Posted 11/12/2013 19:04 (#3440380 - in reply to #3438202) Subject: Re: American Crystal trades at $1,350
east grand forks, mn
Ok Nick And Getafterit,
The managing partner of the JV (grower) could be sued by the shareholder and responsible for 100% of fixed costs for not delivering the beet. JV agreements demand that both parties fulfill all obligations, even if the time on the contract has expired. Because you cannot close the LLP ( JV agreement) with the state until all debts and obligations are fulfilled. The JV is intact until the shares are transferred out. Which for that to happen means the board needs to approve the transfer. That will not happen if the board feels that the shareholder has no way to grow them.
I stand corrected the stock will likely quit falling and rental rates will not go negative. What is the retired shareholder incentive to sell his shares. Unless he/she owes debt against them the rental will just go to zero. It doesn't cost them anything to hang on to the shares and see how things pan out at these prices. The company has inadvertently protected the retired shareholder to maintain acres with this 5-year agreement. 2017 when the 5 year agreement is up then things will get more interesting in numbers if the price of sugar hasn't rebounded some. Now is the perfect time to capitalize on getting the shares back in the growers hands but it won't happen unless the board ratifies the 5-year agreement so as to let the shares be transferred back to the shareholder whether he/she can grow them or not.
A resolution needs to be brought up to change the 5-year contract. Then stock prices will fall and shares will go negative to get those shares out. If the company is worried about acres then set the planting tolerance to 140-150% or whatever it needs to keep fixed costs at a minimum. Berg said himself too, that you grow as much sugar as you can when market is high to capitalize on it. When times are tough you cut back and weather the storm. Now is the time to be growing less acres anyways.
American Crystal trades at $1,350
