The CWB (formerly the Canadian Wheat Board) is charging ahead with its plan to have assets and business in place to be self-sufficient by August 2017, acquiring a Saskatchewan elevator company.
The CWB has agreed to pay $43.2 million for Prairie West Terminal Ltd. (PWT), a west-central Saskatchewan company with a total of five elevators and 78,000 tonnes of storage capacity.
Dayna Spiring, CWB's chief strategy officer and general counsel, said this purchase is another example of the new CWB's commitment to establish the former Crown corporation as a viable, self-sufficient operation by 2017.
In the past month, the CWB has announced construction of two terminals -- one near Portage la Prairie, the other near Saskatoon -- for a total of 41,200 tonnes of storage at a capital cost of about $35 million.
The PWT acquisition and the two new terminals will be financed with retained earnings and commercial borrowing.
After federal legislation was passed in 2012 ending the wheat board's monopoly on the marketing of Prairie grain on Aug. 1, 2012, it was given a five-year window, along with a $349-million cushion to deal with liabilities and obligations, to become economically self-sufficient. CWB officials say the Winnipeg institution is well on its way to that goal and intends to get there quicker than its mandated deadline.
"Back on Aug. 1, 2012, people would have given us a 50-50 chance at survival," Spiring said. "This (the PWT acquisition) is part of the strategy. We are building a network. We are going to privatize, and we intend to do it far ahead of the legislative timetable that the federal government put out there."
The deal requires approval of PWT's shareholders and is expected to close by mid-June. The company is widely held, mostly by Saskatchewan farmers.
Chad Campbell, PWT's chief executive officer, said it's big news for the company, which he said has been somewhat of a Cinderella story, starting as a joint venture in 1998 with just one location and only 10 employees.
For the year ending Jan. 31, 2014, PWT had $69.8 million in revenue, shipping more than 200,000 tonnes of grain. It now has about 30 employees, all of whom are expected to keep their positions.
The CWB already owns about 12 per cent of PWT after it acquired a block of shares in January that had been held by a private-equity firm.
PWT's board of directors has endorsed the deal.
In addition to two new country elevators and PWT's five Saskatchewan locations, in the last several months the CWB has also acquired terminals in Thunder Bay and Trois-Rivières and is about to take receipt of two lake freighters.
After drastically downsizing in 2012 from about 400 to 100 at its Winnipeg head office, staffing at the CWB is now up to 180.