SASKATOON – It’s one thing for farmers to say they support having a farmer-owned inland terminal built in their community.
It’s quite another for them to back up that verbal support with some money.
That’s what inland terminal promoters are finding out as they try to sell common shares in two proposed new grain handling facilities in Saskatchewan.
North West Terminal Ltd. of Unity, Sask., will be well short of the minimum target of $1.75 million when its public share offering expires July 29.
NWT president Bob Cumming said last week he expects the board of directors will ask the Saskatchewan Securities Commission to extend the deadline.
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“We feel even though we haven’t got quite what we wanted, there’s enough interest to keep us going, that’s for sure,” said Cumming.
As of last week, the company had received about $650,000 in cash payments. Approximately $300,000 more had been promised but not yet delivered. The shares are priced at $100, with a minimum investment of $2,500.
Same story in Moosomin
It’s much the same story for Mainline Terminal Ltd. of Moosomin. Its share offering doesn’t close until Aug. 29, but money has been slow coming in.
Company president Keith Lewis said he is “still pretty confident” the target will be reached, but it may require an extension of the deadline.
“I would say generally speaking it’s tougher than we thought it would be,” he said from his farm at Wawota.
Farmers invariably say they support the project, but that doesn’t mean they’re ready to pull out their cheque books. Investors in Mainline must put up a minimum of $4,000, which buys them 40 shares or convertible bonds.
“There is a cash flow problem right now,” he said. “Farmers have just finished putting a lot of money into seeding a crop, probably one of the most expensive crops they’ve ever put in.”
Lewis said many producers are telling the terminal’s sales people to come back in the fall after their crops are combined and there’s new cash coming in.
Both terminal groups say timing has been a big part of the problem. North West had intended to start selling shares in January, but didn’t get final approval from the securities commission until late February.
May and most of June were “a total writeoff” because of seeding and spraying, said Cumming. In July farmers have been busy hauling grain and paying bills. He said the ideal time to sell shares would be from November to February.
Approval for Mainline came at the end of April, just as farmers were starting their spring field operations: “The timing was inopportune to say the least,” said Lewis.
An alternative to extending the share offering would be to scale back the respective projects to match the amount of money raised.
But Cumming said the board would be reluctant to do that, since a smaller terminal might not have the same economic advantages.
In addition, the prospectus would have to be amended and investors might want their money back.
Meanwhile in Gull Lake
Meanwhile two other inland terminal companies are trying to raise money to pay for feasibility studies and business plans.
South West Terminal Ltd. of Gull Lake has until Aug. 31 to raise a minimum of $86,000 and maximum of $150,000 through the sale of $100 preferred shares, each of which would later be transferrable to two common shares.
Company president Ernie Sommer said the fund-raising effort is “about halfway there” and said he was confident the maximum will be reached.
He hopes to be selling common shares in November.
And a group of farmers and business people at Watrous have until July 29 to raise a minimum of $60,000 and maximum of $150,000 in preferred shares. Spokesperson Joyce Brennan said last week things look good.
“Money is tight but there’s a lot of interest,” she said. If all goes according to plan, common shares will be on sale this fall.
