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This post is in response to the post by reformedbanker about the Cattlemen’s Heritage investment prospectus.
First, we have common ground with reformedbanker in the recognition that the beef industry could use more competition and that farmer-ownership, not just in Cattlemen’s Heritage but in other plants across the upper Midwest, is an important part of the solution.
It's important, however, that we provide answers to questions posed in that post as reformedbanker missed an important point Reformedbanker states that class B and C units “will be treated as equal.” That is incorrect, and that fact alone results in a completely different conclusion than was presented.
Class C membership units, which can be purchased and would be held by investors, are non-dilutable. Class B, which would be held by the project developer can and will be diluted. As an example, this project ultimately requires a $450-million investment, when the first offering of Class C units is sold, those shareholders will own one-third of the company. A second $150-million-unit offering would increase the Class C unit holders’ stake while diluting the Class B units.
Class A and Class C units are guaranteed over one-third ownership interest with their investment of one-third of the total project cost. The Class B units is responsible for finishing the project and securing two-thirds of the total capital required along with proper management and has no guarantee to their final ownership interest.
Meanwhile, unit options will be necessary to bring top-flight management to the company. Where will those options come from? Not Class C, but Class B. So, in addition to being diluted as more units are sold, the number of units that “one man – the guy organizing – will retain” is reduced. Ultimately, the percentage and value of his Class B units could be very small, but those Class A and Class C units owned by investors will be protected.
What’s more, the contention that those units will be owned “at no cost” is an incorrect, though easily misunderstood, conclusion. The Cattlemen’s Heritage project has been in the works for two years now. Potential Class C unit holders have not borne those costs; the “guy organizing” the project has. And those costs are far from inconsequential. Hiring a consulting firm for a project of this size runs easily into the millions of dollars.
Finally, there’s no reason for anyone to speculate about the investment prospectus because the Cattlemen’s Heritage leadership team, legal counsel and financial advisers are readily accessible and eager to speak with anyone who has questions. Anyone who wishes to contact Cattlemen’s Heritage can do so via the company’s email, [email protected] or contact the lead developer, Chad Tentinger, at [email protected]. The company’s telephone number in Des Moines is 515.509.9681.
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Cattlemen's Heritage answers are clear
