Spiritwood's $60M soy plant equity drive
SPIRITWOOD, N.D. -- The North Dakota Soybean Processors LLC is continuing sets of investor information meetings to attract $60 million in equity for a $287 million project near Spiritwood, N.D, but is planning more through August, and perhaps bey...
SPIRITWOOD, N.D. - The North Dakota Soybean Processors LLC is continuing sets of investor information meetings to attract $60 million in equity for a $287 million project near Spiritwood, N.D, but is planning more through August, and perhaps beyond, officials say.
The company has found "sincere, enthusiastic" response, especially when promoted by a local champion, says interim board chairman Bruce A. Hill, of Worthington, Minn. The self-imposed deadline for raising the equity is Aug. 31. Starting Sept. 1, the share prices will go up, with the same goal.
"We're doing alright, but we need to get more information out to the people," says Hill, who also is chairman of the board for Minnesota Soybean Processors of Brewster, Minn., which is investing in the project and would manage it.
NDSP has put its plan in front of about 500 "accredited" potential investors at about a dozen meetings so far, Hill says. To be accredited, a net worth of $1 million or annual income of $200,000 is required. The minimum investment is four shares at $10,000 each, or $40,000.
If the equity drive is successful and "breaks escrow," the company can start a ground-breaking in August for a possible start-up in the spring of 2019. If they don't, the cost of shares would go to $10,500 per share at the end of August and the equity drive would continue. If the goal still isn't reached by March 31, 2018, the company has to make decisions about whether the project goes forward, he acknowledges.
Besides the $60 million in "private equity," NDSP has gotten $6 million in "seed money" start-up funds from MnSP, the cooperative of Brewster, Minn. MnSP plans to buy an additional 6,000 shares or $60 million in shares. MnSP will operate the facility and market the products. The fundraising effort with farmer-investors has run into some uncertainty about crop production in a drought year, as well as a slumping commodity market, officials say.
"One point we'd like to get across to guys is we understand there's hardship for the drought, but this is a long-term project - a value-added thing for their own operations," says Jay Myers of Colfax, N.D., who is a member of the seven-member interim board. Two of the board members are from North Dakota and five from the MnSP board. Claude Richard of Fargo is the other North Dakota board member.
Myers says investors should consider that North Dakota allows a tax deduction of 30 percent for value-added ag investments, cutting the cost of a $40,000 investment to $28,000.
Farmers or ranchers affected by drought can look into the Value-Added Agriculture Equity Loan Program (nickname ENVEST), a program of the Bank of North Dakota for purchasing shares in ag processing plants. It offers a buy-down of up to 4 percentage points of interest, with a buy-down limit of $20,000 per borrower.
If built, the plant will be another part of the Spiritwood Energy Park Association. SEPA is an industrial park that already includes a barley malting plant and a coal-to-electricity power plant. The soy plant will inhabit 80 acres just south of a corn ethanol plant that uses steam from the power plant.
The North Dakota plant is expected to employ 55 to 60 people as it expands.
Promoters say North Dakota is an ideal location for the volume of beans grown in the state, as well as access to Pacific Northwest markets for both meal and oil products - specifically food grade oil. Many people in the Pacific Northwest produce vegetables and use oils to blanch or fry those products, including processed potatoes, MnSP officials say.
The Spiritwood plant could provide value-added services to customers - vendor-managed inventories and just-in-time logistics that plants farther south and east would have a difficult time matching.
Hill says the availability of soybeans as well as the steam energy from Spiritwood station, the electrical generation plant operated by Great River Energy, bode well for the company's future in North Dakota. The project also has mainline rail access on the BNSF Railroad.
It would consume about 42 million bushels of soybeans a year. That's about the current annual production of Stutsman, Barnes and LaMoure counties. It would make soy oil for the food and biodiesel markets, as well as soy meal for the animal feed market. As planned, the plant would produce 35 million gallons per year of biodiesel fuel, consuming about half of all of the crude soybean oil at the plant.
In 2016, MnSP formed Northern Ag Commodity Consultants as a wholly-owned subsidiary of MnSP.
"This company is designed to perform marketing and risk management functions for not only our company here in Brewster, but also our proposed plant in North Dakota, as well as other companies, leveraging our current market access in meal and oil to other products we don't actually produce here from soybeans," Hill says.
Here are upcoming investor information meetings scheduled so far:
July 25 - 7 p.m. to 8:30 p.m., Jamestown, N.D., North Dakota Farmers Union headquarters, 1415 12 Ave, SE.
July 25 - 7 p.m. to 8:30 p.m., Bismarck, N.D., Great River Energy, 1611 E. Century Ave. #200.
July 26 - 7 p.m. to 8:30 p.m., Fargo, N.D., Delta Hotels by Marriott, 1635 42 St. S.
July 31 - 7 p.m. to 8:30 p.m., Worthington, Minn., Comfort Inn and Suites, 1447 Prairie Drive N.
Aug. 1 - 7 p.m. to 8:30 p.m., Brandon, S.D., 1103 N. Splitrock Blvd.
Other meetings will be announced soon, and will be announced at NDSoy.com.