Viterra Inc.

Viterra Inc.
Saskatchewan Wheat Pool Inc.
TSX : VT

November 08, 2007 16:02 ET

Viterra Presents Comprehensive Solution to Solve SWP-GSU Pension Plan Issue

REGINA, SASKATCHEWAN--(Marketwire - Nov. 8, 2007) - Viterra (TSX:VT)is pleased to announce that it has proposed a comprehensive solution that will address long-standing funding issues with respect to the SWP-GSU Pension Plan.

Viterra will take full responsibility for funding the solvency deficiency payments and, in exchange, will assume full responsibility for administration of the Plan. Company management met with union officials today to present a solution that achieves a number of objectives including:

- fully funding the solvency deficit;

- providing pensioners with certainty of future pension income; and

- providing active members with fully funded benefits.

The Plan covers approximately 15% of employees at Viterra.

President and Chief Executive Officer, Mayo Schmidt said, "When Saskatchewan Wheat Pool and Agricore United came together, we made a commitment to Viterra employees that we would provide competitive benefits packages to support their continued success within the company. This proposed solution balances the interests of this group of employees with those of all stakeholders. It is an example of management working hard on behalf of its people and illustrates how important we view strong employer-employee relationships in achieving our long-term goals as a leader in the Canadian agricultural industry."

Specifics of the Company plan include:

- Viterra will move all active employees in the SWP-GSU Plan to a defined contribution plan no later than July 1, 2008.

- Viterra will agree to amend the plan and take full responsibility to fund all pension benefits for all plan members, with no change to the contribution rate of active plan members.

- Viterra will contribute $12 million of solvency deficiency payments and will make any future quarterly deficiency payments to the Plan, as required.

- Viterra will assume the full financial risk for all benefits accrued under the Plan in exchange for the right to manage that risk.

In short, the proposal provides certainty of benefits to active employees, security of pension payments to pensioners and allows all parties to avoid the risks and costs of further litigation.

Although the Company still maintains that it has consistently met all of its legal obligations under the Pension Plan, if this solution is accepted, Viterra will withdraw its legal appeal related to this matter.

At December 31, 2006, the Plan had assets of $249 million, a going concern surplus of $17 million and a solvency deficiency of $23.5 million. Current estimates put the solvency deficiency at approximately $19 million. In fiscal 2006, the Company recorded a $20 million provision as the minimum likely cost of settling this dispute. In October of this year, in accordance with an agreement with OSFI, Viterra set aside $12 million in a trust fund pending resolution of the court proceedings involving OSFI. The financial impact to the company associated with fully funding the plan will depend upon future plan performance.

It is Viterra's intention to use Plan assets to purchase annuities for the existing pensioner group. This group accounts for approximately 60% of Plan liabilities. This will reduce the risk of future adverse changes in Plan performance and will provide pensioners with the same monthly payments that they receive today. The pension fund assets related to active members would continue to be managed by an investment committee appointed by the Company.

Saskatchewan Wheat Pool Inc., doing business as Viterra, is Canada's leading agri-business, with extensive operations and distribution capabilities across Western Canada, and with operations in the United States and Japan. The new Company is diversified into sales of crop input services and equipment, grain handling and marketing, livestock feed, agri-food processing and financial products. These operations are complemented by value-added businesses and strategic alliances, which allow Viterra to leverage its pivotal position between Prairie farmers and destination customers. The Company's common shares are listed on the Toronto Stock Exchange under the symbol VT.

Contact Information

  • Viterra
    Susan Cline, Media Relations
    Investor Relations and Corporate Affairs
    (306) 569-6948
    Website: www.viterra.ca