West Fargo, N.D. — Cargill Inc. on Feb. 24 , 2022, formally announced that it will exercise its option to purchase American Crystal’s 50% interest in ProGold LLC.
As a party to a 2018 Consent Agreement, Golden Growers Cooperative will purchase American Crystal’s remaining 1%. The net result is that Cargill and GGC will each own 50% interest in ProGold
“We believe this agreement with Cargill offers a bright future for our members,” said Mark Harless, Golden Growers Chairman. “Our agreement signals a long-term commitment to the Wahpeton community, employees of the facility, and corn producers. For the past 28 years, American Crystal Sugar Company has been our trusted partner. We are so thankful for those years and look forward to a new chapter for ProGold and Golden Growers.”
“This strategic partnership combines the strengths of both parties, paving the way for long-term reliability and viability of corn-based ingredients to supply our customers,” said Mike Wagner, managing director for Cargill’s starches, sweeteners and texturizers business in North America. “We’re proud of our team members who have been instrumental in the success of this operation and our long-standing partnership with ProGold and the local corn growers for the past 25 years.”
Wagner said Cargill is looking “forward to exploring new growth opportunities for the facility, including attracting co-location partners to the site.”
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“American Crystal has enjoyed a long, successful partnership with Golden Growers Cooperative and through ProGold, with Cargill. This transaction allows us to focus our efforts on our core business strategies” Tom Astrup, American Crystal Sugar Company CEO, said in a statement.
SEC filing details
According to documents Securities and Exchange Commission:
- ProGold will lease the facility to Cargill through Dec. 31, 2026.
- For 2022 and 2023, lease payments will be $15.5 million, with ProGold committing $750,000 per year to infrastructure maintenance. For 2024 through 2026, lease payments will increase to $16 million with $500,000 per year to infrastructure maintenance.
- During the lease period, Cargill will deploy capital for several approved projects. They will hold a “leasehold interest” in these capital projects and will receive the benefit of depreciation during the lease period.
- Under certain conditions, Golden Growers and Cargill may enter into an integrated joint venture agreement to operate the facility. If Cargill and Golden Growers achieve a joint venture agreement, Golden Growers will reimburse Cargill for 50% of the undepreciated capital expense associated with those approved projects.
If conditions do not occur or if Cargill and Golden Growers are unable to agree on an integrated joint venture agreement, Cargill will purchase Golden Growers interest in ProGold for $81 million plus half of any remaining lease payments.
ProGold LLC was formed in 1994 as a joint venture between Golden Growers Cooperative, American Crystal Sugar Company, and Minn-Dak Farmers Cooperative to build and operate a corn wet milling facility at Wahpeton. The plant then was built for about $250 million.
After operating the facility for one year, ProGold leased the facility to Cargill. Cargill has continuously leased the facility since that time.
In 2003, Minn-Dak sold its interest in ProGold to American Crystal Sugar Company, resulting in an ownership interest of 51% American Crystal Sugar Company and 49% Golden Growers Cooperative.
Once this transaction is finalized, Cargill and Golden Growers will each own 50% of ProGold. Golden Growers Cooperative, based in West Fargo, was formed in 1994 to create a value-added processing opportunity for corn growers in the Dakotas and Minnesota, and currently has about 1,500 members.
