Creditors of Saskatchewan’s largest hog production company will get the chance to vote on a compromise proposal early next month in Saskatoon.
Ernst and Young, acting as the court-appointed monitor for Big Sky Farms and affiliated companies since the hog firm entered creditor protection in November, has called a meeting of the company’s affected creditors for Monday, Feb. 8 at 10 a.m. CST at the Holiday Inn Express, 315 Idylwyld Dr. N., in Saskatoon.
Secured creditors of Humboldt-based Big Sky as of Dec. 11 are listed as being owed about $81.2 million, including $71.2 million on its senior credit facility with a number of major banks. Unsecured creditors as of Dec. 11 were listed as being owed about $22.4 million, in amounts ranging from one to seven figures.
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In a Dec. 28 letter from Ernst and Young senior vice-president Kevin Brennan to Big Sky CEO Casey Smit, posted on Ernst and Young’s Big Sky web page, Brennan reported that unsecured creditors’ total claims were about $32.5 million.
Under the terms of the plan, an unsecured creditor with a proven claim of less than $4,000 could opt for a cash payment equal to 99 per cent of the proven claim. Unsecured creditors with proven claims over $4,000 could opt to get either $3,960 cash each or 10 per cent of the value of the proven claim.
In all, Brennan wrote, unsecured creditors’ total estimated recovery under the proposed plan of arrangement would work out to about 14.7 per cent.
But if Big Sky were instead forced into bankruptcy, Brennan wrote to Smit, costs due to other obligations such as terminating contracts and terminating employees would “further serve to dilute the recovery to unsecured creditors.”
Thus, in Ernst and Young’s view, Brennan wrote, “unsecured creditors would be significantly better off” if they vote to accept the company’s plan of arrangement and reorganization.
Manitoba sale planned
Lawyers for Big Sky are also expected to be in Court of Queen’s Bench in Saskatoon on Tuesday (Jan. 5) applying before Justice Neil Gabrielson to approve the sale of Big Sky’s farrow-to-finish operation at Treherne, Man.
The buyer, Porcherie Lac du Onze Ltee. of Notre Dame de Lourdes, Man., is offering $600,000 for the barns, land, mill, bins and other assets at the facility.
Big Sky’s facility at Treherne, about 65 km southwest of Portage la Prairie, was built in 1995 with capacity for 600 sows. The company “depopulated” the site in September 2009 and it remains vacant, according to a Dec. 29 report from Brennan to Gabrielson.
According to Brennan’s report, the Treherne site was listed effective Aug. 31 at an asking price of $990,000. After multiple inquiries and five site tours, the agent has seen “no other offers.”
Porcherie Lac du Onze’s offer, in the agent’s view, “is reasonable given the condition of the Treherne facility, the timing of the sale and the state of the market,” Brennan wrote.
