A series of regional meetings has netted Seaway Valley Farmers Energy Co-operative about half of the $6.7 million in new equity required to convince Netherlands-based Rabobank to take the plunge on financing a $50 million ethanol distilling plant in Cornwall.
Seaway Valley directors hit the road beginning last month to take their re-investment message to small groups gathered in halls across Eastern Ontario. Several more meetings are planned, said co-operative president Bud Atkins.
In most cases, small investors who've previously committed are sinking more cash into the project, Atkins explained. Most are farmers with, in some cases, husbands and wives turning over $25,000 each. Even teenagers are pledging up to $2,500 in savings.
During and following one of the latest meetings which was held at Winchester April 14 drawing 38 people, about $250,000 was raised in signed pledges, Atkins said. Some were turned in on the spot and some were faxed in later.
So far, more than $3 million has been pledged. Atkins always knew it would be a tough go to raise the extra amount sought by Rabobank but said a senior official from Holland who met with Seaway directors in Cornwall April 16 felt the campaign was on track.
The determined president said directors have decided that, if the dream doesn't finally come together this spring after five years of trying, they'll give it up and return the latest investments. However, the board feels it owes it to supporters to do everything in its power to protect the original investment of more than $12 million.
Atkins admitted the project always suffered from insufficient equity which made it impossible to land a principal investor. The cooperative was finally left with no alternative other than to attempt to build the local equity in order to finally attract a major bank. He expects Rabobank, if it comes on board, will charge 7.5 to 8 per cent for its financing.
Atkins has always insisted the project was good for jobs and the economy of Eastern Ontario: "The plant will bring in $54 million every year and an expanded capacity of over 100 million litres will create even more jobs and greater economic benefits."
He has noted that only about 200 million litres of 6.5 billion litres of ethanol consumed in Canada and the U.S. are produced here: "The Canadian market today could use 10 plants like ours and still have to import from the U.S. Minnesota has 10 plants where the members invested at least $20,000 and the members and owners guarantee with cash and corn that the bank will get paid. On the other hand, Ontario has one fuel ethanol plant and Seaway struggling to move ahead."
Atkins has always insisted markets exist for Seaway's output and that discussions are underway with major Canadian oil companies: "We are currently negotiating supply agreements for all of our production. If we had the production, we could sell 260 million litres right now."