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Western Sugar growers from a four-state area have formed a
cooperative to look into the possibility of purchasing Western Sugar
from Tate & Lyle of London, England. According to Bob Busch,
president of the Nebraska Non-Stock Sugar Beet Growers Association,
grower representatives from Nebraska, Colorado, Montana and Wyoming
have formed a 10 member board for the Rocky Mountain Sugar Growers
Cooperative.
The group sent out a letter to the growers of Western Sugar and
their landowners asking them to fund a feasibility study with the
intent of exploring a possible buyout. The feasibility study will
determine whether a buyout is feasible and practical.
During the study, the Cooperative will determine the willingness
of ag lenders to ascertain their willingness to loan to the growers
for an investment in the company. The study will also explore the
condition of the factories, environmental risks, etc. Once the study
has been completed, regional meetings will be held to explain the
findings to the growers.
If growers wish to voluntarily participate in the study, they are
asked to contribute $2 a planted acre for the 2000 crop, Busch
explained. They were also asked to complete a survey indicating how
many acres they grow, what factory district they produce for and
what association they belong to.
Busch said the group has also retained the services of Randon
Wilson, of the firm of Jones, Waldo, Holbrook and McDonough of Salt
Lake City, Utah, to represent the Cooperative in the proposed
buyout.
Busch said Wilson was retained because of his experience in
cooperative law. "He has a national reputation," Busch
said. "He represented the Snake River sugar growers in the
buyout of Amalgamated Sugar Company.
He is also representing growers in Michigan and California on
possible buyouts of factories in those states."
Busch said the letter sent to growers is to give them a chance to
express whether they would support a purchase of the sugar company
by the cooperative.
"We have been fortunate to have people own Western Sugar
that have been compatible to do business with," said Busch,
"but, there are distinct advantages to owning your own
company," he added. "The growers have invested a lot of
money in capital expenditures for the company, but have no
equity," he said. "This would change all that."
According to the letter growers received earlier this week, the
Cooperative expects to borrow approximately two-thirds of the cost
of the company. The letter stated, "Based on the Snake River
experience, the local bankers who finance growers with their annual
lines and other financing were the best sources of funds for growers
who needed to borrow to make their investments in the Cooperative.
Under our best estimate, we would expect the investment by growers
would be approximately $200 per acre."
The letter went on to state that until they know a purchase price
and the profitability of the factories, as well as the loan terms,
they can not nail down a definite amount each grower would need to
invest.
Tate and Lyle announced their intentions to explore other
opportunities for Western Sugar months ago due to depressed sugar
prices.
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