507-893-4747 15 UPDATE€¦ · 7/8/2015 · • Selective Milling Technology (SMT) – improving...
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UPDATE A quarterly publication provided by Corn Plus. 711 6th Ave SE, Winnebago, Minnesota 56098 • 507-893-4747 20 15 AUGUST Shareholder/Customer Appreciation Day! Wednesday, September 9, 11:00-2:00 Lunch, door prizes and tour of the plant with improvements! Alternate rain date Thursday, September 10, 2015 Message from the President - Bill Drager As we approach the end of our fiscal year (September 30th), it’s time to take a minute to reflect on the positive changes at Corn Plus. Our plant improvement projects are in progress and will be implemented on schedule. Commissioning of the new equipment will mark the last phase of our Recapitalization Project. We generated a total of $23 million in new capital from our Capital Campaign, ICM, Inc. and AgStar/FCS. Your Board of Directors is proud and thankful of the support we have received from our membership, from new investors, from ICM and from our senior lender AgStar/FCS of America. Special thanks also to Michael Weaver of Lindquist & Vennum Law Firm who was instrumental in stitching the pieces of the Recapitalization Project together. Thanks again to all of our members and bond holders who stepped up to the plate. Job well done. Now the good part begins, and here is where the rubber meets the road. We need to begin creating shareholder value by generating profit. The improvements to the plant to date will improve our corn to ethanol conversion ratio and provide a much more consistent process on the front end of the plant. This consistency will, in theory, flow through to the rest of the plant making all of the downstream processes work better as well. All of this will lead to consistent output and reduced cost. Our focus today is to get the improvements implemented so we can begin reaping the benefits. Looking further down the road, as you may recall from the Capital Campaign, we mentioned Phase 2, which will involve increasing the output of the plant to its permitted capacity of 50 million gallons/year. Though we have no concrete plans, the Board is constantly assessing opportunities to invest in your plant that will yield positive results. Keep in mind that we continue to carry a large net operating loss on the books. This NOL will be VERY beneficial to the company as we pay down debt and/or reinvest in other plant improvements. We are well positioned to take advantage of opportunities as they arise. Message from the GM/CEO - Rick Serie Initially EMS and ICM conducted a “Plant Optimization Evaluation” which was a thorough examination of the entire plant at Corn Plus and its operations. Every part of the plant was analyzed and organized into three sections: 1) Plant and process review 2) Summary of the plant’s current system capabilities 3) Recommendations for improvement As a result of this study numerous changes were made to how the plant was being managed and operated; how products and services were being procured and how final products were being marketed and sold. A plan was also put into place which entailed a “Phase 1” and “Phase 2” improvement plan. We are currently implementing “Phase 1,” which is rebuilding the entire front part of the plant. I’m proud to say we have made a tremendous amount of progress in the last six months at Corn Plus. From increasing our ethanol yield from 2.6 gallons per bushel to 2.8 gallons per bushel and with changes to the cocktail of enzymes and yeast, we are substantially increasing the efficiency of the plant. In addition, we are utilizing all of our syrup, which has increased the volume of our DDGs production. A lot of work has also been done on water balance in the plant; which minimizes water moving through the plant and wastewater discharge to the city. Energy efficiencies are a top priority for Corn Plus and it doesn’t end there. As a management team, we have numerous targets set for improvement that are ongoing and continuous. I’m so proud of the shareholders and investors who stepped up to the plate to reinvest in Corn Plus and support the initiatives going forward. With demonstrated capital support and ICM’s investment, our financing package from AgStar and Farm Credit Services of America was completed on May 18, 2015. I would like to thank Ron Monson from AgStar and Kathy Frahm from FCSA for working with us on the new financing package. It has triggered the inception of the “Phase 1” reconstruction project that began shortly aſter the closing of the loan. With involved and supportive investors and a renewed and revitalized management team, there is nowhere to go but up… success is in our future! Save the Date!
Transcript of 507-893-4747 15 UPDATE€¦ · 7/8/2015 · • Selective Milling Technology (SMT) – improving...
UPDATEA quarterly publication provided by Corn Plus.
711 6th Ave SE, Winnebago, Minnesota 56098 • 507-893-4747 2015
AUGUST
Shareholder/Customer Appreciation Day!Wednesday, September 9, 11:00-2:00Lunch, door prizes and tour of the plant with improvements!Alternate rain date Thursday, September 10, 2015
Message from the President - Bill DragerAs we approach the end of our fiscal year (September 30th), it’s time to take a minute to reflect on the positive changes at Corn Plus. Our plant improvement projects are in progress and will be implemented on schedule. Commissioning of the new equipment will mark the last phase of our Recapitalization Project. We generated a total of $23 million in new capital from our Capital Campaign, ICM, Inc. and AgStar/FCS. Your Board of Directors is proud and thankful of the support we have received from our membership, from new investors, from ICM and from our senior lender AgStar/FCS of America. Special thanks also to Michael Weaver of Lindquist & Vennum Law Firm who was instrumental in stitching the pieces of the Recapitalization Project together. Thanks again to all of our members and bond holders who stepped up to the plate. Job well done.
