By STEPHAN BURNETT, Weyburn Review Editor
The Weyburn Inland Terminal shareholders decided not to pursue a strategic-equity alliance on Thursday.
After a review of the issue including a question-and-answer session, a vote was held. The vote results were 508,902 shares - 63 per cent - opposed to negotiating an equity-voting strategic alliance with 295,190 shares - 37 per cent - voting in favour.
After speculation that the balance of the vote laid within the hands of a few concentrated shareholders, individual and small shareholders came out in force last Thursday to ensure talks of selling 40 per cent of the shares to UGG did not go forward.
Approximately 600 shareholders packed McKenna Hall to debate the possibility of allaying with a major grain-handling company.
The meeting was actually less antagonistic than most had expected after the guidelines were laid out for the meeting in a no-nonsense manner by local lawyer and meeting moderator Greg Bobbitt. Even though there were no fisticuffs, the debate was active.
In an outline provided by corporate counsel Rob Pletch, shareholders were told pulling out of the potential arrangement with UGG could cost the company a $500,000 penalty.
The directors then individually came to the centre stage to announce where they stood. WIT secretary treasurer Ben Kuzmicz detailed how he had been the secretary treasurer for WIT for the last 22-23 years, Kuzmicz went through the history of the company - how it had almost gone broke twice - how it had taken them 15 years to make money. Kuzmicz outlined how his talks with senior individuals in the agriculture industry has led him to believe the Canadian Wheat Board will go through major changes over the next few years.
"I'm a farmer and I need a tractor but I can't build one, if you can, good, but I can't," said Kuzmicz later in the meeting; attempting to illustrate through a metaphor how he believes the farming industry is about to change.
Alfred Bechard the first president and CEO of WIT agreed with Kuzmicz.
Bechard said when WIT was first thought up, the competition was old and using antiquated elevators.
"But now the competition has greatly changed," said Bechard. "WIT doesn't have the marketing skill or the financial resources to compete)."
But not all the directors were for the alliance proposal.
John Van Stavern spoke against.
"I see it as a sell-out," said Van Stavern. "With equity votes the alliance partners will have a veto right. By selling close to half we'll have a serious loss of control."
Claude Carles also spoke against any talk of alliance.
"Give you head a shake and take another look," was Carles' summation after outlining the innovative and independent aspects of WIT. "We believe we should remain independent. There's a lot of uncertainty surrounding the future of the CWB with the Con Agras, the ADMs and the Cargills being at the forefront. It has even been said that we may not survive but we must not forget where we came from. The CWB changes present a significant challenge but they also present an opportunity," he said.
Carles also outlined how WIT had won the CWB's Quality-First Award for two years running, which is awarded to the company that provides the best level of service supplying the CWB's American customers.
"A loss of independent control would equal a loss of corporate control," added Carles.
After the question and answer session several speakers came to the microphones, the vast majority of whom were against any talk of alliance.
Dan Sidloski was one of the farmer-shareholders opposed to the alliance.
"Even if only 25 per cent of the shares were sold, control of the company would be lost," said Sidloski adding that typically, only 25 to 35 per cent of the voting shares are cast at a typical shareholders' meeting. "We had a UGG right here in town and I have nothing against UGG, they're a good company, but the reason why WIT is innovative is because of its independence. If you sell 40 per cent of the company, where does 40 per cent of the after-tax profit go?"
Sidloski also agreed with speculation that the $30- to $35-per-share offer was driven by merger talks and at the same time, he pointed out those who wanted to sell shares at the $30 to $35 level would be able to garner their purchase price within the next few years without having to sell 40 per cent of the company.
Later in the meeting one of the founding shareholders, Art Mainil, took exception with the possibility of having to pay the $500,000 to UGG, as outlined at the start of the meeting by corporate counsel Rob Pletch. Other shareholders addressing the meeting said the directors of WIT should have been red flagged when the $500,000 penalty first came up.
Mainil concurred with an earlier speaker who noted most of the directors in favour of selling were older while directors in favour of keeping the terminal independent were younger.
Mainil also agreed with earlier statements made by many shareholders that other terminals which had entered into agreements with major grain-handling companies were unhappy with their present circumstances. Mainil also disagreed with present CEO and president Norm Flaten that Archer Daniels Midland (UGG's minority-share partner) might be interested in becoming involved in value-added processing in the Weyburn area,
"ADM won't be thinking about WIT shareholders they're much too big for that," said Mainil.
But Bechard countered that although he respected Mainil for being one of the founders of the company, he took issue with Mainil's assertion that the older directors were afraid of the future.
"I'm not afraid of the future, I'm out there with my family, with my son and his family, expanding our farm," said Bechard.
Even though by the end of the meeting every one of the 600 shareholders attending understood the rationale behind the pro-alliance logic, it was Carles, Van Stavern, Sidloski and Mainil who carried the day.
In an information release on Thursday night, Norm Flaten, current president and CEO states the WIT board now has direction from its shareholders and will be acting accordingly.
"As the company progresses into the future, the board and management expect to continue to provide the dedication to excellence that has always been the focus of WIT's business operations. WIT will maintain a high level of service to its customers and shareholders as the company continues to be an innovative, progressive force in the Canadian grain industry," said Flaten.
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