ProGold recently announced that it has reached a new lease agreement with Cargill Inc., effective on Jan. 1, 2018. The prior lease will remain in effect until then. While prior leases were 10 years in length, this lease is a five-year commitment with an optional sixth year.
The latest agreement also includes an option for Cargill to purchase a 50% interest in ProGold from American Crystal Sugar Co. (ACSC). If Cargill exercises the option, GGC would purchase ACSC’s remaining 1%, to become a 50% owner of ProGold. GGC and Cargill have agreed to a general framework for a future partnership, with a detailed partnership agreement to be completed prior to Cargill exercising its option.
In order to maintain the condition of the plant, ProGold agreed to fund a minimum of $750,000 for infrastructure maintenance each year of the lease. ProGold may also be required to pay additional sums in order to make certain capital improvements in a manner similar to how a cooling tower replacement occurred in 2015.
“The evolution of the corn wet milling industry was an important aspect of our discussions,” GGC chairman Mark Harless said. “We believe this lease is a reasonable bargain for the near term. It also holds out a possibility of a long-term future for the ProGold plant.”