* Maple Leaf Foods, Olymel eyeing Big Sky - receiver
* Puratone court protection extended; buyers interested
By Rod Nickel
WINNIPEG, Manitoba, Oct 12 Two Canadian pork
processors are among those expressing interest in Canada's
second-biggest hog producer, Big Sky Farms, which is looking for
new ownership after soaring feed costs left it unable to pay its
Big Sky, which produces about 1 million pigs per year and is
based near Humboldt, Saskatchewan, entered receivership in early
September. Manitoba-based hog producer Puratone Corporation is
also up for sale, after entering court protection from creditors
Both Toronto-based Maple Leaf Foods and
Quebec-based Olymel L.P. are sizing up Big Sky, said Kevin
Brennan, senior vice-president at Ernst & Young, the receiver
for Big Sky. Big Sky is already a supplier to those companies'
Some packers outside Canada are also interested, he said.
"There's a great deal of interest in terms of buying Big
Sky," said Brennan, adding that Big Sky is for sale as a whole,
not in pieces.
"They take a long-term view of the industry itself, and if
there's a concentration of producers going out of business it
provides opportunity for others to grow."
Maple Leaf spokesman Dave Bauer said it's premature to
comment on any specific opportunities the company may have.
"We are evaluating several options that would secure our
longer term hog supply," he said.
An Olymel spokesman could not be immediately reached.
A severe drought in the United States has decimated crops
this year, which has led to higher costs for grains used to feed
pigs. Rising feed costs have prompted some farmers to liquidate
their herds, putting short-term pressure on hog prices and
making losses worse for the remaining North American hog
Ernst & Young will ask a court next week to approve a sales
process for Big Sky.
Saskatchewan Agriculture Minister Lyle Stewart said Big Sky
should be an attractive acquisition for "major operators" in
Canada looking to expand.
"I would expect it to be sold off more or less in one piece.
It's too valuable an asset" to shut down, he said.
Big Sky owes about C$69 million ($70.4 million) to four
secured creditors: lenders Bank of Nova Scotia (C$26 million),
Bank of Montreal (C$16.7 million), National Bank of Canada
(C$16.2 million) and Farm Credit Canada (C$9.8 million).
MANITOBA'S PURATONE ATTRACTS INTEREST
Despite the hog industry's problems, there are parties
interested in buying Puratone as a whole, said court-appointed
monitor Brent Warga of Deloitte.
Two parties filed expressions of interest with the monitor
in buying all or most of the company, and a third group has also
expressed interest. All were rejected, but the parties were
invited to make new offers by mid-October, with the intent of a
sale by Oct. 22, according to court documents.
A Manitoba court this week extended Puratone's protection
from creditors until Nov. 2.
Puratone, which sells about 500,000 hogs annually, owes a
total of C$86 million to three secured creditors: lenders Bank
of Montreal (C$40.9 million) Farm Credit Canada (C$40.3 million)
and the Manitoba government's farm insurance and lending
corporation (C$5 million).
Both Big Sky and Puratone continue to feed pigs and pay
staff as usual, and have not liquidated their herds.
Canada is the world's third-largest pork exporter and the
biggest live hog exporter.