Cash-crunched seeding equipment maker Morris Industries has been handed a letter of intent to purchase, from a Saskatchewan suitor with a farm equipment company of its own.
Calgary consultancy Alvarez and Marsal said in a report Tuesday it received a letter of intent for a “proposed sale transaction” from Superior Farms Solutions Ltd. (SFSL), the operator of Rite Way Manufacturing.
Alvarez and Marsal, the court-appointed creditor protection monitor for Morris, said it had worked in “extensive negotiations” with SFSL — and with the support of BMO, Morris’ largest secured creditor — to execute the letter of intent last Friday.
Details of the Rite Way proposal aren’t available. An order, to be submitted for approval Friday at Court of Queen’s Bench in Saskatoon, has been drafted requiring that the letter of intent be sealed as confidential for now.
The draft order would also extend Saskatoon-based Morris’ creditor protection to July 3. The company has been in creditor protection since Jan. 8 and has since been granted three extensions, the most recent of which is due to expire Friday.
Alvarez and Marsal, in asking that the letter be sealed, said disclosing information about the Rite Way proposal “could potentially jeopardize the Monitor’s efforts to attract future offers” for Morris’ assets.
The monitor had got court approval on Jan. 16 for a “sales and investment solicitation process” for Morris — but it said in its May 6 report that the process hadn’t led to an “acceptable offer.” It then went back to talk to parties that had shown “continued willingness” for a deal.
Though the Rite Way letter of intent is non-binding, the monitor said it’s of the view that reaching a deal by June 19, with a target closing date of June 30, “appears to be achievable.”
Rite Way, founded by Regina machine shop owner Les Hulicsko, is today headquartered in Regina but has its main plant at Imperial, Sask., about 130 km north of the city. Hulicsko, who began building rock pickers in 1972, sold the business in 2012.
Apart from rock pickers and rock windrowers, the company’s product lines today include land rollers, heavy harrows, rotary harrows, crimper rollers, bale carts, grapples and high-speed compact discs.
Saskatoon-based Morris, founded in 1929 as Morris Rod-Weeder, today has plants at Yorkton, Sask. and Minnedosa, Man., making air carts, drills, seeders, harrow bars and bale carriers.
The company was owned by the Morris family up until 2007 when it was sold to an ownership group led by then-CEO Casey Davis. Another ownership group, led by Ben Voss replacing Davis as CEO, took majority control of Morris in 2017.
Apart from BMO, Morris’ secured creditors include Avrio, Kubota Canada, Wells Fargo and the financing arm of fabricating equipment maker Trumpf, among others. Unsecured creditors include Western Economic Diversification Canada and various trade vendors.
A company-owned sales and service centre at Virden, Man. was shut down in mid-March and some “redundant assets” of that business were sold to auctioneer Ritchie Bros. to be included in a March 31 sale.
Other assets and inventory from the Morris Sales and Service site at Virden are expected to either be sold or relocated to Morris Industries sites by the end of this month, Alvarez and Marsal said in its report. — Glacier FarmMedia Network