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Puratone files for bankruptcy protection

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The Puratone Corp., the third largest hog producer in Manitoba, has filed for bankruptcy protection raising alarm bells about a crisis in the hog producing industry in Manitoba.

The Niverville-based operation has about 40 barns, mostly in eastern Manitoba, producing about 500,000 hogs per year.

The company cited a whole series of challenging market conditions that has forced the company into a situation where it has to be restructured. Those conditions include the recent phenomenon of high feed prices brought on by the drought in the U.S. corn belt.

It owes about $92 million and is in breach of its loan covenants. According to court documents, it has lost about $36 million over the past four years.

Puratone has about 300 employees, but a company release said over the past two years the company has eliminated non-core operations and cut staff.

Barns are remaining open and Puratone’s secured creditors, the Bank of Montreal and the Farm Credit Corp. are supporting the action and will continue to fund operations, but industry sources say it is unclear what will happen going forward.

Puratone is owned by a complex structure including many private shareholders.

Puratone’s filing comes the same week that Big Sky, Saskatchewan’s largest hog producer and the second largest in the country, was placed into receivership after having gone through its own restructuring three years ago. It owes its creditors about $69 million.

Hog producers in Manitoba have been beating the drum about severe losses for some time now.

Spokesmen for Manitoba Pork Council say Manitoba’s producers are in line to lose as much as $150 million this winter.

They say hog producers are losing at least $20 per head with no relief in sight at least until next summer when futures prices are already being pegged at about $20 per head higher than they are today.

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Updated on Thursday, September 13, 2012 at 4:03 PM CDT: Removed image unrelated to the story.

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