ProGold announced on Monday, April 10th that a new lease agreement has been reached with Cargill, Inc. to be effective as of January 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 6th year.
Base rent for the lease is as follows:
- 2018-9 – $17,000,000
- 2020 – $16,000,000
- 2021-2 – $15,500,000
- 2023 – $14,000,000 (optional 6th year)
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 the cooling tower replacement occurred in 2015.
The agreement includes an option for Cargill to purchase 50% interest in ProGold from American Crystal Sugar Company (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.
“The evolution of the corn wet milling industry was an important aspect of our discussions,” stated GGC Chairman Mark Harless. “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.”