Alberta cattle feeder association nears loan program suspension resolution
Cody McBride has been hired as the new supervisor for the Picture Butte Feeder Cooperative, indicating its suspension from Alberta’s Feeder Associations Loan Guarantee program will soon be lifted.
The largest cattle feeder association was prohibited from issuing new loans under the program by Alberta agriculture minister RJ Sigurdson on Jan. 27.
The ministerial order was issued after a report from Alberta Agriculture and Irrigation’s Inspection and Investigation Section alleged a number of financial and regulatory red flags, including obstructing provincial inspections, accepting ineligible feeder members, using guaranteed loan proceeds for improper purposes and providing more allowances than were allowed.
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The fallout has included resignation of the co-op’s board of directors and court approval to appoint Alvarez & Marsal Canada as restructuring officer. Its issued mandate was to work toward lifting the ministerial order.
Alvarez and Marsal emailed PBFC this week about hiring McBride as the new supervisor effective May 5.
McBride has more than 25 years of expertise in the agriculture and financial sectors, including seven years running feeder finance companies, five years as a brand inspector and 13 years working at ATB Financial in agriculture lending.
An administrator for the PBFC is also being hired.
The FALG program has been around in Alberta since the Great Depression and is intended to provide “relatively easy access to low interest, leveraged financing backed by a government guarantee,” according to the province.
Founded in 1991, the Picture Butte Feeder Co-op is more than 10 times larger than any of the other 44 feeder associations in Alberta in its use of the province’s loan guarantee program.
Records show the co-op had administered slightly more than $281 million in loans to its members to finance cattle purchases, and in turn, owed approximately the same amount to a syndicate of banks, led by the Bank of Montreal, at the time of the loan program injunction.
“The restructuring officer has been working closely with the minister’s office and the lenders over the past several weeks to have the ministerial order lifted and negotiate updated credit term arrangements between PBFC and the lenders, respectively,” read the Alvarez & Marsal e-mail.
“We anticipate providing a further update later this week on the timing of when PBFC will be back to ‘operations as normal’ to allow PBFC being able to provide loans to its member’s without restrictions. In the interim, the restructuring officer has been delivering overage payments to its members (for January and February) and March overage payments are being sent to those members this week.”
As part of removing the ministerial order, the restructuring officer is also reviewing all existing members of the co-op to ensure they meet the eligibility requirements and developing/revising PBFC’s internal operating policies and governance structure.
Some of the allegations in the affidavit are being disputed, and PBFC legal counsel has alluded possible legal action in the future.
“Certain findings of the ministry are subject of significant dispute by certain parties” reads a bench brief posted on Alvarez and Marsal’s website.
The Picture Butte co-op had 227 members as of August 2024, some of which included feedlot owners’ family members and employees.
A spokesperson for Alberta Agriculture and Irrigation has said issuing loans to family members and employees is permitted as long as the family members satisfy the eligibility requirements under the Feeder Associations Guarantee Regulation.
They also said the use of power-of-attorney is acceptable in certain situations.
Source: www.producer.com