MAUCH: RTE Board of Governors has the best interest of all shareholders of RTE
On behalf of the Board of Governors of Red Trail Energy, LLC I would like to respond to the article that Mr. Bob Zent published in the April 7 issue of the Dickinson Press.
For those of you that don't know, Red Trail Energy, LLC (RTE is a 64 million gallon per year ethanol production facility located in Richardton, ND with annual sales of $125 million. RTE employs 46 full time employees who operate the facility 24 hours a day, 7 days a week, and has an annual payroll of $3.2 million.
Along with producing 64 million gallons of ethanol, RTE also produces 180,000 tons of DDGS, MDGS, and corn oil which are sold to many local cattle feeders. To produce these products RTE purchases 22.8 bushels of corn mostly from North Dakota farmers and as as we can from local producers in the area.
RTE's inception began with an idea from a local farmer and seed dealer. Through that process RTE was formed and shares were offered for sale. To meet its equity requirements there were several North Dakota programs that were used such as the Community Development Block Grant program of the Division of Community Services of which Stark County is the agent and the North Dakota Development Fund, which provides funds as as an equity investment in the plant with the understanding that RTE would repurchase and retire their shares when it was able. These two entities are a part of the 932 investors that own RTE.
Over the past three years RTE has been in contact with the Community Development Block Grant Division of Community Services and the North Dakota Development Fund to review the intent of their investments. RTE has been working with these agencies to return their initial investments so they can use those funds for future economic development opportunities throughout the state.
Mr. Zent's evaluation of the tax burden placed on Stark County by RTE is somewhat disturbing and short-sighted. RTE was built on 65 acres of land that was paying a tax of $5.48 per acre (using today's numbers), which would equate to $4,274.40 over a twelve year period for Stark County. Even though Stark County gave a tax abatement for the first years of our construction, and we thank Stark County for that, RTE has sinces paid $2,058,389.39 in property tax and will be paying at least $300,000 per year going forward. Stark County has also received distributions totaling $99,996 for being the agent for the distributions to the State. Not to mention the positive economic impact a company that on average does $125 million in sales brings to the area.
In addressing Mr. Zent's view point on RTE trying to change the value of the smaller investor's share, this is totally false. RTE has 932 investors and the Board of Governors has the responsibility of protecting all shareholders, and I assure you that is our intent, large or small does not matter. RTE is a public reporting company that is registered with the SEC. Several years ago the board looked at deregistration in an effort to reduce overhead cost. The only way to accomplish this was to reclassify the shares into three different classes of shares and change the voting rights of each class. So Mr. Zent was right in that respect. However, he is not correct in that there is a different return on each share class. All shares are treated the same when it comes to distributions. It is only his perception that the share value would be worth less. It's all a moot point anyway as the Board of Governors took it to the shareholders and the shareholders voted it down.
The real misunderstanding is between the Community Development Block Grant Division of Community Services agreement and Stark County.
RTE is willing to work with the State and County to accomplish the wishes of the State and comply with the intent of the program by returning the investment to the state so it can be used to help develop more successful companies throughout the state.
I assure you that the RTE Board of Governors has the best interest of all shareholders of RTE, the State and County alike.
Sid Mauch, Chairman of the Board