Prairie Pride closes equity drive

Members of the Prairie Pride board of directors present at Tuesday;s equity information meeting were, left to right, Kevin Fischer, Ray Stropes, Paul Cumpton, Russell Johnson, Chuck Dunlop, Huleigh Wilson, Gene Morris, Al Decker, Marvin Oerke, Jerrell Fischer and Virgil Ast. --Rusty Murry/Daily Mail

Prairie Pride Inc. held a meeting Tuesday, Jan. 27, at the Cherry Street Grill in Nevada to present an overview of the company, its facility, operation and financial situation to current members and prospective investors and offer a final opportunity purchase equity in the company which would provide the $10 million needed to operate the plant at full capacity.

There were 11 of the 15 members of the Board of Directors in attendance, a handful of other employees and a number of interested individuals present. Casual conversation and business banter continued through the meal until Marvin Oerke, chairman of the Board of Directors, began the presentation.

A very brief history along with some slides of the plant under construction and the statement that the plant was only operating at 50 percent capacity brought Oerke to the point of the gathering when he said, "we need to get this plant running full tilt, so we need some more working capital." Oerke then introduced Director Gene Morris to continue with the presentation.

Using slides, Morris walked the audience through the facility, pointing out its state-of-the-art features and production and storage capabilities and the company's ability to efficiently deliver the finished product. He went on to introduce Joanne Godfrey the company's biodiesel sales representative.

Godfrey showed a couple of brief videos, gave a short explanation of the process of extracting the different products from the beans and discussed procedures for unloading raw material and shipping the finished products. She said, "we have great material handling capabilities."

Director Al Decker took the floor next and made mention of how soybean products had been a part of the meal the crowd had just enjoyed. Decker noted the high quality of the products coming out of the plant and the marketability of those products. Citing some data compiled as recently as Jan. 5, 2009 Decker explained how the original operating costs had been projected and how current economic conditions have affected the purchasing power of the company.

He gave the audience a "snapshot view" of the daily cost to operate, and using terms like risk assessment, fixed costs, depreciation and daily margin explained the fiscal reasons for the company offering equity at this time. Using a pipeline analogy, putting soybeans in one end and having money come out of the other, Decker went on to detail how the money flows through the plant and what kind of use the company could get out of a dollar's worth of operating capitol.

He then reiterated the point of the meeting which was "to offer you the opportunity to help furnish operating capital and ensure that that pipeline stays full and it moves forward and operates at optimum capacity." Decker gave a description of the two kinds of investment available and turned the microphone over to General Manager John Nelson.

Nelson began by telling the crowd "how we ended up in this position."

When the company began, it had 40 percent equity and 60 percent debt. Some time ago, in the midst of the financial sector's meltdown, "lenders decided that projects with limited equity, such as ours at 40 percent, needed more equity instead of paying on debt." Requiring more equity effectively eliminated the working capital line of credit the company had in the beginning.

That is why the board and management decided to make the equity offering and come out into the communities and put the offer to current members and interested investors. They feel as though they have proven the company's worth because, "the company has been working for the past five months," said Nelson, "through five months of some of the worst economy in 30 years. It's been a struggle with limited working capital," he added.

According to Nelson, the first $5 million will be used to purchase soybeans. The second five will be to "lock in profit." The company does that by locking in the price of beans on "the board" and then selling the product off "the board." At this time no one is sure how successful the equity drive will be, but "the board is looking at all options that are open to get this $10 million and are committed to obtaining it," said Nelson.

That brought up the issue of other entities investing in the company. One man in the audience who said he believed in the plant and planned on investing expressed concern about the value of original stock being diluted if a large chunk of stock went to one investor. Nelson went on to say that a large entity was in fact evaluating the project.

It was stated that for the $10 million to come from current members and new investors was the best case scenario and the money was starting to come in now that the drive was nearing its end.

The offer closed Jan. 30. The company will have a chance to evaluate how much has come in next week and the board will have to make a decision from there. "We will do what it takes to keep this successful," said Nelson.