Give ABP a chance

[rkaiser]

Okay farmerson and anyone else on here who is a supporter of the ABP/CCA dream.

Why is it that everyone seems to agree that another packer in this province would be beneficial for the industry except for representatives from ABP?

In a meeting of industry groups last spring a question was raised by a group ready to purchase the ranchers beef plant and the "then" minister of agriculture asked for a unanimous show of support to bridge finance the project. At that meeting ---- the ABP blocked the opportunity. The only excuse at that time was that they feared that one of the big packers would pack up and leave the country or the packing industry in Canada.

Is that still the position of the ABP?

Because you still may have a chance to not only redeem yourselves, but turn the corner and do something that would actually change the industry for good. I do not know how much influence ABP or the CCA had in the WTO decision on COOL but I would suspect it is about as much as they have had on opening markets for Cargill and Nillsen Brothers in other continents. Not much!

We have another company ready to have a go at Balzac. Far more marketing homework done than any previous group including the ones who ran the plant for 14 months. Operational management that is already established in the value added sector. An opportunity to purchase the plant for less than 25 cents on the dollar. Enough cattle producers willing and ready to take a chance on value added alternative marketing to put up a $40.00 per head purchase levy to pay off a private OR MAYBE government backed bridge financing loan.

This is not a socialist idea and we are not asking for any more than Cargill and Nillsens other than a loan with interest - or a guarantee from the government for the purchase.

Does everyone realise that this purchase price is less than 20 million dollars.

We already have the rest of the money for operating in place and there is more than one entity ready to pull the pin on the 20 million dollar loan with their not so soft money. A government loan with a little softer interest rate would even make the project more lucrative than it is going to be, but support from groups like ABP might help and actually allow ABP/CCA to do something real and helpful for the entire Canadian beef industry beyond slapping themselves on the back for little victories that may or may not have had anything to do with them.

[wd40]

Randy - Someones worried that one of the packers might leave. Really? So what might that do? Stop a foreign corp from stealing and pilfering the Canadian beef industry.
Why don't we add up how many taxpayer $ they have gotten out of our hide. To say nothing of the dollars they plane stole in the market place, and declare our rightfull ownership of the plant and send them home.

The worst case senario would be you'd finally get paid what your beef is REALLY worth.

[kato]

By the one packer left? Not likely.

If one, (and we know which one it would be), would leave, we need alternate plants set up to step in, or else we'll be in a one buyer market which is a real losing situation.

[wd40]

kato u gotta think out side the traditional box - we need possession of the facility and pay the beef industry 30 - 40% dividends above their current take home. That's what you all are leaving on the table and love it.

DA

[MGMT]

Although another packing plant may be good for this province, is it possible the deal you are looking at is not viable?

There is a great deal of publically available information that provides insight into this proposal.

The court documents relating to the Ranchers Beef bankruptcy are public information. Google: Algers Ranchers Beef. Algers acting as receiver sold the Balzac plant to Sunterra Beef Ltd. for $12 million and change. That is fact.

Why would it be worth $20 million only three years later? Is that where the government money comes in? $8 million over the original purchase price, who gets that money?

Another fact. Tyson Foods, a global livestock processor, is a publically traded company and as such it is easy to view its financial reports to gain a perspective on the livestock processing industry. Simply Google: Tyson Foods Annual Report. Tyson’s three year average operating profit on its beef segment is 1.63%.

In 2011 Tyson’s Class A stock traded for about $17 a share. Tyson paid 16 cents dividend per Class A share. That amounts to less than 1% dividend per share.

WD40 is talking 30$ to 40% dividends over the current take home. Where are those 30% to 40% dividends coming from.

Based on the information presented here the prospective investors are proposing to pay 166% over recent market price for the Balzac plant and then, according to WD40, promise 10, 20, even 40 times the going industry profit to prospective investors.

It is my view that it would have been irresponsible for the government to put money into the investment as herein described.

[rkaiser]

Thanks for the response MGMT. I have to say that both of the number systems you offer are from the Kool Aid side of the books and if these are the numbers that ABP is using to convince their members to vote against public money going to finance the Balzac plant, I understand. Understanding however, does not mean agreement. If you would like to see some true numbers, email me personally at kaiser.randy@gmail.com. I am in confidence agreements with a number of groups and can't even share everything with you, but will try if your interests are anything but maintaining the present oligopoly status quo.

[MGMT]

This is a private venture you have proposed. And as such I wish these venture capitalists well. The roadsides are littered with failed packing plant proposals and ventures. And no doubt the government has already poured taxpayer dollars into the proposal through ALMA, possibly AVAC.

I am not with ABP but read the minutes which are also public information. To my knowledge there has never been a vote as you describe.

Is Sunterra Beef Ltd. the present owner of the Balzac livestock processing facility? Are they the ones who will pocket $8 Million profit if the government backs the proposal you describe? Is this just a way for the government to cut Sunterra a cheque? I think these are valid questions that need to be answered.

There is no KOOL AID side of financial records filed with the SEC and other financial regulators. The numbers I presented are from audited financial statements. The days of playing games with financial statements disappeared with Enron and the subsequent jail sentences for those involved. And even in the days of Enron the criminal intent was to make the financial statements appear better than they were to attract investors and inflate share value. No one would deliberately make their books look worse than the actual reality. Tyson makes a lot of money, just not very much money from a single animal.

