AGT Food and Ingredients Inc. (AGT) on Nov. 20 announced the sale of all shares of its short line rail and bulk handling infrastructure, comprising Mobil Grain Ltd. (MobilGrain), to GCM Grosvenor, a global alternative asset management firm, through the firm’s Infrastructure Advantage Strategy.
The sale includes MobilGrain and its operating subsidiaries: Last Mountain Railway, with 140 kilometers (87 miles) running from the Regina Plains to Central Saskatchewan, including 160 kilometers (100 miles) of running rights on CN; Big Sky Rail, with 431 kilometers (258 miles) running from Central Saskatchewan through West Central Saskatchewan; MobilEx Terminal Ltd., a port and loading facility for grain and potash located in Thunder Bay, Ontario; and Intermobil, a privately-operated, state-of-the-art intermodal terminal located in Regina, Saskatchewan, featuring CN service to the Atlantic, Pacific and Gulf Coasts and CN’s intermodal terminals. Bulk loading infrastructure includes Saskatchewan facilities in Condie, Aylesbury, Delisle, Dinsmore, Lucky Lake, Beechy, Elrose, Kyle, Eston and Laporte for the receiving of grains, canola and pulses from farmers in the region.
The assets included in the sale of shares to GCM Grosvenor, AGT says, are critical infrastructure for the growth of the Saskatchewan agricultural sector, with transportation of agri-products from the Regina Plains, West Central and Central Saskatchewan regions, “an area that is one of the most important grain, canola and pulse growing regions of the world,” the company noted.
This infrastructure connects to CN main rail lines, moving Saskatchewan agri-products to coastal ports and markets around the globe. “To ensure that the rail and bulk infrastructure included in this sale continues to grow and improve for producers and communities along the line and corridor,” AGT has signed a 20-year agreement with MobilGrain to continue to utilize this infrastructure for its global origination and supply chain programs for export, providing Saskatchewan farmers options for marketing their grains, canola and pulses to world markets through this “critical and unique collection of community-based assets.”
“AGT is thrilled to enter this partnership with GCM Grosvenor, a key infrastructure investor who wants to hold the infrastructure for the long term, improve and grow it to build on the work that MobilGrain and AGT have done over the past two decades operating these assets,” said AGT President and CEO Murad Al-Katib. “With the planned Lake Diefenbaker Irrigation Project adding growth to the already strong Regina Plains, West Central and Central growing regions, there are great opportunities ahead for all involved, including GCM Grosvenor, AGT, CN and farmers and producers who depend on this rail service. This sale returns significant capital to AGT, which presently generates over $3 billion in revenue annually. We will continue building on the strength of our partnership with Fairfax Financial Holdings Ltd. in creating a global agriculture growth story, including expanding our global packaged foods business. The long-term agreement with GCM Grosvenor and MobilGrain means AGT will remain a mainstay in the communities along the railway in which we operate today,” added Al-Katib.
“This transaction underscores Saskatchewan’s essential role in the global economy as a key producer of critical minerals and agricultural products. Integrating MobilGrain’s short line rail with CN’s network creates significant growth potential, while Intermobil and MobilEx terminals will continue supporting agricultural and potash exports,” said GCM Grosvenor Managing Director, Infrastructure Matthew Rinklin. “In line with GCM Grosvenor’s responsible contracting principles, all employees at these facilities will remain with MobilGrain. We look forward to supporting Kent Affleck and his team’s growth plans. In addition, partnering with Bluejay Capital Partners, whose transportation and short line rail expertise is vital, will further strengthen MobilGrain’s future success.”
“CN is pleased with the long and successful partnership with AGT and MobilGrain in this important Saskatchewan shortline railway corridor,” said CN Vice-President and Chief Commercial Officer Remi G. Lalonde. “We look forward to building on this successful collaboration to grow our business by working with GCM Grosvenor and MobilGrain to further improve first-mile service, and to bring more of Saskatchewan’s potash and agricultural products to the world.”
The transaction is subject to regulatory approvals and customary closing conditions and is expected to close in late 2024 or early 2025.
Financial terms and details of the sale and subsequent agreement have not been disclosed. Northborne Partners acted as the sole lead advisor to AGT on the transaction.
