Shareholders of DENCO, LLC voted Monday to sell their stock to Big Island Grain, LLC, a combination of U.S. and Australian companies.
"It passed overwhelmingly," said DENCO General Manager Gerald Bachmeier, who did not divulge the terms of the sale. Big Island Grain is also studying the feasibility of building another larger ethanol plant in Stevens County, he said.
DENCO, which started in 1999 with 340 investors, now has 363 investors and in excess of 6.3 million outstanding shares, he said.
The proposed sale is the first step in the merger process. The sale is still contingent on Big Island Grain securing financing. If the financing is arranged, the sale could be closed before the first of the year, Bachmeier said.
The DENCO plant, which is permitted to produce up to 30 million gallons of ethanol per year, produces about 25 million gallons of ethanol per year. About nine million bushels of corn are processed each year, Bachmeier said.
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Big Island Grain also is expected to receive the results of a feasibility study to build another 50 million gallon per year ethanol plant in Stevens County, west of Morris. The project would cost an estimated $70 million, Bachmeier said. The study will determine the availability of corn, rail service, electricity, water and gas, Bachmeier said.
"The feasibility study will indicate the best location for the plant," he said.
"Big Island Grain wants to develop a larger platform in the ethanol industry," Bachmeier said.
The DENCO stock sale won't affect current operations of the plant, Bachmeier said.
"The structure won't change," Bachmeier said. "We're still a Minnesota company, we'll still pay Minnesota taxes, and we'll still grind Minnesota grain."
To ensure stability, Big Island Grain wants the top six or seven DENCO management employees signed to longerterm contract of four to five years, he said.
All 38 DENCO employees will remain on the job, he said.
"Big Island Grain looked at other facilities, and they really liked the (Morris area) community," Bachmeier said. "They did a lot of interviews in the community and with ag-based people."
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Big Island Grain and DENCO management began discussions about the sale eight months ago, Bachmeier said.
The community's and company's history in the ethanol business led Big Island Grain to purchase an existing facility instead of embarking on a project of its own in the area, Bachmeier said.
"I think it was the relationship we have with the community," Bachmeier said. "The credibility we have in the industry and the image it portrayed, they liked it."
