Des Moines Register
02/23/06
Australians will buy Iowa plant for ethanol
JERRY PERKINS
REGISTER FARM EDITOR
An Australian company has agreed to purchase a 60 percent interest in Midwest
Grain Processors LLC, one of the first and largest farmer-owned ethanol plant
operations in Iowa.
The deal appears to mark the first time a foreign company has purchased a
controlling interest in an ethanol plant started and owned by Iowa farmers, said
Roger Ginder, an Iowa State University Extension economist who
specializes in farm cooperative finances.
Ethanol supporters have argued that farmer-owned plants help keep money in
Iowa and produce a domestic alternative to foreign oil. Ginder said the sale may
raise fears of increased foreign investment in the ethanol industry, but it's no
surprise.
As profits have risen, interest from outside investors has increased in the last 18
months.
"One of the things that has been happening is that the nature of the investors has
changed from farmers, local business people and others in the area to outside
capital and Wall Street investors," Ginder said.
The agreement is contingent on a favorable opinion from Duff and Phelps, an
investment banking adviser, that the deal is fair to the 1,300 member-owners of
Midwest Grain Processors, which owns an ethanol plant in Lakota.
Members of the co-op also will need to approve the deal.
Balloting will probably be held in late March, said David Nelson of Belmond,
chairman of Midwest Grain Processors.
A disclosure statement on the purchase agreement will be distributed to the
membership, and a series of information meetings will be held before the vote.
"I'm sure there will be a lot of questions and apprehension," Nelson said, "but
after the members see the business plan and what they'll get back if the sale is
approved, I predict there will be a favorable vote."
Nelson identified the buyer as Global Ethanol. He declined to reveal how much
the 60 percent stake in Midwest Grain Processors was worth.