What if Receiver comes in on Sask Pool

[rain]

http://www.hursh.ca

Farmers Worry About Grain in Sask Pool Condo Storage
Officials with the Canadian Grain Commission and the Canadian Wheat Board are being peppered with calls regarding grain that farmers have in condo storage in Saskatchewan Wheat Pool facilities. A large amount of grain is in condominium storage and it does not have the same protection as grain actually delivered into the system. For instance, the licencing and bonding provisions of the Canadian Grain Commission do not apply to grain in condo storage. What can producers do? Well, they can take re-delivery of their grain, although this will mean extra handling and transportation costs. In many cases, they can sell their grain out of condo storage.
On canola, with prices dropping, that may not be an appealing option. Producers can also switch grain in condo storage to primary elevator storage and then it becomes like a regular delivery. However, if a lot of non-board grains are switched to elevator storage, the Pool’s liability will increase and then its bond with the Canadian Grain Commission may become inadequate. While no one wants to create undue concern, farmers may want to investigate their risks if they have grain in condo storage at Sask Pool facilities. I’m Kevin Hursh.

[TOM4CWB]

Larry;

Considering what the CWB Act says in Section 69:

69. Any contract or agreement for the sale, purchase, or transportation of wheat or wheat products in contravention of this Act or of any regulation or order is void.

R.S., c. C-12, s. 43.


"62. (1) Notwithstanding any other statute or law, the Corporation may authorize any person with whom the Corporation enters or has entered into an agreement relating to the handling or receipt of grain for the Corporation, to borrow from any bank on the security of grain delivered to and received by that person, and to give security on that grain...

(2) In case of default by a person described in subsection (1), the bank shall sell or dispose of the grain referred to in that subsection to the Corporation only, and the Corporation shall take delivery on the terms of the agreement from the bank in lieu of that person..."

I cannot see how the CWB could loose a farmer's CWB grain, as long as the CWB Agent is really and actually a CWB Agent! Even if the elevator lied about the Agency status, the CWB still under Section 69 has the right to confiscate the wheat (barley), how in the world have we got to the stage that we are at in this topic?

Is the CWB trying to destroy SWP/Agpro?

Why hasn't the CWB specifically spelled out these legislative rights farmers have under the CWB Act, and reassured our industry that CWB grain is safe from confiscation in case of insolvency or bankruptcy?

Some shareholders and management at SWP/Agpro should sue the pants off the CWB Directors!

Instead the CWB legal staff just tell the directors they cannot comment, thus making SWP/Agpro even deeper in problems with financial stability!

WHy hasn't the CWB clarified these issues?

[TOM4CWB]

Sorry for the delay, Tom.
I wont comment on why the CWB hasn't clarified the condo issue but I do know that the Pool's condo's are treated differently than other grain companies and that you may want to take up with them.

The CGC's answer is that non-board grain stored in Condo is NOT covered by the bond held as security.

I know of farmer owned terminals that set up a separate company to protect the condo holders if the parent company failed.

If i ever need an expert on the Act, I'll be sure to call you Tom! Amazing what you learn when you have a passion for what you believe in!!

[TOM4CWB]

Larry;

Some people snow board, I wheat board!

I had a long night last night, fax fired up, it did the trick too!

Here are some of the CONDO arguments with respect to SWP/Agpro virtual condos:

Farmers do not have any “farmer owned storage” at Agpro. they simply, by paying a sum of money, bought the right to over deliver CWB grains to the Agent, as allowed by Section 24.(3) of the CWB Act. The CWB gave permission and allowed this delivery.

24.(3) The Corporation may, by order, exempt deliveries of grain to an elevator from the requirements of any of paragraphs (1)(a), (c) and (e), but only to the extent that the elevator is owned or leased by a producer.

I note that the CWB Act applies to my SWP/Agpro condo deliveries, that the CWB “MAY” exempt my deliveries from (1)(a),(c) and (e);

Therefore inherent in this clause is the admission that CWB authority over this wheat exists, because....

an exemption would not be required from the CWB.... for which originating CWB Act authority and responsibility did not exist in the first place.

Therefore the CWB gave permission for me to deliver my CWB Wheat in the first event.

