Winnipeg, Manitoba-based farm equipment manufacturer Buhler Industries is reporting progress on finding a new long-term investor.
The company that employs around 800 people building Versatile tractors and Farm King equipment announced in July that it had hired Toronto-based Origin Merchant Partners to find an investor who is committed to “preserving the legacy of the iconic Versatile and Farm King brands.”
As part of its Nov. 14 third quarter earnings report, Buhler said it has “advanced this process.” Citing this progress, the company says its lenders have agreed to extend the maturity date of its credit facility from October 31, 2023 to December 4, 2023 to allow for more time to complete the search for a new investor.
Buhler has not publicly stated whether it’s looking to sell a minority or majority ownership stake, but the investor search is viewed as a possible sign that Buhler’s Russian owners are looking to divest, as geopolitical tension has become entrenched with Canada’s strong opposition to Russia’s ongoing war against Ukraine.
Russian farm equipment-maker Rostselmash has been a majority owner of Buhler since 2007, and has held a 96.7 per cent stake in the company since late 2021, with the remaining shares trading on the TSX.
Some other companies in Canada with ties to Russia have faced sanctions since the invasion of Ukraine in February 2022, but Buhler’s Russian owners have not been named on any of the Canadian government’s sanctions lists.
While he remains the president of Rostselmash and the leader of a political party in Russia, Konstantin Babkin was dropped from Buhler’s board of directors in March 2022 after making public comments in support of Russia’s actions in Ukraine, and his comments were denounced by Buhler’s North American executive team.
Babkin’s fellow Rostselmash owners Yuri Ryazanov and Dmitry Udras are still on Buhler’s board, with Ryazanov currently listed as Buhler’s CEO.
According to financial statements, Buhler’s financing agreement with its lenders is conditional on the company, its executives, and employees remaining unsanctioned.
While intellectual property has been shared with Rostselmash, Buhler reports it has never paid dividends to its majority owner in Russia.
Meanwhile, Rostselmash is planning to complete construction and ramp up production at a new tractor manufacturing plant in Rostov-on-Don, Russia — less than 100km from the Ukraine border — in the fourth quarter of 2023.
Buhler says it intends to provide a further update on the search for a new investor on or before December 4.
The company reported net income of $18.8 million for the first nine months of 2023, compared to a net loss of $1.1 million for the same period in 2022. Buhler said it still has a large backlog of sales and continues to see strong demand for agricultural machinery.