Sector News

Cargill inks option to buy half of ProGold LLC from American Crystal Sugar

April 11, 2017
Consumer Packaged Goods

American Crystal Sugar Co. of Moorhead, Minn., has agreed to give Cargill Inc. an option to buy half of its half interest in ProGold LLC, a corn fructose plant at Wahpeton, N.D. The potential sale price was not disclosed.

American Crystal owns 51 percent of the plant while the Golden Growers Cooperative of West Fargo, N.D., owns 49 percent. In the past, ProGold had leased to Cargill for 10-year spans. This lease will run through Dec. 31, 2022.

Basics of the five-year agreement appeared Monday in ProGold’s 8-K form filing with the U.S. Securities and Exchange Commission. Under the deal, signed April 4, 2017, and effective Jan. 1, 2018, ProGold and Minnetonka, Minn.,-based Cargill will again lease the facility to Cargill. Both American Crystal and Golden Growers posted information on the deal in their websites. It isn’t clear who initiated the transaction.

Tom Astrup, president and chief executive officer of American Crystal Sugar, declined to elaborate on terms of the deal except to say it was “satisfactory to all parties involved.” He declined to say whether this was part of a Crystal strategy to focus on its sugar business. He acknowledged it would likely provide “some proceeds” that Crystal would need to manage, but said it “wouldn’t change our business strategy at all.”

As in past 10-year leases, it will automatically extend one year if Cargill doesn’t exercise the purchase or if a new lease deal isn’t struck on time. Cargill will pay ProGold annual rent of $17 million in 2018 and 2019, $16 million in 2020, $15.5 million in 2021 and 2022, and $14 million if the lease is extended through 2023,

As part of the lease, Cargill will have an exclusive option to purchase 50 percent interest in ProGold from American Crystal during the first four years of the of the five-year deal.

According to the SEC filing, if Cargill exercises its option, Golden Growers Cooperative will pay American Crystal’s remaining 1 percent for a base price ranging from $1.3 million to $1.7 million. Golden Growers also will pay American Crystal a “capital adjustment” of equal to 1 percent of the costs that haven’t been paid by Cargill to ProGold through added rents.

By Mikkel Pates

Source: AgWeek

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