Now the good part begins, and here is where the rubber meets the road. We need to begin creating shareholder value by generating profit. The improvements to the plant to date will
improve our corn to ethanol conversion ratio and provide a much more consistent process on the front end of the plant. This consistency will, in theory, flow through to the rest of the plant making all of the downstream processes work better as well. All of this will lead to consistent output and reduced cost. Our focus today is to get the improvements implemented so we can begin reaping the benefits.
Looking further down the road, as you may recall from the Capital Campaign, we mentioned Phase 2, which will involve increasing the output of the plant to its permitted capacity of 50 million gallons/year. Though we have no concrete plans, the Board is constantly assessing opportunities to invest in your plant that will yield positive results. Keep in mind that we continue to carry a large net operating loss on the books. This NOL will be VERY beneficial to the company as we pay down debt and/or reinvest in other plant improvements. We are well positioned to take advantage of opportunities as they arise.
Message from the GM/CEO - Rick SerieInitially EMS and ICM conducted a “Plant Optimization Evaluation” which was a thorough examination of the entire plant at Corn Plus and its operations. Every part of the plant was analyzed and organized into three sections:
1) Plant and process review2) Summary of the plant’s current system capabilities 3) Recommendations for improvement
As a result of this study numerous changes were made to how the plant was being managed and operated; how products and services were being procured and how final products were being marketed and sold. A plan was also put into place which entailed a “Phase 1” and “Phase 2” improvement plan. We are currently implementing “Phase 1,” which is rebuilding the entire front part of the plant.
I’m proud to say we have made a tremendous amount of progress in the last six months at Corn Plus. From increasing our ethanol yield from 2.6 gallons per bushel to 2.8 gallons per bushel and with changes to the cocktail of enzymes and yeast, we are substantially increasing the efficiency of the plant. In
addition, we are utilizing all of our syrup, which has increased the volume of our DDGs production. A lot of work has also been done on water balance in the plant; which minimizes water moving through the plant and wastewater discharge to the city. Energy efficiencies are a top priority for Corn Plus and it doesn’t end there. As a management team, we have numerous targets set for improvement that are ongoing and continuous.
I’m so proud of the shareholders and investors who stepped up to the plate to reinvest in Corn Plus and support the initiatives going forward. With demonstrated capital support and ICM’s investment, our financing package from AgStar and Farm Credit Services of America was completed on May 18, 2015. I would like to thank Ron Monson from AgStar and Kathy Frahm from FCSA for working with us on the new financing package. It has triggered the inception of the “Phase 1” reconstruction project that began shortly after the closing of the loan.
With involved and supportive investors and a renewed and revitalized management team, there is nowhere to go but up…success is in our future!
Save the Date!
Meet the Corn Plus Board Members
Bill DragerPresident
Term 2/15-2/18
Lawrence SukalskiVice President
Term 2/15-2/18
Andy BullochTreasurer
Term 2/15-2/17
Robert SonnekSecretary
Term 3/14-3/17
Jerry PloehnTerm 2/15-2/16
Mike AdrianTerm 2/15-2/18
Dave Vander GriendTerm 2/15-2/18
Craig WierTerm 2/15-2/16
Don De Langhe2/15-2/16
Alternate Board Members
Chris MitchellICM Alternate Board Member
Jason FreidburgICM Alternate Board Member
Board Members
Executive Board>>>
>>>
>>>
Senior Debt Financing (AgStar/Farm Credit Services) $12,000,000
Subordinated Debt Financing 6,945,000
Equity 4,000,100
Total Estimated Sources of Funds $22,945,100
Summary of Recapitalization PlanCapital Improvements (Phase 1) $5,437,000
Repayment of existing senior debt 8,587,777
Financing Costs 153,501
Working Capital 8,766,822
Total use of Funds $22,945,100
Estimated use of Funds
Rick SerieCEO/GM
Capital Improvements (Phase 1) $5,437,000
Repayment of existing senior debt 8,587,777
Financing Costs 153,501
Working Capital 8,766,822
Total use of Funds $22,945,100
Agstock TraderStock Trading Service for Corn Plus
AgStockTrade.com is a registered Alternative Trading System with the Securities and Exchange Commission and owned by Variable Investment Advisors, Inc., a securities broker dealer. The Trading System is designed to match sellers with buyers of your shares in Corn Plus. The Trading System will always match the most willing seller with the most wanting buyer on an auction basis, allowing the seller to set a reserve price and giving the seller the best fair market value available. The Trading System is easy to use and you need not even register to see what is available, at what price shares are listed at, and what the trading history is. To buy or sell shares you will need to be registered on the System.
