CARGILL announced May 2 that it has signed a letter of intent to enter a joint venture agreement with Parrish & Heimbecker Ltd. (P&H) in which both companies would jointly own and operate Cargill's existing grain terminal in Thunder Bay, Ont.
Both Cargill and P&H currently operate out of the Thunder Bay terminal port. The two companies will have an equal ownership in the joint venture.
"This is about creating a business arrangement that will help build a long-term, sustainable business," said Len Penner, president of Cargill Ltd. "Both of our terminals have been underutilized in past years. With P&H as our partner, we'll make the business stronger by sharing costs and efficiencies. In addition, our combined operations and expertise will help us better serve our customers."
Under the transaction, Cargill will sell its existing assets to the new joint venture, and both parties will divert grain to the joint venture.
In the future, P&H may operate its terminal to handle commodities that the joint venture does not handle.
The parties intend to close the deal by May 31. The new name of the terminal will be determined at a later date, according to the announcement.
"We are looking ahead at the promise that this new venture with Cargill will bring for our customers," P&H president John Heimbecker said. "Creating a long-term, sustainable model is what the industry needs to remain competitive, and together, we can better adapt to those changes."
Union employees at both terminals share a common collective agreement, and the new joint venture will continue to abide by the agreement that's currently in effect.