SASK Pool

[rain]

Am I hearing correctly, are they still a company?

[rodbradshaw]

On the six o'clock news tonight they said that the bond holders had accepted a revised offer so Sask Pool will survive another day.

[wedino]

Looks like they pulled it off!!

Reuters
SaskPool noteholders approve debt plan
Tuesday February 4, 6:21 pm ET


REGINA, Saskatchewan, Feb 4 (Reuters) - Saskatchewan Wheat Pool (Toronto:SWPb.TO - News) noteholders have voted to approve the company's revised debt-restructuring plan, the company said on Tuesday.
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Canada's No. 2 grain handler postponed the vote from Friday after proxy votes indicated its original plan to restructure C$300 million ($197 million) in debt would be rejected.

But it developed revisions over the weekend with its bankers and a key group of noteholders that include higher interest rates and the ability to convert notes into a larger number of warrants for shares.

Despite being in default on bank loans, the company had earlier said its banks had agreed to reinstate credit facilities pending approval of the plan from noteholders on Tuesday.

As part of the new plan, more than 100 farmer-delegates representing class A voting shareholders must approve at least four new independent directors to the company's board -- a shift in governance for the 78-year-old farmer-run company.

SaskPool is more than C$500 million ($329 million) in debt, the legacy of a highly leveraged attempt at international expansion under previous management in the mid-1990s.

The company has also faced two years of drought on the Prairies, sharply reducing revenues.

($1=$1.52 Canadian)

[smcgrath76]

My non investment adviser read on the issue from an email I sent to a friend…

It is interesting that most of the challenges SWP faces are self created. Perhaps they were undercapitalised before the IPO, however it appears as though the extra capital they obtained by going public only encouraged them to expand too rapidly. The end result was more money but significant overextension of the company and an even more severe undercapitalization problem. All of this was done as a trade off with declining customer loyalty.

They were in such a precarious position, that a couple of years of reduced volumes and they were in big trouble. I for one, doubt that they will survive, and if they do are at least 15 years (that’s generous) from being a profitable company, but probably more like 25 years.

The Moral: Companies that don’t have a strong mission statement, and an understanding of their business and their goals are a poor investment. Keep your eyes open though, because if they make it past the stage of the brink of bankruptcy, their cash and assets may outweigh their debt and share price combined and they could be a good buy (Eg: if you buy shares at $0.25 per share and they go tits up, the sale of assets may cover the debt and return $0.50 per share.) As well, there may be some spin off investment opportunities such as CanOat.

[TOM4CWB]

Agriweek had an interesting comment on this issue;

"The Saskatchewan Wheat Pool is not alone. Farmland Industries, the giant U.S. co-op which is in everything from fertilizer to bacon, has been in Chapter 11 bankruptcy protection for a year. Another U.S. co-op that never seems to be far from trouble is Land O'Lakes, which would have lost money last year on $5.8 billion in sales had it not been for a windfall legal settlement. Land O'Lakes is one of the biggest dairy processors and pork packers in the U.S. but it can't seem to make real money and its debts top $1 billion. Cenex Harvest States, another big co-op primarily in petroleum and fertilizer, is selling preferred shares to the public to finance itself."

So the whole issue of New Generation Co-operatives is forefront and centre in this issue.

THe CWB is no different at all... the real experenced business smart CWB appointed directors... left the starship... they can see a Columbia type disaster in the making.