The Saskatchewan government’s two-year search for a buyer for its cash-losing Thomson Meats plant at Melfort has ended in the company’s head office.
A company led by current Thomson CEO Paul Kowdrysh will pay $246,972.05 for the meat packer and assume all its debt and liabilities, the province announced last week.
“Our role as government is to create a positive economic climate for businesses to succeed, not to be involved in owning private companies,” provincial Agriculture Minister Bob Bjornerud said in a release. “Getting Thomson Meats Ltd. back into the hands of industry is a positive step in that direction.”
The province slowly became Thomson’s owner between 1996 and 2007, investing about $11.9 million through grants, debentures and share purchases by various provincial agencies and programs, the government said last week.
In that time, the province said, Thomson “has not recorded a profit in any year,” nor did the provincial government collect any dividends, nor any repayments on its debentures.
Thomson began in 1960 as a retail butcher shop at Naicam, about 50 km south of Melfort. In 1982 the company opened its new facility at Melfort and had upgraded to a federally inspected meat plant by 1991.
The company expanded rapidly, going public in 1993 on what was then the Alberta Stock Exchange (now part of the TSX Venture Exchange) as it began shipping meat products throughout Western Canada and the northern territories and sought to expand into markets overseas.
But despite expansion in 1995, heavy debt and underwhelming sales soon jeopardized the company and by 1998 the province had become the company’s majority owner. Agricultural Credit Corp. of Saskatchewan (ACS) owned 100 per cent of the company before last week’s announced sale.
Thomson, which still processes its own brand and lines of meats, expanded its plant again in 2006 and launched the Saskatchewan Toll Processing Centre, which provides processing services to companies and groups aiming to bring meat products into federally regulated markets.
Kowdrysh was hired as the company’s new CEO in 2007, at which time the Saskatchewan ag ministry touted his skills as a “turnaround specialist” in helping organizations build profitable ventures.
ACS, in its annual report to government in April, said it received a letter of intent in March to buy its unnamed “wholly owned subsidiary” and would write down its net investment to the net recoverable amount. ACS in the same report booked an overall write-down of assets of $2.075 million.
Bjornerud said last week he’s “optimistic that returning this business to private hands will improve its profitability in the future.”