Richardton, N.D., ethanol plant looks to future after debt is paid
The nine-year-old investor-led company, which crushed corn into more than 54 million gallons of ethanol last year, informed investors at the company’s annual meeting March 17 that it had paid off its final $5.5 million in debt.
“I think it was a surprise for them,” Red Trail Energy CEO Gerald Bachmeier said. “I don’t think it was expected.”
According to the company’s SEC filings, Red Trail Energy was scheduled to be paid off over the next three years.
“With our bank debt and our cash position, the board made the position to pay it off,” Bachmeier said.
On top of that, Board Chairman Sid Mauch said Red Trail Energy investors were also “really pleased to hear” they’d still be receiving yearly dividend payments despite paying off the debt.
“We struggled for years because the industry was at negative margins,” Mauch said. “Through good management and paying attention to detail and trying to squeeze every little bit of margin that we could out of this plant, we could survive this. That’s the main thing, was to be able to survive the economic impact of the industry, so that when the better times do come back, we’re still here. We’re fortunate to say that we got here. We got that done.”
Bachmeier said since January 2011, Red Trail Energy has reduced its debt by around $50 million, added $13 million in capital and distributed more than $20 million to its investors.
Changing from running the plant on coal to natural gas in 2014 was a big step in the right direction, Bachmeier added.
“That has increased our capacity close to over 10 million gallons of production per year,” he said.
Bachmeier said he foresees the plant producing close to a record 65 million gallons of ethanol this year, and noted that while recent corn prices may not make farmers too happy, they’ve been good for the ethanol industry.
“I think there’s a balance that will find its way. It always does,” he said. “We’re looking forward to continuing to serve the corn farmers in southwestern North Dakota.”
North Dakota farmers planted an estimated 2.75 million acres of corn in 2015, with all but around 7 percent of that being harvested.
Though corn acreage is down from the state’s all-time high of 3.85 million acres in 2013, Bachmeier said he’s optimistic about this year. Despite a dry spring, he said producers are telling him they’re still set on planting a good amount of corn.
“Some of them are actually increasing (corn) acres this year,” he said.
Though it’s impossible to forecast what the future will hold for the agriculture industry, let alone Red Trail Energy, Bachmeier said he believes the company is positioned well financially to continue improving the plant.
“With the efficiency and everything that we have in the plant, I think we’re going to be here for a long time to come,” he said.