An Australian firm is set to acquire a 60 per cent stake in a farmer-owned ethanol plant in Iowa, Midwest Grain Processors LLC, marking what experts say could be a first for the state’s ethanol sector, Post Bulletin reported.
Officials of the cooperative said the buyer is Global Ethanol. The proposed deal would give the overseas company a controlling interest in Midwest Grain Processors LLC, which is owned by about 1,300 members.
Ron Ginder, an extension economist at Iowa State University Extension, said it appears to be the first time a foreign company has moved to take a controlling stake in an ethanol plant owned and operated by Iowa farmers.
He noted that investor interest in the ethanol industry has grown over the past 18 months as profits have improved. “The nature of investors has shifted from farmers and local business people to outside capital and Wall Street investors,” Ginder said.
The agreement is subject to a favourable assessment from Duff and Phelps, which has been asked to determine whether the deal is fair to the cooperative’s members.
In addition, members of the co-op must approve the proposal in a vote expected late next month, said David Nelson, chairman of the cooperative. He did not disclose the value of the 60 per cent stake.
“I’m sure there will be many questions and some concern, but once members review the business plan and understand the returns they would receive if the sale goes through, I believe the vote will be positive,” Nelson said.
