Restructuring emphasized at ethanol meeting

Restructuring, coinciding with new investors and the possible sale of corn byproducts, became a central theme Monday evening during a gathering of members of Otter Tail Ag Enterprises held at the Bigwood Event Center in Fergus Falls.

Although closed to the general public and news media, some members were positive when speaking after the gathering. One positive sign, they said, was that the last quarter (three months) of operations at the ethanol plant northwest of Fergus Falls was far better than a year ago.

Negotiated restructuring is part of Chapter 11 bankruptcy for Otter Tail Ag. The organization is currently negotiating with lenders.

As for original investors who each pitched in a minimum of $25,000, that investor would, under a new proposal, have the opportunity to releverage at 25 percent of his or her original investment. This would be what’s called Class B stock, as part of a new stock option that also would apply for new members. A tax write-off of the original investment would be part of the new scenario.

One member said Monday that an outside investment entity is among those willing to put in much needed capital into the restructured organization.

As for the sale of corn byproducts, that’s an exciting possibility, said another person who attended Monday evening’s gathering. In one scenario, corn syrup would be sold to another entity that would make methane gas. That, in turn, would be used in cogeneration of electricity sold to Twin Cities-based Great River Energy which in turn sells to members such as Lake Region Electric Cooperative of Pelican Rapids.

The other scenario calls for corn meal (distilled grain) to be sold to an entity for the processing of oil byproducts, also referred to as biodiesel.

These options provide some hope to current and future investors, said another person.

Members on Monday evening also were give a rundown of the indebtedness of Otter Tail Ag as well as a review of step-by-step operations the past year. Various factors, said management, such as corn prices and the state of the economy, led to Chapter 11 bankruptcy with lenders making efforts to reclaim assets.

As for reporting directives for the Securities and Exchange Commission (SEC), “everything is somewhat of a worst-case scenario,” said one member. “Those reporting directives came about after the collapse of energy giant Enron. Even Microsoft, which is doing well, has to report the worst-case scenario factors to the SEC.”

Otter Tail Ag management reiterated Monday evening that “green jobs” with cogeneration and the like is an exciting possibility.

Restructuring will again be discussed at other Otter Tail Ag meetings planned in other locations and towns in the next several days.

source: fergusfallsjournal