Midwest ethanol plants draw attention from large corporations
Alyssa Famuliner, posted Dec. 7, 2006
Many farmer-owned ethanol plants in the Midwest are being pursued by large corporations interested in buying them out. Some farmers who have invested want to cash-in and sell their shares while others are reluctant to sell and turn over a successful plant to a company that is not farmer-based.
With an ethanol plant in Malta Bend, Mo., Mid-Missouri Energy, and another in the process of beginning in Carrollton, Mo., Show Me Ethanol, the issue is hitting close to home for many people. According to the Mid-Missouri Energy website, there are 726 farmers who invested in the MME plant that began operating in February of 2005, and it has been a booming operation ever since.
The plants across the Midwest have been producing ethanol to help the nation in the fight to become less dependent on foreign oil. With the production of ethanol threatening oil companies across the country, many of them along with investment banks and hedge funds are seeking out ethanol plants to buy, partially or whole.
The MME board has sent their investors a newsletter explaining the offers that they have been receiving and the future possibility of selling out. There have been offers coming in nearly every week, some as high as $275 million.
Before the bids began, the board of directors at MME already decided to expand the year-old plant, not just a little expansion, but doubling the size. According to the MME website, the plant was built with expansion in mind, even though nobody knew it would come so soon. In March of 2006, shareholders were informed that their stock had split five to one. With this success, the $50 million expansion will be financed by the company without more money being put forth by the investors. The project is predicted to be completed in 2008.
Although the future is looking good for the shareholders of MME, many are having to consider the possibility of selling out. Ron Korff, an investor of MME and board member of Show Me Ethanol said if the return to the investor is adequate then it could be a good time and choice to sell. On the other hand, some farmers are reluctant to sell at any price and fear the day that big oil companies or investment firms take over what they have built.
Mark Casner an MME board member who is opposed to selling out said he and his family have farmed for generations and the past few years have invested a lot of time working with MME. Casner feels that selling out would take the enjoyment and satisfaction out of working with the plant, board, and investors. Also, he is concerned about the people wanting to buy the plant will not have respect for it like those in charge do now.
The board of directors has informed their investors that if a solid offer that is a favorable amount, the decision will come to a vote among those invested. To sell, the holders must have a two-thirds vote approval.
For such hard workers like Missouri farmers to put in effort like they have demonstrated building the ethanol plants and gaining statewide support, it becomes a difficult decision to choose at what price they are willing to sell. For many, especially those who have borrowed their invested money, selling sounds ideal, others never want to part with the plant that they are connected and dedicated to.
