CANADA: SWP moves ahead in its turnaround plan, welcomes DBRS ratings
Regina, Saskatchewan-based agribusiness giant Saskatchewan Wheat Pool (SWP) has welcomed news that the progress made on its turnaround plan has been recognised by an independent credit rating agency, Dominion Bond Rating Services (DBRS), which has maintained the company's credit rating and trend at last year's level.
"Over the past 24 months, the Pool has undergone tremendous change and it is gratifying to see that our efforts are being recognized by DBRS, which has maintained our senior long-term debt and medium term note ratings," says CEO Mayo Schmidt.
"Our financial profile is improving and the Pool remains committed to return our company to profitability as quickly as possible in today's agricultural environment."
In addition to reducing costs and stabilizing market share, SWP has taken significant steps to pay down debt and reduce its securitization requirements.
Schmidt explained: "We are a solid company, both financially and in terms of the services we are offering prairie farmers and end-use customers. We have a strong commitment to our business plan from our banking partners.
"Last week, we repaid C$45m (US28.3m) on our long-term loan facility and are on-track to reducing our debt substantially by year-end.
"We continue to have success with the Canadian Wheat Board's tendering program. Our grain shipments are similar to last year's level, despite drought conditions in parts of the Prairies.
"Our customer contact strategy is winning back customers in Saskatchewan, and generating new business at our AgPro operations in Alberta and Manitoba. We have expanded market opportunities for prairie production by signing multi-year contracts with key end-use customers."
SWP president Marvin Wiens is also pleased that DBRS acknowledges the efforts of the Pool to manage through weather-related risks, including drought: "As soon as we knew how drought would affect production last year, we moved quickly to adjust our operations and we continue to take the steps necessary to insulate the company if we don't get spring rain," Wiens says.
"The potential for more dry weather is a concern for everybody involved in the sector, including farmers. They are preparing for spring seeding now. We urge government to move quickly to provide details on this year's crop insurance coverage so that farmers can make timely and informed decisions."
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