Fargo, N.D., Nov. 8 - Owners of the ProGold LLC corn syrup plant in southeastern North Dakota hope to finish paying off the factory's debt soon, now that Cargill Inc. has agreed to lease the plant for another 10 years.
The agreement, which takes effect Jan. 1, calls for Cargill to make annual lease payments of $21.5 million for 10 years, with $4 million added to the first year's payment, company officials say.
The ProGold factory, in Wahpeton, cost $261 million to build when it was completed in 1996. Declining fructose prices hurt its bottom line, and its owners signed a 10-year lease agreement with Cargill in October 1997.
American Crystal Sugar Co., which is based in Moorhead, Minn., owns a 51% stake in ProGold. Golden Growers Cooperative, an organization of corn farmers, owns the rest.
The plant's farmer owners have not received a return on their investment, but that may change as the factory's debt is paid off, officials said.
Carl Larson Sr., of Fullerton, who is chairman of both ProGold LLC and the Golden Growers Cooperative, said he was pleased with the new lease agreement.
"It's going to be a real good deal for the Golden Growers, in that we'll have the plant paid off early next year," Larson said.
Joe Talley, chief operating officer of American Crystal Sugar Co., said most of the renewal negotiations with Cargill took place during the last six months.
Talley said both sides recognized the corn sweetener market "is going to be very volatile." "There is a fair share of risks and opportunities" in the lease agreement, he said.
Golden Growers will have "actual cash flow going to the bottom line," said Mark Dillon, the cooperative's executive vice president. "From that perspective, our members would be feeling relatively optimistic," he said.