Vancouver Fraser Port Authority is the front-runner to purchase a 40-acre industrial site in North Vancouver at 100 Amherst Avenue currently home to the Chemtrade facility.
Toronto-based Chemtrade announced its intention to sell and leaseback the property from its new owners on April 19. The facility produces industrial caustic soda, chlorine and hydrochloric acid for Chemtrade clients across North America.
“We are excited about the financial flexibility that this opportunity could create for Chemtrade,” the company’s CEO, Scott Rook, said in a statement announcing the sale.
The property’s assessed value in 2021 was $204.3 million, according to the BC Assessment Authority. Chemtrade says proceeds from the sale “could provide significant liquidity for investments in organic growth while also helping to reduce debt.”
Chemtrade’s most recent annual report shows the company posted a net loss of $235.2 million on revenues of $1.4 billion in the year ended Dec. 31, 2021. Owners’ equity also declined in the most recent fiscal year as the company faced limited demand for its products during the pandemic and aging infrastructure. The plant in North Vancouver experiences biennial maintenance shutdowns that reduce its annual output by millions of dollars.
However, the sale could also help resolve a running dispute with the port authority over Chemtrade’s lease of an adjacent 18-acre property. The lease expires June 30, 2032.
Together, the two properties give the facility more than 58 acres for its operations, complete with rail service. Chemtrade intends to continue its operations in North Vancouver, but without a deal with the port it will not be able to use the 18 acres of leased land “to receive, manufacture, store, and distribute liquid chlorine.”
“We are assessing alternatives to address this restriction, but not finding a viable alternative could have a material adverse effect on our business,” Chemtrade's most recent annual report states.
Upping the pressure on Chemtrade is the fact the port has expressed its intention to exercise an option to purchase the portion of the site that Chemtrade owns.
Discussions with the port are ongoing, but a sale-leaseback transaction presents an attractive way to resolve the issue. The deal would allow Chemtrade to keep operating the facility while allowing the port to acquire the site.
Port vice-president, real estate, Tom Corsie was not immediately available to comment on the port’s interest in the property.
The deal would be a small but not insignificant addition to the port’s substantial land holdings across Metro Vancouver.
The port’s most recent land use plan notes that properties on the north shore of Burrard Inlet handle 22 per cent of all cargo volume through the port. It describes the area as “an integral connection for Canadian exports to overseas markets.”
Colliers International and RBC Capital Markets are charged with managing the sale process, which officially launches at the beginning of May.
Colliers executive vice-president Stuart Morrison declined comment, noting that the process is still in the very early stages.
Chemtrade units (CHE.UN:TSE) closed at $7.80 on April 21, down 1.9% versus a day earlier. Over the past year, units have traded between $6.01 and $8.70.