Published by Reuters, February 21, 2005
Saskpool farmers approve plan to overhaul shares
By Lee Harding
REGINA, Saskatchewan, Feb 21 (Reuters) - Farmers who own the voting shares of Saskatchewan Wheat Pool <SWPnvb.TO> approved a plan on Monday that will end their control of Canada's second-largest grain handler in a bid to slash debt and attract new investment.
The Regina-based company wants to consolidate its voting and nonvoting shares, convert debt into equity, offer new shares, and remove an ownership cap.
"Obviously there are those who viewed this as a bit of a sacrifice, but I think we needed to do what we did to get to where we needed to be," said Terry Baker, a farmer from Denzil, Saskatchewan, who is chairman of Saskpool's board.
The vote, which had to be approved by two-thirds of the 80 farmer-delegates at the meeting, narrowly passed with a margin of one, with 54 votes.
"We have had a very long debate, a very spirited debate," Baker told reporters after the vote.
Saskpool was created by farmers in the 1920s as a patronage-based co-operative.
But it has struggled to survive in recent years, burdened by a failed, debt-financed global expansion attempt in the mid-1990s followed by three consecutive years of bad weather that reduced the amount of grain it handled.
The plan will give Saskpool the might to force consolidation in Canada's grain industry, which is plagued by overcapacity, chief executive Mayo Schmidt said.
"We will retire substantial debt and this organization will be at its strongest point in its history, financially," Schmidt told reporters.
But some farmers said they felt betrayed by delegates who voted for the overhaul and gave up on the farmer-owned cooperative business model.
"I thought I knew these people," said Kyle Korneychuk, a farmer from Pelly, Saskatchewan, who voted against the plan.
"It's like your best friend saying he likes the Toronto Maple Leafs (ice hockey team), and then all of a sudden he switches to the Vancouver Canucks," Korneychuk said.
But Schmidt said farmers will continue to play a role in the company and will nominate four directors to its board.
Since Saskpool first announced its plans in December, business has picked up at its country elevators, Schmidt told Reuters.
"I think the customers have a view that with a stronger organization, they feel more confident doing business with the company," he said.
Saskpool shares rose 7 percent, or 3 Canadian cents, to close at a new two-year high of 53 Canadian cents at the Toronto Stock Exchange on Monday.
Nonvoting shareholders and noteholders are scheduled to vote on the plan on March 23.
Schmidt said the restructuring and share offering should be complete by late spring or early summer.
((Reporting by Lee Harding, writing by Roberta Rampton, editing by Peter Galloway; Reuters Messaging: firstname.lastname@example.org; 204 947-3548))