An end of an era for the Weyburn Inland Terminal came on Friday, as just under 80 per cent of shareholders voted to accept an offer to sell to Canadian grain company Parrish & Heimbecker for $94.6 million, ending its role as a farmer-owned and operated independent grain terminal.
The results of the vote, which were cast on Friday afternoon at a special shareholders meeting at McKenna Hall, will be presented before a justice of Court of Queen’s Bench today, Mar. 5, in Regina, for final approval.
In the verbal report of the scrutineers to the shareholders meeting, there were a total of 1,017 shareholders represented or 88 per cent, representing 4.84 million shares out of the 5.4 million outstanding shares that exist for WIT.
Of the shares voted, 246 shareholders were present at the special meeting, and 771 voted by proxy; the vote break-down was 79.79 per cent in favour of the sale, and 20.21 per cent against.
Prior to the start of the meeting, all shareholders and proxy holders had to register and get a wrist band to gain entrance to the main hall. At the beginning of the meeting, some questions were raised by representatives of the dissident group of shareholders.
One question, from lawyer Jim Ehmann, pointed out that WIT president Claude Carles had indicated earlier in the week that he was reluctant to chair the meeting, and now he was at the front acting as chair.
Carles refused to elaborate on why he unwilling earlier, indicating that by company bylaws, it fell to him to act as chair for a shareholders meeting.
Another question was raised, by Michael McLeod, about why the scrutineers for the meeting were from the same company hired to solicit proxy votes for WIT, Shorecrest.
According to the consultants hired by the WIT Shareholders Group, this was “unprecedented” in companies where a contentious proxy vote is involved.
Rob Davies, CEO of Weyburn Inland Terminal, gave an address to the shareholders about the sale offer.
“This process has not been quick or easy,” he began, explaining that grain transportation by rail is one of the major challenges the company has to deal with, and share liquidity is another.
Davies noted he’s been involved at the federal level on grain transportation issues, and pointed out this is a difficult issue that has been around for many years.
From the way railways are pushing things right now, he feels single-point shippers like WIT are at a disadvantage over larger companies that can move rail cars around to where they need them most, and this “will affect our ability to be competitive and profitable.”
As Davies added in his explanation, “Size matters” when dealing with the railways.
As to share liquidity, Davies said the two programs that were put in place to promote the trading and selling of shares, the Customer Share Purchase Plan (CSPP) and Dividend Reinvestment Plan (DRIP) worked well for a few years, but they can’t keep up when there are not enough shares available to sell.
He noted that of the shareholders in WIT, 40 per cent were active producers, 30 per cent were retired producers, and the remainder were mostly people who aren’t involved with farming.
The process towards the sale began when the board was asked to consider possible scenarios, and were asked to come back after harvest to discuss what options were available.
The board decided to send out inquiries to nine grain companies about what they thought WIT was worth, and they had responses from six grain companies, with the best offer coming from Parrish & Heimbecker.
As Canada’s second-largest flour miller, P&H has access to port facilities on both the east and west coasts, and are involved with condos for grain storage. At WIT, the grain condos are owned separately by producers who use them for off-farm grain storage.
“The board feels the time is right,” said Davies.
A former CEO of the Terminal, Roy Levee, was the first shareholder to appear at one of the microphones set up for questions, and he responded to a letter from an old friend, Don Olah, which appeared in the Weyburn Review on Feb. 26, asking why Levee had had a change of heart on the issue.
“At the time, that was a business decision,” said Levee, as he truly felt the offer from UGG for a minority stake in WIT was not a good one.
“The price that was bandied about wasn’t very good,” he said. “You compare that with the decision we have today. We have a good price, and a good company who will carry on. As it was a business decision 13 years ago, this is a business decision to support the sale.”
Former director Al Richards spoke to the group, noting that their Regina-area farm has hauled down to WIT since the very beginning, and that he was first elected to the board in 1981, and has served continuously on the board from 1999 until he recently resigned, along with fellow director Dale Mainil.
“WIT has been very successful by finding solutions to our challenges. We now have a strong farm supply business, grain marketing, pelleting, and Vigro; so how is it the board has determined that it’s impossible to operate?” he asked, noting that he and Mainil felt “obliged” to step down from the board in order to bring the issue to light that the board was looking to sell the company.
“We quit the board, not the company. We believe in the strength of the company, the staff and the businesses. Really the question is, does WIT have a future?” asked Richards.
“WIT was not built by the faint-hearted or the weak,” he added, urging of the shareholders, “Take back your company and let’s move forward. There is no ‘P’ or ‘H’ in WIT.”
A shareholder from the Yellow Grass area, Dean McPherson, questioned why the grain transportation issue by rail was brought up as a reason to sell.
“Don’t you think that’s speculative? There are a lot of unknowns with rail transportation,” he said, pointing out WIT was better able to get rail cars for their grain deliveries than either Viterra or Pioneer, the two competing grain terminals.
“It is an industry-wide issue. As an industry, we have a huge issue,” said Davies.
“Clearly what we have today is not working.”
He noted that grain companies have done everything the railways have asked for over the years, including closing small wooden grain elevators and inefficient branch lines, “and nothing has changed.”
Answering criticisms about the decision to sell, Davies pointed out, “The nature of a public company with 1,500 shareholders is they elect a board to study the information and make a decision. It’s unworkable to have 1,500 directors; that’s why a board is elected, and they made a recommendation to the shareholders.”
Dale Mainil, shareholder and former director, said as a dissident shareholder, he was proud to work with the young producers “that have been working hard to keep an independent grain elevator. They’re energetic and youthful, and are the future of farming in the southeast.”
Michael Mainil, shareholder and member of the dissidents group, questioned the offer made by P&H, noting the value of the Terminal in its various facilities, including its stake in the Alliance Grain Terminal in Vancouver.
Davies replied that they went to nine companies and received offers from six of them.
“We established the best value from the information available,” he said, noting the offer of $17.25 a share was a 33 per cent premium to where shares were trading before, and reiterated that the board was comfortable that this was “a strong offer”.
Shareholder Dan Cugnet noted he was going to let his name stand at the annual meeting, if the sale didn’t go through, and was told there were 23 others who also indicated they would let their name stand.
“Why would we sell a company that has engaged so many people?” he asked, going on to question why there was such a lack of information to shareholders about the process or about how or why the sale process all began.
Once the Terminal is sold, he said, “It will never happen again, there will never be another WIT. Ask yourself if you want to give it away.”
Producer and shareholder Brent Kosior commented about share programs like DRIP that they could’ve worked if they had been better promoted by the company. He talked to a number of shareholders who didn’t even know the program existed, and suggested this could’ve partially addressed the issue of liquidity.
Shareholder Justin Brown asked the board, in regard to the challenges facing the Terminal, “Why give up so soon on challenges on the rail service? They’ve had more cars than Pioneer or Viterra, two companies that are very large. I wouldn’t be able to farm if I gave up that easily.”
One of the founding directors of WIT, Don Olah, felt that the offer of $17.25 a share was vastly under-valued, suggesting a more accurate price would be in the $30-range. “I honestly feel you’re giving away. It’s one of the top companies in the province. It was built by farmers, for farmers and run by farmers, and I hope you can keep it that way.”
Following the vote, the board asked for a motion to redact the names from the ballots which are made available for shareholders to view.
The original untouched ballots will be presented today to the court, while shareholders who wished could come in on Monday to view them without the voters’ names on them.