WINNIPEG, July 31, 2015 /CNW/ - Legumex Walker Inc. (TSX: LWP) ("LWI" or the "Company") today announced the Company's Washington State-based, 84% owned Pacific Coast Canola, LLC ("PCC") subsidiary has received from AgCountry Farm Credit Services, FLCA ("AgCountry"), the agent for a syndicate of lenders under PCC's senior credit facility (the "Facility"), notice making a demand for repayment of all amounts due under the Facility. The notice of demand cites as the basis for the demand a default by PCC of its covenants under the Facility and requests that covenant defaults be addressed. The amounts due under the Facility are estimated at US$54.6 million, and are secured by a first lien on all assets and undertaking of PCC. PCC has been in active discussions with AgCountry and is considering various alternatives. PCC operates one canola crushing plant in Warden, Washington.
AgCountry is not a lender to the Company's Special Crops Division whose operations are separate from those of PCC. The Company does not expect AgCountry's demand or PCC's default to affect the Special Crops Division's operations, which include 14 plants in Canada, the U.S. and China, and will continue to work with its growers, customers and suppliers in the normal course.
PCC does not currently have access to funds to satisfy its obligations under the Facility. If PCC is unable to refinance the Facility, PCC will cease its operations and should that occur, the Company expects that PCC would no longer have any equity value.
The PCC Facility has not been guaranteed by the Company or any of its subsidiaries, other than PCC. However, the Company has provided a letter of credit in the amount of US$2 million in support of PCC's obligations under the Facility, which letter of credit is expected to be drawn down by AgCountry.
The Company is not aware of what actions AgCountry will take to enforce its rights under the Facility. The Company will update its shareholders in respect of PCC as appropriate.
In light of the AgCountry notice, the Company has initiated discussions with its other lenders to seek waivers or forbearances so that it will remain in compliance under its other credit facilities which are subject to "cross default" provisions.
The Company will record an asset impairment charge in respect of the carrying value of the crushing plant for financial reporting purposes.
About Legumex Walker Inc.
LWI is a growth-oriented processor and merchandiser of pulses and other special crops, and with the completion of the PCC canola seed processing facility in Washington State, canola products. The Company derives its revenue from sourcing, processing, marketing and distributing special crops, canola products and associated healthy, specialty food ingredients to a global customer base. The Company operates processing facilities in the Canadian Prairies, American Midwest, the Pacific Northwest, and China. LWI has an 84 percent interest in Pacific Coast Canola LLC ("PCC"), a canola oilseed processing facility in the State of Washington, the largest commercial-scale canola oilseed processing facility west of the Rocky Mountains.
Cautionary Note on Forward-looking Statements
This press release contains "forward-looking information" within the meaning of Canadian securities laws which may include, but are not limited to, statements relating to the possible refinancing by PCC, possible ceasing of PCC's operations, the exercise of remedies by AgCountry under the senior credit facilities, possible default under other credit facilities and the need for waivers and forbearances from lenders. Such forward-looking information reflects the Company's views with respect to future events and is subject to risks, uncertainties and assumptions, including the risk that the PCC plant will not continue to operate, the risk that a refinancing alternative will not be completed by PCC, the risk that the Company will be responsible for certain costs associated with PCC ceasing operations and the risk that the Company may be in default under other credit facilities as a result of the demand by AgCountry unless waivers or forbearances are obtained from other lenders, as well as those factors referred to in the section entitled "Risk Factors" in the Company's Management's Discussion and Analysis for the period ended December 31, 2014 which are available on SEDAR at www.sedar.com and should be reviewed in conjunction with this document. The statements relating to refinancing alternatives assume that PCC may be able to reach agreement with AgCountry and certain other parties. Statements relating to waivers and forbearances assume that the Company may be able to obtain such waivers or forbearances from its lenders. Such statements are subject to significant uncertainties". Although the Company believes the assumptions inherent in forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this press release. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.
SOURCE Legumex Walker Inc.
For further information: Lauren Moran, Manager, Investor Relations - Legumex Walker, [email protected], (425) 250-1498; Lawrence Chamberlain, National Equicom, [email protected] (416) 815-0700 ext. 257