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UPDATE 4:10 p.m
The CEO of Novem Pharmaceuticals tells Castanet his team has been working on this deal for three weeks and there was a real sense of urgency to get a deal done in time to save this year's apple harvest.
"This doesn't take care of all the storage, but it's around 20% of B.C.'s controlled ambient storage. So it's extremely significant. It's about 25 million pounds of fruit that will be able to be stored in this facility. So it was complicated from the standpoint of getting the emergency lease and being able to operate it," Davison says.
Back in September of 2023 BC Tree Fruits listed the Sexsmith storage facility near Reid's Corner for $39M. Davison wouldn't say what the final purchase price will be but he did say he believes Novem's offer was the most competitive.
"This is the most important facility in our eyes. This is the best facility available, in terms of our existing business structure and everything else. We're moderately interested in possibly some of the marketing and trademark assets and things like that. But as far as I know, most of the other facilities have interest in them and are in the process of closing," Davison says.
Novem plans to start shipping apple bins starting Monday and Davison says it's important for apple farmers to connect with the packing houses.
"This is the part that was needed to save the fruit, and that's the starting part. This is all we can do. And I think from a private industry standpoint, you know, we've stepped up, but we will need support from provincial and federal government agencies as well to make this deal worthwhile"
Davison says once the immediate issues are dealt with, Novem plans to update and modernize the business
"This facility really goes a long way to expanding our business, and we're not taking the BC Tree Fruits model and applying it to this facility. Yes, the immediate term is to store fruit. In the long run, we're hoping to work with the city and the province to actually build another facility at this site, as well as combine kind of a modern view on the agri-food, biopharmaceutical and pharmaceutical markets," says Davison.
ORIGINAL 12:54 p.m.
A company has extended a lifeline to BC Tree Fruits farmers by offering to purchase the co-op's storage facility in Kelowna.
Locally-based Novem Pharmaceuticals specializes in processing and packaging, with warehouses and distribution services for the agrifood, pharmaceutical and biopharmaceutical industries. Novem has warehouses across Canada and international partners for global exports and distribution.
Novem has been working on a deal to purchase the Sexsmith Road facility since BC Tree Fruits declared bankruptcy on July 26. A court-directed sale process for the entire co-op was approved on Aug. 26.
Colin Davison, Novem CEO, says his company's offer to purchase the facility has not yet closed, but it's been accepted on an emergency basis to allow the tree-fruit industry to avoid the loss of as many as 25 million pounds of apples.
"Saving this year's harvest is our immediate goal but we believe Novem can also play a role in helping farmers create a modernized version of the Canadian fruit tree industry here in British Columbia," says Davison.
Finalizing and funding the transaction is expected to require the support of both the provincial and federal governments. Davison says government officials at both levels have expressed support for the project, leading up to the signed conditional purchase agreement for the facility. The emergency lease on the facility will run through the entire fruit season, or upon closing of the transaction.
"We can't do it alone. Strengthening Canada's food security should be of national interest and a priority for all levels of government over the long term," Davison said. "Private industry is doing its part, but it will take government support to cultivate an industry that is more sustainable and stable."
Davison says Novem has already secured committed contracts from most of the major packing houses in B.C.'s Interior.
"The space is expected to be 100 per cent committed prior to September 15—just one week after possession," said the company in a news release.
Novem says they have plans to continue storage operations at the Sexsmith Road site as well as to expand the facility to accommodate future growth in the industry.
The overall court-directed sale process sees the bids for the entire block of BCTFC assets accepted until Sept. 27, with a final bid deadline date for individual assets set for Oct. 18. The entire sale process is proposed to close on Nov. 30.
BCTFC owes over $53 million to secured creditors.
