Glencore Agri subsidiary acquires assets from troubled ILTA Grain

Glencore Agri subsidiary Viterra has purchased the assets of Tillridge-owned ILTA Grain’s pulse processing facility in Belle Paine, British Colombia. Financial details of the transaction have not been disclosed.

The sale closed on August 27 and is part of ILTA’s ongoing restructuring that could potentially lead to the sale of all its assets. Viterra has acquired machinery, equipment, land, contracts, customer lists and intellectual property as part of the deal.

The Belle Paine facility has an annual processing capacity of 350,000 metric tons, a storage capacity of 22,000 metric tons and a 135-railcar loop track adjacent to the Canadian Pacific Railway mainline rail. The company processes peas, lentils, beans and flax seed sourced from Western Canada and exports to more than 40 countries.

ILTA obtained creditor’s protection from the Supreme Court of British Colombia last month under Canada’s Companies’ Creditors Arrangement Act, following a series of poor financial results. PricewaterhouseCoopers was appointed monitor of ILTA’s CCAA process.

Tillridge Agribusiness Partners and its co-investors acquired ILTA from its founders in 2014, investing $98 million for 78 percent of equity and 20 percent of preferred equity, according to PwC’s second monitoring report.

“Over the past few years, ILTA has faced increasingly challenging international trade conditions, which has caused a reduction in its revenues and, in turn, limited its ability to repay and service its debt load,” wrote Tillridge co-founder Mark Zenuk in an August 19 affidavit.

A subsequent filing highlighted steps taken by India, China and Saudi Arabia to limit – and in some cases discontinue entirely – some imports from Canada, which Zenuk cited as having had a “major impact on ILTA’s business model and profitability.”

ILTA had $266 million in combined revenues in 2018 and historical funding from investors and lenders totaling $274 million, according to PwC’s second monitoring report.

Filings related to the CCAA application identify Farm Credit Canada and HSBC as ILTA’s primary secured creditors, which are owed C$86.5 million ($65.02 million; €58.74 million) and C$47.5 million, respectively.

ILTA engaged Canadian investment bank Origin Merchant Partners in March 2019, to solicit interest for a sale of, or investment in, all or part of its assets. Origin said interested parties have included agriculture companies, bulk handlers, processors and ag-focused financial sponsors.

ILTA will report the outcomes of this process to the Supreme Court by October.

ILTA received an investment of an undisclosed size from Equity Group Investments in July 2017, a firm founded and backed by real estate investor Sam Zell. EGI describes its strategy as including focus on opportunistic investments including operational turnarounds, restructurings and dislocations in capital-constrained environments.

PwC’s CCAA filings reveal EGI’s investment was worth $41 million and yielded 21 percent of ILTA’s equity and 80 percent of preferred equity.

The Canada Pension Plan Investment Board, which acquired a 40 percent stake in Glencore Agri in 2016, Viterra and EGI declined to comment. Glencore and Tillridge did not reply to requests seeking further detail by press time.