The Weyburn Inland Terminal has entered "exploration talks" of a possible partnership with United Grain Growers, WIT shareholders were told at their annual meeting on Thursday afternoon.
Also at the annual meeting, a vote approved a special resolution to split the stocks of WIT by a factor of 10 to one.
Interim president and CEO Norm Flaten said talks have been ongoing with UGG to explore partnership options. In turn, UGG has a partnership with a major U.S. grain company, Archer Daniels Midland.
"If we do come up with a proposal that's mutually acceptable to both committees, they will have to convince the board of directors of UGG and of WIT of the advantages," said Flaten. "If this has possible potential it'll have to go before the shareholders of WIT in a special meeting. It's not something that can be done by the executive committee or board of directors."
The interim president assured shareholders no decision of any partnership has been made as yet, as talks are only in the discussion stage.
"At this time it's strictly exploration, a matter of discussion. They obviously have a major partner in ADM, a major American grain corporation, and there could be advantages to that," said Flaten.
Flaten adds the two parties have a confidentiality agreement in place about the terms of the discussions.
He was questioned about what benefits there would be to WIT through such an association, and was told this might decrease competition in the area if the company went in with UGG.
"As a producer, I can't see any benefits to keeping one more competitor out of the market. It would be to our benefit to have UGG locate on the other side of town, as a producer," said a shareholder.
Flaten pointed out that WIT was established with the aim of promoting strong competition, not discouraging it.
"If WIT, through a decision of the shareholders of both WIT and UGG, does decide to merge, there will be some reduced competition in the immediate area. But if we aren't providing adequate service, someone else will move in to compete. I don't think there'll be any shortage of competition with the high-throughput elevators being put in," said Flaten.
A benefit for the producers in the Weyburn area would be improved access to U.S. ports through or ADM, which is UGG's American partner, he added. Currently WIT has an agreement with Cargill for sending grain to export terminals.
"We may or may not come up with some kind of alliance or working agreement. It's very up in the air at the moment," Flaten later said in an interview.
In the vote to split the stock, meanwhile, all three classes of shares represented at the annual meeting voted overwhelmingly in favor of the move. In the vote, 1582 Class A shares or 86 per cent were in favor; 398 Class B or 100 per cent; and 24,941 Class C (common) shares, or 94.5 per cent, were in favor. In order for the resolution to pass, all three share classes had to approve it by a two-thirds majority.
The split means a share worth $100 will now be 10 shares at $10 each. The shareholders were assured in a question-and-answer period that the values of the shares will not be diluted at all through this split.
The board members explained part of the rationale for the split was to make the shares more accessible to more producers or others who may want to invest in the company. This move won't mean more stocks will be issued, but will help make it easier to divide up shares within a family than it was before.
Another reason, said secretary-treasurer Ben Kuzmicz, was the board felt the WIT's shares have been vastly under-valued in comparison with other grain companies' shares.
He said WIT shares trade, on average, about three-and-a-half times their worth, while UGG shares trade on the market 14 to 18 times their value, and Sask. Wheat Pool shares go for 12 to 14 times their value.
The split will "make liquidity and share trading easier, so if anyone wants to split up their shares in a family it's easier to do it," said Kuzmicz, adding this plan will also allow WIT employees to buy shares in the company.
Asked by a shareholder who the company is trying to attract with this move, Kuzmicz replied that more producers in the area should be stepping up to buy shares.
"My question is why aren't more farmers buying it? It just blows my mind we're not buying our own shares at three-and-a-half times their value. It's really an anomaly. If you have a quarter section trading at $60,000, and next door there's one for $15,000, you would go and buy (the lower-priced one)," he said.
Kuzmicz added later that if WIT doesn't make this move to help increase the value of their shares, they will be ripe for a take-over.
"The way we're so widely held I think we're a perfect target for a take-over. Maybe this will help with an increase in the prices of shares. Right now I think we're living in a fool's paradise. You can put poison pills out till hell won't have it, but you can't stop somebody from buying your shares," said Kuzmicz.
In another move by the WIT board, approved by the newly-elected board on Saturday morning, the terminal will be hiring a full-time professional manager who will act as the vice-president of operations. The manager will not be chosen from the board, but will come from the grain industry.
The board of directors will still elect the President and Chief Executive Officer. The new President/CEO, Norm Flaten, was chosen by the board on Saturday morning at a special meeting. The chairman of the board is Bill Watson, the corporate vice-president is Ed Douglas, and the secretary-treasurer continues to be Ben Kuzmicz.
The board of directors, elected by ballot on Thursday afternoon, includes Ed Douglas of McTaggart, Norm Flaten of Weyburn, John van Staveren of Creelman, Dale Slimmon of Heward, Claude Carles of Radville, Trevor Dammann of Griffin, Bill Watson of Yellow Grass, Ken Fortner of McTaggart and Ben Kuzmicz of Candiac, all returned for another term, and newcomers John Allan of Corning and Alfred Bechard of Sedley.
Shareholders were also told that their Gladmar terminal will remain open, despite the closure of the Bromhead subdivision rail line. The line was originally going to shut down as of mid-April, but the line will now be open until around the end of July.
"One reason we're staying open is not in spite of the rail line closure, but because of the rail line closure. There may be an opportunity there in the short term at least," said Flaten.
In order for this terminal to be viable once the railway is gone, he said, the terminal will have to provide the services that will attract producers and their business.
In a vote on a resolution from the floor, the shareholders took an official stance in opposition to the Canadian Wheat Board Bill C-4.
The bill, which is under review by the Senate right now, will establish a partially-elected board of directors to oversee the Wheat Board, and provides a framework for the inclusion or exclusion of grains from the board's monopoly.
Many producers commented in the discussion that the Weyburn Inland Terminal has had good success with the Wheat Board in its current state, and didn't see how these changes would improve on that at all. Approximately 95 per cent of the grains handled by the terminal are Wheat Board grains.
"I don't think we'd be opposing the Canadian Wheat Board, we'd be opposing Ralph Goodale's changes. Only the Sask. Wheat Pool is supporting it," said one producer.
"We were doing well with the Wheat Board as it was and I don't see us supporting Bill C-4," added another.
In a vote taken by a show of hands, the producers voted in favor of the resolution opposing the bill by a margin of about 29-7.
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