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Community Pork given deadline to fix money woes

Angela Hall

Saskatchewan News Network; Regina Leader-Post

July 21, 2004

REGINA -- Major Western Canadian hog producer Community Pork Ventures is in financial trouble, with lenders giving the company until the end of August to re-organize and improve balance sheets hard hit by difficult years in the pork sector.

The Outlook-based company -- which has 13 pig production sites in Saskatchewan and three in Manitoba -- owed about $38 million to its lenders as of April 20, and its president and board chair have resigned.

Community Pork has entered into a forbearance agreement with five of its lenders, an arrangement that puts the situation at a standstill until Aug. 31.

"The company is carrying on business as usual," said lawyer David McKeague, corporate secretary for Community Pork.

But if the agreement is not extended or dropped by that date, debts owed will become due and assets could be seized, the company said.

The agreement prevents the banks from taking any proceedings against the company in the short-term.

It also gives the barns an opportunity to continue to operate and the chance to demonstrate the financial viability of the operations, McKeague said.

"It's certainly an opportunity for the company to assess how it does business and whether it can be done more efficiently."

McKeague said industry conditions have improved in recent months, which bodes well for the future of Community Pork.

The company, which produces about 250,000 pigs annually, is not the only major operation to experience financial difficulties.

The Saskatchewan Wheat Pool's money-losing hog subsidiary applied for creditor protection under the Companies' Creditors Arrangement Act in April after being put up for sale in March.

The Pool's pork assets were written down by $10.7 million in its second quarter, and the barns sold to a subsidiary of Saskatchewan's Stomp Pork Farm in May.

Don Hrapchuk, general manager of SPI Marketing Group, Saskatchewan's main hog marketing agency, said prices turned around in April after five or six years of losses in the industry, the upswing being driven by demand for pork. Hrapchuk said the key is for prices to remain profitable for an extended period of time.

"Things have been tough and prices during the past two months have been a very welcome relief," Hrapchuk said.

"(But) we need maybe two or three years of profits before (people) can get their head above water."

Richard Wright, president and chair of the Community Pork board of directors, tendered his resignation on July 5. But Wright remains general manager of Quadra Group Partnership, which manages the barns.

Fred Knoedler has been appointed chair, while the president's office remains vacant.

© The StarPhoenix (Saskatoon) 2004

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