[rkaiser]

The numbers are your reality only MGMT. And for me to disclose numbers that we have been dealing with would be unethical. That is the difference between reading minutes and documents and actually doing business. However, your numbers and your fear are the key to keeping everything status quo.

Yes there was a vote. Ask the two members of ABP who sat at the meeting last spring. I think that Dave Solverson was one of them.

As far as this project being private, you must not read much of my drivel. We are working on a producer ownership model that would put every producer in a position of choice to participate or follow the fear that you and some of the ABP boys and girls are backing.

There is and always has been money in the packing industry - period. Taking the product outside of the conventional North American marketing system makes it even more so.

As for the numbers that you are promoting about Tyson foods; we all know that good business involves the moving of cash and books around to suit taxes and media. Your Enron example is a joke --- sorry. How well do you think Tyson foods is doing in the real estate market for instance. Same thing could happen at Balzac - maybe even better and guess who would benefit in this case. Producer owners methinks.

Yes the Sunterra boys will cash in. That is what happens when you take a chance, be it ethical or not so ethical; which I agree is the case with Sunterrra. The numbers that you have presented on the balzac plant are the ones that are out the most and even if they were right, the plant is still a 60 million dollar plus facility sitting on a very valuable piece of real estate.

[MGMT]

I have no problem with millionaires who happen to be producers investing in the Balzac plant. It is their money which they are risking. I hope they do well.

I have a problem with the government giving their millionaire friends (not that I think Rkaiser is a millionaire) millions of taxpayer dollars, either through grants or loan guarantees which never get paid back. And then the venture still fails or else the hand is out to the government for even more money.

I am not with ABP and I know my way around a business deal. I have offered solid facts which apparently may be inconvenient yet are irrefutable.

Google Smithfield Foods Annual reports. Smithfield lost money two of the last three years. Is that KOOL Aid enouigh for you? The packing plant business is a high volume, low margin business. That is the competitive environment any upstart venture will have to survive in.

If this group had a solid business plan they would not require government money.

And it doesn't help that the government money would appear to be earmarked to pay friends of the government what amounts to more than fair real market value for the plant.

Keep the government money out of this. Please.

[rkaiser]

Don't really have too many expectations for grant money bud, most of it has been used up supporting those poor packers who you say are not making anything...LOL

A loan is not the same as a grant. We asking for a loan and maybe afterward, try to get some of the same money that is supporting those other poor packers.

Once again, the group I am involved with is looking to help any rancher who chooses to take part. This is not the same as the first time round with the Ranchers Beef investors.

Do you happen to have an FCC loan, or any other type of ag loan sir? Did your neighbors try to stop FCC or any other lender from giving it to you because of their personal belief in your impending failure or business plan?

That is basically what you are talking about here is it not?

[smcgrath76]

Question...
A producer plant has a couple of options
as I see it.
1. Plant operates at breakeven and value
is accrued to owners of the cattle
2. Plant is operated at profit and value
is accrued to shareholders of the plant
3. a mixed combination of the two.

Is the Balzac approach leaning towards
breakeven operations with producer(s)
doing the marketing, or is the plant
leaning towards marketing the product as
well.
In this case a producer would be a
shareholder and thus accrue value, but
the methodology matters...

[wd40]

What you don't know MGMT is what you'd know if you were on the inside of a packing plant looking out. Our 20 year vetran consultant in Cargils HO Kansas made it clear that they WILL NOT make any major capital investment unless they can pay it of in 3 to 4 yrs. Our 25 yr. vetran consultant sitting under the arm pit of Bob Peterson (Iowa Beef Packers) (pre Tyson) defended their books to the USDA back in the 80's and IBP had a 33% return AFTER TAX. So like i said until you've been on the indside and watched their creative book keeping yoou don't know squat around their "business deals"!

[burnt]

Aw surely the packers wouldn't cook the books, would they? WD40, you don't think they made a few extra bucks when we were practically giving them our cattle after May 20, 2003, with no change in the retail price?

Poor, poor packers - let's pass the hat for them.

[wd40]

MGMT - you have "hostage syndrome" you've married you captors.
Here's some numbers for your poor packers.

If you had bought 100 shares in IBP in August 1968
Sep 28, 1968 split 2 - 1
Nov 15, 1978 split 4 - 1
April 15, 83 split 2 - 1
April 15, 85 split 5 - 2
April 15, 86 split 2 - 1
April 15, 87 split 3 - 2
April 15, 91 split 2 - 1
Feb 15, 97 split 3 for 2,

In 2004 you'd have 36,000 shares worth $855,000. Better fire your broker and hire another one.

[rkaiser]

Sorry Sean.... your question will be answered when we reach the next step. I am personally always leaning toward producer ownership through the levy but how much ownership will be up to the board of directors that settles out of all the dust we are kicking up.

As for profits. I would like to see a significant portion destined to the next plant and the next one after that. If Cargill or the boys decide to bail LOL like ABP is thinking, we could buy them out at a fire sale price, or my preference, build more plants and let the old shit rot.