East Kansas Agri-Energy, LLC, the ethanol plant in Garnett, is set to start operations again Sept. 16, Bill Pracht said Friday during his presentation at the First Friday Forum in Ottawa.
Pracht, chairman of EKAE’s board of directors, said the plant has been shut down since October 2012, but will be up and running in no time.
“We’re going to start receiving grain on the third day of September,” Pracht told the audience at the community forum, which takes place each month at Neosho County Community College, 900 E. Logan St., Ottawa. “The rain we’ve had the last two weeks has allowed us to make this announcement.”
To some, the rainfall that’s doused the county recently might seem significant, but Pracht said it hasn’t been enough.
“We’re not going to have a great corn crop this year,” he said. “But we’re going to have enough corn to make our facility viable and to start right up again.”
In addition to the plant reopening, EKAE also is getting a new chief executive officer, according to a press release. Jeff Oestmann will be leading EKAE, according to the release. Oestmann most recently served as president and chief executive officer at Soy Energy, LLC in Mason City, Iowa.
“We are very excited to be re-opening the plant and having Jeff on board to guide EKAE as we prepare for future growth,” Pracht said in the press release. “EKAE has a strong balance sheet and is not encumbered by a huge debt load, which puts us in a great position to ramp up quickly and get back to doing what this plant is built to do — producing ethanol, distillers grains and economic vitality for rural Kansas.”
“It cost $1,000 to purchase a unit in our company and you had to buy 10 units,” he said. “We’ve paid out 92 percent of eligible money that we’ve had based on bank reports that we’ve been ordered to pay out, which is about $40 million total we’ve paid out to our investors so far.”
Pracht said for every $1,000 an investor put in, they got back $1,721 — but that wasn’t the end number for shareholders’ return on investment.
“In addition to a dividend, you as a shareholder have received $743 per unit in state and federal tax credits,” he said. “Bringing you a total of $2,464 per $1,000 invested. We’re very proud of that and our shareholders are very proud of that and happy that they’ve gotten that return so far.”
That amount of money might seem like a lot to pay out to shareholders, Pracht said, but EKAE also was being proactive during that time and investing money back into the plant as well.
“We’ve reinvested over $12 million into our plant over that same period,” he said. “In 2006 and 2007 we put a lot of money into storage — grain storage and ethanol storage. We’ve added buildings and corn oil extraction, too.”
Part of the reason the plant is going to be able to reopen, Pracht said, is because of its strong financial standing.
“We are financially sound,” he said. “We have no debt. We have some fiscal capital in the bank to restart our operations.”
When the plant shut down operations last year, some shareholders believed it was a huge mistake, Pracht said, while others thought the decision helped more than it hurt.
“In the board’s decision to shut our plant down in response to last year’s drought, it was hailed by many others as a courageous and prudent choice,” he said. “We’ve been able to preserve capital and preserve our shareholders’ value through that.”
Pracht addressed the possibility of the current board of directors being ousted by the Concerned Shareholders Group, led by Scott Brittenham, chief executive officer of Clean Energy Capital, LLC, EKAE’s largest shareholder.
“He does have an agenda,” Pracht said. “He wants to throw the entire board of directors out, except for himself and one other person. But we are confident that we have the proxy votes to win this proxy ballot, and we’ll see that outcome on [Aug. 17].”
Brittenham initially requested a shareholder meeting be scheduled for Wednesday in Lawrence to discuss the current standing of the board. That meeting would be about a week before the shareholder’s annual meeting, Pracht said, but that meeting has been postponed and will take place during the regular scheduled Aug. 17 meeting.
The economic impact the plant has on the City of Garnett and surrounding area is a driver for the plant’s reopening, Pracht said, and he’s excited to see it take off again.
“[The plant] has been a key positive driver for our rural communities,” he said. “It has helped every farmer, every agricultural business, in what I would safely say the eastern third of this state.”