An investment company intends to breathe life back into a bankrupt grain handling and processing operation in northeastern Sask-atchewan.
Toronto-based Alignvest Private Debt is acquiring the grain-handling assets of Naber Specialty Grains Ltd., of Melfort, Sask.
Naber Specialty Grains, also known as NSGL, was placed in receivership in June 2015 and its operations have been suspended for the past year.
Alignvest was NSGL’s largest secured creditor with outstanding credit originally estimated at more than $2.7 million.
The Toronto company recently received court approval to acquire NSGL’s assets for $4.25 million as part of the bankruptcy settlement process.
Read Also
Land crash warning rejected
A technical analyst believes that Saskatchewan land values could be due for a correction, but land owners and FCC say supply/demand fundamentals drive land prices – not mathematical models
According to the receiver’s report, purchase price will include $450,000 in cash and $3.8 million in debt forgiveness.
Assets involved in the deal include property known as the Melfort Grain Terminal, land, office buildings, storage bins, warehouse space, dryers and other processing equipment on the outskirts of Melfort.
Alignvest spokesperson Sanjil Shah said his company is hoping to take legal ownership of the assets in the coming months.
He said he expects the facility to be re-opened in time for fall grain deliveries.
“We are ready to go,” Shah said.
“The purchase has been approved. The deal is waiting for lawyers to finalize it, but we intend to be the owners.”
Shah said Alignvest has already contacted potential business partners in the area and is assessing business opportunities.
Alignvest’s acquisition of NSGL assets represents a major step toward resolving Naber’s outstanding debts to secured creditors.
A report prepared by court-appointed receivers at Ernst & Young suggests that NSGL’s total debts exceeded $8.2 million at the time the company was placed in receivership.
Approximately $1.5 million was owed to unsecured creditors, including farmers who sold grain to the company but didn’t receive full payment for their deliveries.
The actual value of farmer losses has yet to be determined because many growers who made claims did not specify the value of the grain delivered.
In a May 20 email, Todd Naber, former owner of NSGL, said that debt calculations established by the receiver are based on incomplete and not current company records. Naber said there is a plan in place to ensure farmers will receive 100 percent of the value of any outstanding grain receipts.
NSGL was licensed by the Canadian Grain Commission and was bonded under its payment protection program.
Under that program, licensed grain buyers are required to submit a security bond to the grain commission. The bond is held in trust by the commission in the event that the grain buyer runs into financial difficulty.
Growers involved in the case say Naber’s bond with the grain commission was worth $150,000.
“We’ll be lucky to get a penny on the dollar,” said grain grower Lee Egland, who estimated his family’s losses at $80,000 to $90,000.
Egland said he and his father sold close to 6,000 bushels of flax to NSGL in early 2015. NSGL arranged to have it picked up at Egland’s Eastend, Sask., farm in March of 2015.
Two months later, Naber’s licence at the CGC had expired and was not renewed. The commission later confirmed that it had initiated a financial audit of NSGL’s books and was preparing to start a claims process to compensate farmers.
Egland said the CGC audit should have taken place months earlier.
Naber’s bond was obviously inadequate, he added.
brian.cross@producer.com
