A group of 900 farmers wanting to operate Michigan Sugar Co. - which processes sugar beets grown in northwest Ohio - say they have $45 million in financing and capital for the purchase that is to close Feb. 8 with owner Imperial Sugar Co., of Texas
The farmers, about 50 of whom live in northwest Ohio and bordering Michigan counties, will operate the 95-year-old business as Michigan Sugar Beet Growers, Inc., said Mark Flegenheimer, who is president and chief executive of Michigan Sugar Co. He expects to retain the title when the business changes hands.
The company's plants in Michigan's Thumb process beets and package sugar under the Pioneer label as well as store brands and account for about 5 percent of the country's sugar production, Mr. Flegenheimer said.
Michigan Sugar has warehouses in Fremont and Findlay.
Owner Imperial, the country's largest processor and marketer of refined sugar, is reorganizing after filing for bankruptcy this year. Part of its strategy is to reduce its risk by selling some interests. The $45 million sale price does not include the assumption of $18 million in debt by the growers group.
Michigan Sugar has been profitable nine of the last 10 years and produces $150 million in annual sales, Mr. Flegenheimer said. It employs 350 people year-round and more than 1,000 seasonally.
More than two-thirds of U.S. sugar processing companies are owned by growers.
The farmers pledged $24 million for the purchase, agreeing to buy more than 125,000 shares in the cooperative at about $200 each. The money for those shares is due to the cooperative in a week.
The cooperative expects the state of Michigan to give it an interest-free loan of $5 million for five years. State officials are reviewing the loan application. Imperial is to lend the remaining $20 million, at 8 percent interest, to the farmers.
In addition to the purchase price, the grower group is to take over $18 million in Michigan Sugar Co. debt. Some of that debt is bonds that are not due for more than 20 years.
“Everything's falling into place,” said Richard Maurer, chairman of the cooperative, which has taken two years to organize.
The growers announced their plan to purchase the company in March but had trouble arranging financing and renegotiated in October, getting a $20 million discount from Imperial, Mr. Flegenheimer said.
In northwest Ohio and adjoining Michigan counties, farmers raised about 2,000 acres of sugar beets this year. Next year, Mr. Maurer expects acreage to increase to 3,000 locally.
However, as recently as 1995, northwest Ohio farmers alone raised 17,000 acres of sugar beets. Many quit raising the crop when the Fremont plant stopped processing beets and became a warehouse in the mid 1990s.
Farmers can still take beets to Fremont and Blissfield, but the company's expenses to transport the beets on to the Thumb area are deducted from their checks. Many farmers have said that greatly diminishes the returns of sugar beets so the crop is not worth the extra labor and risk.