Input Capital takeover falls through

Input says U.S. buyer to walk away, pay termination fee

The Regina company that brought “streaming” to the Prairie canola marketing business is considering its other options now that a friendly cash bid from a U.S. suitor has been taken off the table.

Input Capital said Thursday that Washington, D.C.-based investment firm Bridgeway National, which in August proposed to buy Input for about $96.15 million, is now “not in a position to complete the plan of arrangement.”

The deal had still been expected as recently as mid-October to proceed. Bridgeway said in filings to the U.S. Securities and Exchange Commission (SEC) at the time that it aimed to raise “a portion, if not all of the purchase price” for Input through a sale of Bridgeway capital stock.

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Bridgeway had also reported to the SEC in early October that it received Saskatchewan Court of Queen’s Bench approval for the transaction on Sept. 28.

The terms of the two companies’ agreement call for Bridgeway to now pay a termination fee, which according to documents provided to Input shareholders in September is worth three per cent of the “aggregate consideration” of the agreed-upon sale.

With Bridgeway’s offer no longer in play, Input said in a release Thursday it will “continue to consider internal or external proposals that would enhance and grow shareholder value.”

In business since 2012, Input bills itself as a “non-operating farming company” dealing in canola — which it obtains from Prairie farmers by way of “multi-year streaming contracts,” including capital streams, marketing streams and, for a brief time, “mortgage streams.”

The company’s canola purchases, from growers in all three Prairie provinces, generally involve up-front payments in return for agreed-upon tonnage over a specified number of years.

Since last year, the company’s board has sought “a partner with a source of scalable capital to grow our mortgage stream business.”

The company in 2018 had set up a pilot to offer “a conventional farmland mortgage product that uses canola streaming as a payment vehicle.” In May last year, however, it put off those plans, saying scalable funding for a mortgage stream business was “not competitively available in the marketplace at this time.”

Input reiterated in August it hasn’t deployed new capital since May 2019 and won’t do so until it can get “a scalable source of mortgage financing.”

Input said Thursday its board has now “confirmed a return to the company’s strategic plan that was in place prior to Aug. 12.” That plan focuses on “managing Input’s existing book of business to build book value per share.”

To that end, Input said Thursday it will look to “minimize expenses and maximize and accelerate where possible the repatriation of the company’s capital.” –– Glacier FarmMedia Network

 

About the author

Editor, Daily News

Dave Bedard

Editor of Daily News for the Glacier FarmMedia Network. A Saskatchewan transplant in Winnipeg.

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