Letter: Golden Oval saga continues
Remember Midwest Investors of Renville? That became Golden Oval Eggs, which morphed into The New Midwest Company. I've tried to forget, but a trustee service company keeps sending me letters, with ever more depressing news.
A very brief history. In 1994 farmers invested in a new co-op, intending to raise chickens for egg production. In 2004, that co-op had a banner year. By 2007 lenders were so worried about debt and poor management of the now LLC, that an ultimatum was given. Paraphrasing, "Sell or we lock the doors."
Enter Rembrandt Enterprises, Inc., with a $123 million offer. That same year, 2008, the former chairman of the board and CEO of Golden Oval sent a letter to stockholders. We could expect to be paid in a range of $4.25 to $4.75 per unit, on the 5.5 million outstanding shares. Even at the higher price, it represented a loss to investors, but the alternative seemed a lot worse.
Fast-forward to 2009. Rembrandt paid just under $123 million, with $4.5 million being held back to clean up any messes left by Golden Oval's management team.
Shareholders first received $3 per share, then came another 60 cents. Any further payments would be handled by our new trust fund manager.
Now some curious things happened from December of 2008 to the sale of Golden Oval in 2009. Units of stock outstanding went from 5.5 million to 6.43 million, (a 930,000 increase). Golden Oval's former CEO became the largest individual shareholder, with just over 144,000 shares. In addition, the board of directors awarded the former chief $979,000 in cash. All to be paid within 30 days of the closing.
Now the average investor did get $3.60 per unit and a trust fund manager. (Secretly, I've always wanted to be a trust fund kid.) However, even our trust couldn't make it out of the financial swamp it was left in. Apparently, things were a bit messy and our trust fund is being terminated
Guess some get to eat quiche, others just get egg on their faces.
Daniel R. Jacobs