Livestock co-operative has accepted offers on its grocery, fuel divisions

by Jim Moodie

MANITOULIN-A year since the Manitoulin Livestock Co-operative gained the endorsement of members to sell off any or all of its assets, each of the businesses operated by the long-running agricultural enterprise now appears to have a taker.

“We have letters of intent signed for all our properties and stores,” said John McNaughton, chair of the co-op board. “Things are looking very good, and it’s a relief to us that we have interest in all our parcels.”

Mr. McNaughton was not in a position to name the buyers, as “we’re still waiting for final approval.” But he did confirm that a single party is poised to purchase the two Valu-Mart stores in Gore Bay and Little Current. “A letter of intent has been signed for both stores, and we just need to finalize the legal paperwork to the satisfaction of both parties,” he said.

As for the hardware store that formerly functioned in tandem with Gore Bay’s Valu-Mart, Mr. McNaughton indicated that a separate buyer is interested in that business. And the bulk fuel business in Gore Bay is coveted by yet another entity.

The cattle sale barn in Little Current, which has lain dormant since the annual fall auction failed to occur in 2007, also has a likely buyer. “It’s not quite finalized yet, but there is a party on that one, too,” said Mr. McNaughton. “There’s solid interest in all our properties, and we hope to have the transactions done soon.”

While a year has elapsed since the co-op began entertaining offers on its assets, Mr. McNaughton said the process could have stretched on longer. “We were worried it might take a considerable length of time to sell everything, because we might not get solid offers for all of our properties,” he said. “We’re very pleased with the offerings we’ve received to date and feel we’ll be getting our dollar value out of it.”

The hardware store in Manitowaning was the first co-op asset to switch hands, with Reuben Allen of Allen’s Automotive acquiring the business in late June of last year. Once the remaining businesses are sold off, the co-op will effectively cease to exist, although Mr. McNaughton indicated that the organization will need to maintain some form of administrative structure until such time as lingering financial details are tidied up and its books are firmly closed.

Revenue from the sale of the businesses will be put towards the co-op’s debt with lending institutions as well as obligations to individual members. “Secured creditors will get taken care of first,” said the board chair. “Then residuals will get paid off to members.”

He explained that members initially chipped in $100 each to join the co-op, but larger amounts were invested too over the years. “In the past we paid interest, but the principal is outstanding,” he said. “Ours was an older-style member loan co-op, so it’s like buying back shares.”

Until the deals are completed, Mr. McNaughton said he couldn’t put a firm figure on the amount that will be available to members. “They will get some money back on their principal; we just don’t know how much yet.”

In recent years the co-op had been hobbled by an outstanding bill for a pension shortfall, owing to the 2003 collapse of a plan serving superannuated co-operative workers from across Ontario.

“Because of the pension issue at the time, we couldn’t raise capital for new member loans,” said Mr. McNaughton. “Financial institutions made it difficult for us to have working capital.”

Speaking last January, following the co-op’s 2008 annual general meeting, director Hugh Moggy noted that “there are 1,600 people who are members, and probably close to 800 have larger amounts of money invested.” That money, he indicated, was due to be paid back, “and we don’t have the money to pay them.”

Members learned last year that the co-op had incurred a loss of $63,000 in 2006, and owed its investors nearly $1.4 million.

All of this informed the difficult decision to sell off “pieces or all of the co-op,” said Mr. McNaughton.

The organization had its humble beginnings in 1944, when it was formed to host the first cattle sale on the Island, and grew over the years to boast a variety of outlets selling feed, fuel, groceries, hardware and clothing. By the time the decision was made to part with these businesses, the co-op employed over 60 workers.

It is expected that many of these positions will survive the transition to new ownership when the businesses change hands.