Legumex Walker Inc.’s shareholders have voted in favour of selling the company’s special crops business to The Scoular Company and to subsequently liquidate and dissolve LWI.
Over 99 percent of the votes counted on Monday morning were in favour of selling the special crops division, while 90 percent said “yes” to winding down the company at a time to be decided by the board of directors.
As reported here, LWI plans to sell its business processing pulses and special crops to Scoular for C$94 million plus the amount of net working capital at closing. The sale, which includes more than a dozen handling and processing facilities in Manitoba, Saskatchewan, Minnesota and North Dakota, is now expected to be complete by November 30, 2015.
Before winding down, LWI must also divest its 84 percent ownership stake in Pacific Coast Canola LLC, which owns a struggling canola crush plant in Washington. LWI says “terms have been agreed to in principle with the prospective acquirers,” although the company does not expect to receive any value from the sale. Glencore holds the other 16 percent stake in PCC.
So why is LWI, which was formed through the merger of Roy Legumex and Walker Seeds in 2011, going out of business?
In a memo to shareholders in mid-October, the company said the sale came about in trying to address several structural challenges, including “the declining contribution of Pacific Coast Canola LLC to the company’s gross profit, the high leverage of the Special Crops Division and PCC, and the significant recurring costs of the company’s reporting obligations, governance structure, and listing on the TSX.”
“The timing of that determination coincided with a growing concern that additional scale and size may be required by each of the Company’s two divisions to realize various business opportunities in the future. In addition, continued depressed margins in the North American canola industry were expected to require funding…”
LWI shareholders are expected to receive $1.69-1.98 per share, a decrease from earlier projections of $2.50-$2.75 per share after a $4.4 million increase in required debt repayment.
Headquartered in Omaha, Nebraska, Scoular had nearly $6 billion in sales in 2014, employing more than 850 people at over 90 facilities around the world.