Fast-paced equity drive under way for proposed Redwood County ethanol plant
GRANITE FALLS -- In a schedule as crunched as a politician's final weeks of campaigning, the board of directors for what could be Minnesota's next ethanol plant is holding a two-week equity campaign with 30 meetings in as many cities.
The campaign began April 14 in Lamberton, where the organizers for Highwater Ethanol LLC intend to break ground this spring on a 50 million-gallon ethanol plant. Fagen Construction is contracted to build it.
More than 600 people attended that opening meeting, said Brian Kletscher, chairman of the board for the company. One week and 15 meetings later, Kletscher said the response to the offering has remained "positive.''
More than 1,100 packets have already been mailed to prospective investors. Kletscher expects to send out another 1,000 in the weeks ahead.
Kletscher, who addressed more than 30 interested people Monday morning in Granite Falls, said the company is seeking to raise $50 million to $65 million in equity toward the $110 million project. What a change from just a few years ago, when organizers struggled for four years to raise $18 million in equity to build the Granite Falls Energy plant that began producing ethanol in November 2005.
"It's hard to remember how different things were in 2003, then and now,'' said Julie Oftedahl-Volstad, secretary-treasurer of the Granite Falls Energy board, and one of its founders.
Granite Falls Energy ran out of extensions from the Securities and Exchange Commission and put its equity together with an infusion of capital from Glacial Lakes Energy of Watertown, S.D., literally at the final minute, according Oftedahl-Volstad.
"It was like pulling hen's teeth,'' she said of raising the equity for the project.
She lost count of how many equity meetings the company held. Most were sparsely attended, and the crowds were not always friendly. People upset over the sale of the Minnesota Corn Processors plant in Marshall to Archer Daniels Midland came and vented their anger, even though there was no connection to the Granite Falls Energy project whatsoever.
But she said the bigger issue was ethanol itself. Even here in the hometown of the country's largest builder of ethanol plants, people were uncertain about the fuel's future and skeptical when it came to investing their money, she said.
Fagen Inc. of Granite Falls is currently building 35 ethanol plants around the nation and will be simultaneously building 50 by year's end. The company has built 66 percent of the new ethanol capacity in the country in recent years.
U.S. ethanol capacity is now at 5.2 billion gallons of ethanol per year. Steve Core, ethanol plant development consultant for Fagen Inc., said he believes corn-based ethanol plants will continue to be built until the country's capacity reaches 14 billion to 15 billion gallons.
"Everybody wants to build a 100 million-gallon plant,'' said Core. "You simply have to raise the money,'' he added, with a smile.
Raising the money is always hard, but the crowd that Oftedahl-Volstad joined on Monday is different from those she knew when seeking to raise funds for Granite Falls Energy.
Kletscher said that the Highwater equity meetings are attracting a good mix of people. While the original investors in the state's ethanol plants were mainly the farmers producing the corn, today they are just as likely to be Main Street business owners or other people looking for investment opportunities.
"Young and old,'' said Kletscher. "We had one 84-year-old man who said he wasn't going to miss out on this opportunity.''
Those attending the Highwater meetings are familiar with the industry. They are evaluating their possible investment with a keen eye toward what works best for them, said Core.
Speaking only two weeks earlier at this very same site, Ron Fagen, CEO and president of Fagen Inc., said he believes new ethanol plants will continue to be built in Minnesota, but that much of the future growth in the state's ethanol industry will come by way of expansion of existing plants. He said Iowa has nearly reached its limit for new plants.
Kletscher and the Highwater board of directors believe the site they have identified near Lamberton in the southeastern corner of Redwood County offers one of the state's best. Test pumping on two well sites indicated that an ample water supply exists for the plant. It will be served by the Dakota, Minnesota & Eastern Railroad. It will have interconnection capabilities to both the Burlington Northern Santa Fe and Union Pacific railroads, according to Kletscher.
Most important of all, it will be surrounded by a sea of corn. Farmers in Redwood and the six neighboring counties raised 219 million bushels of corn last year. The proposed Highwater plant would grind 18.5 million bushels a year.