For more information, you can click on the “How We Work” tab on AgStockTrade.com, you can register yourself or you can have a trained assistant do it with you during normal working hours. Call 800-859-3018, Greg, Steve or Kyle.
Plant Improvement Operations• Management agreement with EMS (GM and Plant Manager)
• Risk management agreement with Commodity Marketing Company
• Agreement with Gavilon to market DDGS
• Ethanol yield from 2.6 to 2.8 gallons per bushel
• Process changes to increase gross revenue by 8%
• Recapitalization plan
Phase 1 Improvement • Increase ethanol production to 42 MGY
• Upgrade grain scaling and milling
• Upgrade slurry tank and flour blending
• Selective Milling Technology (SMT) – improving grinding and
yield enhancement
• Upgrading liquefaction
• Updating heat exchange
• Implementing quality control improvements
Cost Estimate: $5,800,000
New Employee Break RoomNew Fermentation Heat
Exchangers Extraction of Storage Tank
New Ferm 8 Header Flush New Liquefaction Pump New SMT System
Want to BUY OR SELL Corn Plus stock?
See below!
Commodity Marketing Company - Craig Ludtke
“Not Your Traditional Grain Company. Better.”Sitos Grain consists of a group of marketing professionals with over 80 years of grain merchandising experience. Sitos Grain is the exclusive corn buyer for corn delivered to Corn Plus Ethanol in Winnebago, Minnesota. Sitos was established to provide producers with
innovative marketing contracts that yield not only competitive pricing, but also a variety of delivery locations for your corn or soybeans. If Corn Plus isn’t your best delivery option, Sitos will still buy your grain and sell it to your best market alternative.
Commodity Marketing Company is the risk management team currently supporting Corn Plus. CMC works daily with both of Corn Plus’s ethanol and DDGS marketing partners to ensure that the values being contracted are optimized and balanced relative to the plant’s net corn position. CMC is also responsible for producing and monitoring CP’s daily break-even margin model, which estimates Corn Plus’s spot and forward ethanol margin inclusive of all futures and basis pricing adjustments. CMC then has the ability to lock in a margin for Corn Plus when market conditions are ideal. Other Commodity Marketing functions include providing natural gas and corn oil risk management.
CMC is also the corn risk management provider for Sitos Grain, which is the exclusive corn buyer for Corn Plus. Commodity Marketing looks to maximize storage, carry and spread revenue while also working to generate basis appreciation through proactive corn merchandising strategies that emphasize building a sufficient corn-to-arrive. Corn Plus receives all of the potential downstream corn revenue generation from Sitos Grain’s positions through the daily sales transfer of corn from Sitos Grain to Corn Plus. Commodity Marketing has an established and proven track record in ethanol risk management, having been in the business since 1998.
Notice to CORN PLUS bondholders:First Annual Conversion Right of Your Notes is here!
As provided in section 14 of your Note, you have the right to convert all or a portion of the principal amount of your Notes (in increments of $10,000 or the principal amount of your Note) into CORN PLUS common stock at the rate of 3 shares for every $1.00 of principal, by surrendering your Note and delivering the Conversion Notice to the Trustee (included with your Note). The first conversion period runs from August 2 – August 31. If you wish to convert, you must deliver the Conversion Notice and surrender your Note to the Trustee by August 31 (must be received by Trustee on or before August 31). Holders who are not current members are also required to deliver a signed Uniform Marketing and Delivery
Agreement to the Trustee. A copy of the new Uniform Marketing and Delivery Agreement is enclosed with this newsletter or can be downloaded from our website at www.cornplusethanol.com. Please see section 14 of your Note and the Conversion Notice for more information and requirements. Please note that the conversion is irrevocable. You will receive interest on the converted portion of your Note through September 30, 2015. The shares that you receive upon conversion will be issued effective October 1, 2015, and you will have delivery obligations/committed bushels on those shares for our upcoming fiscal year. Please contact Rick Serie or Sheila Helland with questions.
Interested in selling your grain to Sitos? Call Bill Musick today at 507-893-5424! Bill is the senior grain merchandiser at the Sitos grain buying office in Winnebago, Minnesota.?
Contracts Offered:• Flat-price Contracts• Basis Contracts• Hedge-to-arrive Contracts (HTA)• Delayed Pricing Contracts (DP)• Minimum Price Contracts (MP)• Premium Plus Contracts• And many more!
Why Sitos?• Licensed and bonded grain buyer in the
State of Minnesota• Financially strong. Substantial equity and an
extensive line of credit with AgCountry Farm Credit Services in Fargo, North Dakota
• Prompt Payment by ACH or check