Next, Section 112 of the Canada Grain Act protects Condo Primary Elevator Grain Receipts:

CGC Act Section "112. Notwithstanding anything in the Bank Act, no charge on or interest in grain referred to in an elevator receipt that affects the interest of the holder of the receipt may be created by the holder, or by the operator of a licensed elevator who issued the receipt, other than by the endorsement or delivery of the receipt to the person in whose favour the charge or interest is created."

Therefore SWP/Apro have no legal right to put any lien against my Condo stored grain, without my written consent.

With CWB grain, it is even harder for anyone but the farmer who grew the grain originally, or in the second case, the CWB, to own... CWB statutory grades of grain.

#1 and 2CWRS, for instance are only allowed by the CWB Act to be sold to the CWB itself.

Agpro gave me this legal advice, and I may as well pass it along:

"Board Grains

SWP/(AGPRO) does not acquire title of CWB grains when they are delivered to our facility. As a result, SWP's creditors could not claim a security interest in CWB grains even if they are delivered in condo as long as the bin
contains only CWB grains. When grain is delivered on condo it should be designated as board or non-board on the receipt, so it should be a simple
process to determine ownership.

Therefore the board grain condo holders do not have a security issue with SWP's creditors in the event of a filing as
long as the bin contains only board grains."

I actually went and had my grain receipts endorsed with "Canadian Wheat Board Grain" and initialed by the elevator manager.. because Agpro grain receipts don't have CWB grain on them any where.

Hope this helps someone... seek your lawyers advice... if you have any concerns at all!

TRJ

[TOM4CWB]

January 31st, February 01st will be a long long day.

The meeting is not until one oclock

[wedino]

Looks as if it's all over but for the crying!!

SaskPool restructuring plan appears headed for defeat


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By PATRICK BRETHOUR
Friday, January 31, 2003

Calgary — Saskatchewan Wheat Pool's plan to restructure its debt and stave off a cash crunch appears headed for defeat Friday.

That would push the co-operative to the brink of receivership, imperilling a Saskatchewan institution that has served — and been owned by — Prairie farmers since 1924. Canada's second-largest grain company, SaskPool is also the largest single corporate employer in Saskatchewan, with 1,565 workers as of the end of July, 2002.

A committee representing more than 42 per cent of the holders of medium-term notes says it will vote against the restructuring proposal in a meeting scheduled Friday in Regina.

It's a scenario that SaskPool says would leave it in default of its bank credit agreements, would cut it off from further loans and might even push it into insolvency proceedings.

SaskPool's losses have soared over the past two years as back-to-back droughts cut its revenue sharply and hampered its ability to service its debt.

The Regina-based company has been in technical default on its bank loans for much of January, but the co-operative's bankers said they would not take any action so long as the restructuring proposal was approved Friday. SaskPool also missed an interest payment on $300-million of medium-term notes on Jan. 18.

"We would have had to use the banks' money," spokeswoman Dawn Blaus said.

The company has until Feb. 18 to pay the interest, but it will need fresh financing to do so. SaskPool's plan to restructure its debt would deal with the outstanding interest, among other things.

Under that plan, the $300-million in existing medium-term notes would be replaced by an equal amount of new securities, but with a longer period to expiration. In addition, nine million warrants to purchase SaskPool class B shares would be issued to noteholders.

But the committee of dissident medium-term noteholders opposes the plan, partly because it ranks some bank debt ahead of their securities in the event the company becomes insolvent, said Robert Chadwick, a partner at Goodmans LLP in Toronto, which is representing the committee.

Other items of contention include the amount of interest paid on the new notes and SaskPool's power to convert the new securities into equity in 2008 without the noteholders' consent.

Since the proposal requires two-thirds approval, the noteholders represented by the committee have enough voting clout to defeat the measure, a move that could push SaskPool into receivership.

Mr. Chadwick declined to comment on the likelihood of SaskPool seeking protection from creditors, but he said the committee of noteholders wants to reach a "consensual agreement" with the company so it can continue operations. "We want the pool to be successful," he said.

An analyst at Standard & Poor's Corp. in Toronto said SaskPool will likely be forced to seek court protection, and to sell off some of its assets, if the restructuring proposal is defeated Friday. "I don't know if it could continue to operate," said Don Povilaitis, S&P's director of corporate ratings.


© The Globe and Mail