No sale consummated for assets of Merit Functional Foods Corp.

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This article was published 09/05/2023 (1228 days ago), so information in it may no longer be current.

The previously scheduled sales process for the assets of Merit Functional Foods Corp., which was placed in receivership on March 1, has come and gone and no sale has been consummated.

Burcon NutraScience Corp., which had owned 31.6 per cent of Merit when it was placed in receivership March 1, has disclosed that an offer to purchase by an undisclosed participant in the plant protein industry that Burcon participated in was rejected by the receiver.

PriceWaterhouseCoopers (PWC), Merit’s court-appointed receiver, had set April 21 as the deadline for bids to be submitted.

Paul Lam, a spokesperson for Vancouver-based Burcon, said “The entire process is confidential” and could not disclose any further information.

However Burcon, which is a publicly listed company whose shares trade on the TSX, has stated that it “continues to work with additional industry participants, who have expressed an interest in jointly acquiring Merit’s assets.”

The PWC partner in charge of the receivership as well as one of the founders of Merit were not available for comment.

In a public release from Burcon, it indicated that interested industry participants need additional time beyond the receiver’s bid submission deadline to complete their due diligence.

There has not been any public disclosure that the sale process timeline has been extended, but a Burcon statement said that it “believes that alternative competitive bids may still be accepted by the receiver under the sales process.”

At the end of last year Burcon, which was formed in 1999 with the acquisition of the Winnipeg company BMW Canada (Burcon continue to maintain a research and development operation in Winnipeg), had a total net investment in Merit of $16.4 million.

PWC’s sales process materials indicated that more than $200 million had been invested in Merit’s 94,000-square-foot plant protein production facility just north of Inkster Boulevard on Route 90.

The company was forced into receivership after about a year of both production delays as well as customer delays in pursuing new consumer products that were to include Merit’s highly regarded pea and canola proteins because of market disruptions caused by the pandemic.

The plant opened in 2021 amid much fanfare and significant hype about the potential for the plant protein market.

The company was producing protein from pea and canola — the only plant in the world commercially producing canola protein — and there was such strong anticipation in its products that Merit formed a strategic partnership with Nestle, the international food company, a full year before the plant opened to help Nestle develop “nutritious and great-tasting plant-based meat and dairy alternatives with a favourable environmental footprint.”

Last August, Merit retained Suisse Securities Canada to find strategic investors in the company but that process was unsuccessful.

As of March 1, Merit had secured debt of $58.6 million to Export Development Canada, $36.4 million to Farm Credit Canada, $5 million to CIBC and unsecured debt to trade and other creditors of $2.4 million.

On Monday, Burcon closed a private placement of $3.3 million.

Kim Underwood, Burcon’s CEO, said in a prepared statement that, “The funding is expected to provide sufficient runway to execute our Burcon 2.0 strategies. In addition to the Merit opportunity, we firmly believe there are multiple paths to market, some of which we are already exploring.”

martin.cash@freepress.mb.ca