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Early response from growers to fund a feasibility to possibly buy
Western Sugar has been strong, according to the attorney
representing the group. Randon Wilson of the firm Jones, Waldo,
Holbrook and McDonough of Salt Lake City, Utah, said Nebraska lags
slightly behind Colorado. Responses from Montana and Wyoming are
ahead of Colorado.
"I don't know if the grower buyout is the right choice for
these growers, but they only get one chance and if the plants are
closed or purchased by another company, they will lose that
opportunity," he explained.
Western Sugar growers from Montana, Wyoming, Colorado and
Nebraska recently formed the Rocky Mountain Sugar Growers
Cooperative and elected a 10-member board to look into purchasing
the sugar company from Tate and Lyle of London, England.
Last week, growers and landlords received a letter from the
cooperative asking them to contribute $2 an acre to fund a
feasibility study. The group hired Wilson to represent them in the
proposed buyout.
Wilson has also represented the Snake River growers in the buyout
of Amalgamated Sugar Company three years ago.
The letter was sent to over 1,200 growers and 2,000 landlords,
Wilson said. Growers have until Saturday, August 5 to send in their
contributions and indicate whether they wish to participate.
Their letters must be postmarked by the fifth, Wilson said. They
plan to tally the results next week.
The feasibility study the growers are asked to fund will involve
obtaining key information to determine whether or not a buyout would
be a sound investment. Wilson said he feels the biggest advantages
to the growers in pursuing a possible buyout could be retaining
their option to grow sugar beets as a crop and the buyout could
provide them with more income opportunity.
Wilson said during the feasibility study they will negotiate with
Tate and Lyle to determine what the purchase price for the factories
would be.
A financial study will also be conducted to determine whether the
cooperative can afford to purchase the factories, if they can obtain
the funding for it and whether the growers can afford it.
Wilson added the feasibility study will also conclude the general
condition of the factories (if they are in good repair and operable)
and whether the environmental risk is manageable.
"We need to determine whether there is adequate support from
the growers because if we don't have enough beets to operate the
plants, the cooperative won't be profitable. We have to be able to
sell sugar to keep the cooperative going," Wilson explained.
The attorney said they have already started the feasibility study
and hope to have it completed before harvest. "We could have
informational meetings for the growers as early as this fall,"
he added.
Wilson said if they do decide to buy the company, they could have
the buyout wrapped up by the end of the year.
Wilson said deciding whether to participate in the cooperative is
a big decision for the growers to make. "It is hard for the
growers to decide," he said. "They have to look into the
future to see if they want the sugar beet industry to be a part of
their future.
They have to determine whether or not they want a sugar beet
industry 10 years down the road," he explained.
From the responses he has received so far, Wilson said he has
heard from growers who have written back and said they don't wish to
participate to growers who have sent their contribution in and said
'We'd be dead in the water without the sugar beet industry.'
"From past experiences, I have found in those areas where
growers can raise other crops there was less support for a
cooperative than in areas where crops are limited," Wilson
said.
"There are six factories in the Tate and Lyle system,"
Wilson said. "We need all six of them to make this thing go
forward. Part of the feasibility study is to look at how much
support we will need." "Growers need to realize the value
of having sugar beets in their crop rotations," Wilson said.
"Through the feasibility study," he added, "the
growers will know whether or not this buyout is the right thing to
do."
Wilson explained that the growers cooperative that would purchase
Western Sugar would be a non-profit corporation growers could join
by making some sort of investment.
The cooperative would buy the factories, process the beets, sell
the sugar and pay whatever it gets back to the growers. "The
growers are not only making a profit from growing sugar beets, but
also from the processing and selling of sugar," Wilson said.
"They are getting two bites out of the apple instead of
one."
Wilson said once a grower buys into the company, he is locked in
until he wants to sell his delivery rights. "For example, if he
retires, he could sell his delivery rights to another grower who
wants to buy them," Wilson said.
Landlords can also invest in the cooperative. "They can buy
delivery rights if they want to attach those to their land," he
explained. "Landlords can participate in the buyout and
increase the value of their land if they ever decide to sell
it," he added.
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