The Hancock-Henderson Quill, Inc.
by Dessa Rodeffer, Quill Publisher
The first milestone for a farmer-owned Ethanol cooperative exceeded many area sceptics predictions after more than $10 million was raised by April 15th. An extended deadline, however, allowed farmers until July 1st before adding a price increase of 10%.
"We have exceeded the minimum needed of $11 million and the 51% of farm memberships to break escrow," said BRRC Board Co-Chair Ray Defenbaugh of rural Biggsville. "We can now concentrate on raising capital for the joint venture. Over 500 have invested by purchasing shares on the cooperative side, and I am expecting even more to join in."
He stressed that capital formation by producers is one of the biggest hurdles in developing a project like this, yet he felt confident that the fundraising would continue smoothly.
Defenbaugh said a lot of farmers doubled their initial offering and there were a number of new memberships.
"We had a good response from a presentation made in the Streator-Pontiac area (east of Peoria). We also had some from Ohio, Minnesota, and the Dakotas who will use the pool to supply their corn."
Defenbaugh said they decided to give their presentation east of Peoria because it was a good corn growing area in Illinois and an opportunity for them to add value to their corn as well.
The minimum offering a farmer could invest was $10,000 for two shares plus $500 for a non-refundable membership. For those who could buy twenty shares at a $100,000 a 3 cent premium was added to their corn for ten years on each delivery.
Defenbaugh said profits of the plant will be split among the investors. The main difference is the size of the invested required.
$10,000 is the minimum on the cooperative side; $500,000 is the minimum on the joint venture side.
Defenbaugh said federal law requires that the joint venture side can be no more than 15%. "We plan on keeping it much lower so there will be no danger of going over the requirement," he said.
According to the original offering information handed out to potential investors, "if the proceeds of this Offering equal or exceed $22 million, the Cooperative may own the Plant directly, without the Joint Venture."
But it looks as if there is advantages of having large investors pulling in the same direction with farmers.
Defenbaugh said he recently attended a national Ethanol workshop in Springfield where they toured ethanol plants owned by Williams Company and ADM Company, both wet mills.
Out-of-date technology and a sugar market gone bad showed the dry mill process and the latest technology in equipment assured BRRC that they were far on the best track for investors.
What would be even more helpful in Illinois would be better incentive by state legislatures such is seen in other states.
"Tax dollars spent are not wasted," Defenbaugh said. Figures show $6 or $7 returned for every dollar spent. Governor Holden of Missouri have shown even higher figures."
The state may be short-sighted in what this might mean in tax revenue, jobs, and economic growth if tax incentives were put in place.
Defenbaugh is extremely gratified by the support for the $40 million gallon ethanol plant and reminds potential investors that investment is still open to producers and non producers.
BBRC now will finish all permits needed to begin construction and finalize the finances needed by their senior lender.
The plant is to be located in West Burlington, Iowa adjacent to Highway 34 and will process 15,000,000 bushels of corn annually.
A 14-month construction period is planned and a fall 20034 start-up is scheduled.