Winnipeg-based pea protein plant goes into receivership

The company behind a pea protein processing plant in Winnipeg has gone into receivership less than three years after receiving millions of dollars from the federal and provincial governments.

A receivership is generally appointed to a company when it is unable to make loan payments or defaults on a loan. PricewaterhouseCoopers International Limited was appointed receiver on March 1 for Merit Functional Foods as per an order from the Court of King's Bench of Manitoba

In a statement posted on LinkedIn, Merit's co-CEO Ryan Bracken confirmed the company was placed into receivership as of March 1.

"This means the end to Merit as it stands today," Bracken wrote in the statement.

Bracken said Merit was founded in 2019 but was not able to get the level of cash flow needed to operate the business profitably and quickly.

"We started up prior to understanding the full impact of what Covid could do to our business plan."

In a news release Friday, Vancouver-based Burcon NutraScience Corporation, which already owns 31.6 per cent of Merit's shares, said this was an, "anticipated step in the process of addressing Merit's financial situation," but said it doesn't alter its plans to acquire Merit's business.

MERIT HAD CONTRACTS FOR 10,000 ACRES OF PEAS THIS SEASON, GROWERS GROUP SAYS

"It's an unfortunate development," Daryl Domitruk, the executive director of Manitoba Pulse and Soybean Growers, told CTV News.

He said Merit had contracts for about 10,000 acres of peas here in Manitoba. He said the immediate impact of this receivership is going to be felt by those farmers in the upcoming growing season.

However, Domitruk said it's not too late for farmers to switch their crops or sell to other markets.

"It's a setback, but not an insurmountable issue for farmers currently," he said. "It's more what it means for the future, and we're still hopeful that companies like Merit can be established in Manitoba and can be successful in the global protein market."

COMPANY RECEIVED MILLIONS OF DOLLARS FROM FEDERAL GOVERNMENT, PROVINCE

In the first few months of operating, Bracken told CTV News Merit had 10 employees but expected the company to grow to 200 employees in three years.

In that time, the company also saw multi-million dollar investments from the province and federal governments.

Merit Functional Foods received a $2.5 million grant from the federal and provincial government in August 2020, for its state-of-the-art, 94,000 sq. ft. plant protein production facility in Winnipeg.

Manitoba's Minister of Agriculture Derek Johnson was not available for an interview Friday. However, the province told CTV News in a statement there would not be a requirement for the money to be paid back, as this was a grant and not a loan.

At the time, the province said this was on top of nearly $100 million from the federal government in June 2020.

Manitoba's then-minister of agriculture and resource development Blaine Pedersen said it would help establish Manitoba as a leader in plant protein extraction.

Efficiency Manitoba also put in $1.25 million to incorporate energy-efficient technologies in the facility.

The province told CTV News on Friday it has no confirmation for the number of employees affected.

CTV News has reached out to Merit Functional Foods for comment.