after it injected additional cash into MTL about five years ago.
The project originally cost about $8 million; 350 local shareholders raised $1.36 million.
The Wapella facility has since been sold to local farmers.
Capacity at Moosomin is 25,500 tonnes, including 15,500 tonnes of condo space. It has a 55 car loading spot.
Langbank has a capacity of 5,800 tonnes and can load 26 cars.
