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Financial woes dash hopes for city cheese-making plant

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Pedro Campayo stands in the now-closed factory on Dufferin Avenue.

MIKE DEAL / WINNIPEG FREE PRESS FILES Enlarge Image

Pedro Campayo stands in the now-closed factory on Dufferin Avenue. Photo Store

A new Winnipeg cheese plant that had hoped to make fresh cheese, including some varieties not made anywhere else in Western Canada, is closed and has been placed in receivership.

Whiteshell Dairy Foods was never able to hit its stride after Venezuelan cheese maker, Pedro Campayo, decided to sink around $6 million into a state-of-the-art operation in the former site of the People's Co-op dairy on Dufferin Avenue.

It seems the operation was mired in a number of setbacks.

It's not clear if it ever hit commercial production rates, even though construction was nearing completion in the spring of 2011. A report in the summer of 2012 suggested it was weeks away from opening.

A "Sorry, We're Closed" sign is now in the window of what was originally planned to be a retail walk-up store at the front of the production facility.

In mid-December, PricewaterhouseCoopers was appointed receiver jointly by the Royal Bank of Canada and Farm Credit Corp.

Dave Johnson of PWC said the plant was closed before PWC's engagement.

Earlier this month, the Royal Bank of Canada filed a statement of claim in Manitoba Court of Queen's Bench against the company and its owners for $1.64 million, representing an operating loan, a term loan and a $59,250 Visa loan at 19.99 per cent annual interest rate.

Defendants in the case are the company, Campayo, other members of his family and a Winnipeg investor in the business.

That investor had previously filed a lengthy lawsuit against Campayo, claiming her rights as an investor had been abused.

Campayo's lawyer in that lawsuit, Garry Sinnock, said that matter has not been resolved, but it is a moot point now the company is closed and in receivership.

Johnson said in addition to the secured debt with RBC, the company owes more than $2 million to the Farm Credit Corp.

He said the course of action to be pursued is in the process of being organized.

"We have not yet made a determination," Johnson said. "At some point, we will be putting together a package, and we'll be looking for interested parties. We're just assessing things now after the holiday season."

He said other creditors PWC has become aware of have been notified.

Over the course of the last couple of years, other suppliers have filed statements of claim against Whiteshell including Ambassador Mechanical Corp. for more than $200,000 and Lazer Grant LLP for $70,000.

A spokeswoman for Dairy Farmers of Manitoba, the organization that manages the supply of milk in the province, would not disclose its history with Whiteshell.

Back in 2011, it had allocated a certain amount of milk quota to Whiteshell. Typically, that is a commodity that is hard to come by for new players and at the time was considered an acknowledgement there was a sound business plan in place.

Campayo comes from a cheese-making background in Venezuela where his father had a long-standing cheese-manufacturing operation.

Campayo worked as a technician in the food science department at the University of Manitoba for five years before starting to build Whiteshell Dairy with significant financial assistance from his family.

The failure of the operation was disheartening news in the industry. It was built in a North End neighbourhood that would have benefited from such a commercial enterprise and it was anticipated that the plant would have required about 25 employees when it was fully operational. It is not clear how many people were employed when the plant shut down.

"I thought it was a great idea," said Dave Shambrock, executive director of the Manitoba Food Processors Association. "The specialty food market in general is a real growth area and Whiteshell Dairy really seemed to fit in that niche."

martin.cash@freepress.mb.ca

 

Republished from the Winnipeg Free Press print edition January 14, 2014 B6

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