Item 1.01 Entry into a Material Definitive Agreement.
Cargill Incorporated ("Cargill") exercised its option (the "Option") to purchase
a 50% interest in ProGold LLC ("Pro Gold") from American Crystal Sugar Company
("American Crystal"), pursuant to that certain Option Agreement, effective
January 1, 2018, by and between Cargill, Golden Growers Cooperative ("the
Cooperative"), and American Crystal.
The Cooperative, pursuant to the terms of that certain Consent Agreement,
effective January 1, 2018, by and between Cargill, the Cooperative, and American
Crystal (the "Consent Agreement"), approves and consents to the transfer of such
50% interest in ProGold from American Crystal to Cargill in connection with the
exercise of the Option. The Cooperative is also electing to exercise its right
under the Consent Agreement to purchase American Crystal's remaining 1% interest
in ProGold such that the Cooperative and Cargill will each own a 50% interest in
ProGold. The Cooperative will also pay to American Crystal a capital adjustment
in an amount equal to 1% of the portion of costs that have not been paid by
Cargill to ProGold through additional rent with respect to certain projects at
the facility.
In connection with the exercise of the Option, on February 24, 2022, the
Cooperative and Cargill announced an Operating Agreement outlining the
structure, governance and operation of ProGold. ProGold's board of governors
will initially be comprised of six members, with each member having the right to
appoint three of these governors. Extraordinary transactions such as a sale of
ProGold or its assets, dissolution, and amendments to its operating agreement
must be approved by the members and neither member may sell or transfer its
interest in ProGold to any other party without the other's consent. Each member
has a right of first refusal to purchase the other's interest in ProGold if it
receives an offer for or desires to sell its interests in ProGold and Cargill
also has an option to acquire the Cooperative's interest if certain defined
events occur. Further, if a defined triggering event occurs, the Cooperative and
Cargill will expeditiously and in good faith work together to finalize a joint
venture agreement for the structure, governance and operation of ProGold
according to certain operating principles and other guideline terms. If a joint
venture agreement is agreed to, the Cooperative will reimburse Cargill for 50%
of the undepreciated capital expense associated with approved projects. If the
Cooperative and Cargill are unable to agree on terms for a joint venture
agreement, Cargill agrees to purchase the Cooperative's 50% interest in ProGold
for $81 million and half of any remaining lease payments due through December
31, 2026. The Operating Agreement will become effective at the closing of
purchase of ProGold interests pursuant to the Option.
The foregoing description of the material terms of the Consent Agreement and
Operating Agreement does not purport to be a complete description of the rights
and obligations of the parties thereunder and is qualified in its entirety by
reference to the full text of the Consent Agreement and Operating Agreement. The
closing of purchase of ProGold interests pursuant to the Option is expected to
occur on March 1, 2022 and is subject to various terms and conditions. There is
no guarantee that the closing will occur, in which case the Operating Agreement
will not become effective.
Item 8.01 Other Events.
On February 24, 2022, ProGold and Cargill announced a lease agreement (the
"Lease Agreement") with a term continuing through December 31, 2026. This Lease
Agreement will become effective at the closing of the purchase of ProGold
interests under the Option.
Under the terms of the Lease Agreement, Cargill will pay ProGold annual rent of
$15.5 million in 2022 and 2023, and $16 million in 2024, 2025, and 2026.
Additionally, ProGold has agreed to pay at least $750,000 for infrastructure
maintenance for the years 2022 and 2023 and $500,000 for the years 2024, 2025,
and 2026. Cargill has agreed to pay Golden Growers $1.28 million at closing as
an early buyout of previously committed and deployed capital projects. During
the course of the lease, Cargill will deploy capital for several approved
projects estimated at $25 million. Cargill will have a leasehold interest in
these capital projects and will receive the benefit of depreciation during the
lease.
The foregoing description of the material terms of the Lease Agreement does not
purport to be a complete description of the rights and obligations of the
parties thereunder and is qualified in its entirety by reference to the full
text of the Lease Agreement. The closing of purchase of ProGold interests
pursuant to the Option is expected to occur on March 1, 2022 and is subject to
various terms and conditions. There is no guarantee that the closing will occur,
in which case the Lease Agreement will not become effective.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
10.1 Consent Agreement, effective January 1, 2018, by and between Cargill, the
Cooperative, and American Crystal, incorporated by reference to Exhibit 10.1
of the Cooperative's Current Report on Form 8-K, filed April 10, 2017.
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