Aug. 31–Efforts to correct Oklahoma’s beef processing deficit may face further delays as producer-investors have not raised the required $10 million startup funds to build the proposed AmericanNative Beef facility near Hugo. The project’s supporters are not giving up and are seeking $6 million in venture capital to complete the project.
A term sheet guaranteeing a 22 percent return on venture capital over the life of the investment has been prepared and federal and state tax credits of up to 69 percent are available. State agriculture officials say it’s the most attractive package they have seen.
“This project is too good to let it go without doing everything we can to complete it,” said Terry Peach, Oklahoma agriculture secretary. “We rank third in the nation in beef production and 37th in beef processing; even New Jersey and Puerto Rico process more than we do.”
A feasibility study by SJH & Co. of Danvers, Mass., renowned for its expertise in the meat industry, showed a high probability of success, he said. This study has been confirmed by an extensive due diligence report compiled by meat scientists and economists from Colorado, Texas and Oklahoma.
Money from producers could not cover the entire cost of the project for a variety of reasons, Peach said.
“This is pure speculation, but I think the sluggish economy and perhaps the corporate scandals we’ve experienced have discouraged producers from making the investment,” Peach said.
Producers from Oklahoma, Texas, Arkansas and Louisiana have invested about $2.5 million in ANB so far, Oklahoma Farmers Union coordinator Mason Mungle said. The drive to recruit these investors began last November.
ANB wants to complete the offering by the end of this year, Mungle said. Unless enough venture capital is raised, the company will be forced to cancel the offering and return all funds.
Mungle said the cattlemen behind the project don’t want their money back. They want a beef processing facility in Oklahoma.
“The producer-investors I talk to want to see this project completed,” he said. “I’m confident that if we can get companies that have the ability to invest in this facility to look at ANB, they will want to get on board and we won’t have to return the money we’ve raised so far.”
In fact, the cattle producers who have invested in ANB are expected to buy an additional $1.5 million in stocks once the $6 million venture capital goal is reached, Mungle said.
“Their only concern has been whether or not we could raise enough money to make this beef processing plant a reality,” he said.
ANB is planned as a cow processing facility that will fabricate high value products from traditionally low value beef cuts. Gary Bledsoe, consulting coordinator with the Oklahoma Department of Agriculture, Food, and Forestry, said focusing on converting beef from cull cows into processed products is the key to high profits.
Bledsoe said companies interested in receiving a term sheet or more information about the blended cooperative or limited liability company can contact him at 830-1341.
Mungle can be reached at 491-1594. Bill Elliott with First United Bank in Durant is also on
the ANB advisory board and is available at (580) 924-2267.
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(c) 2003, The Daily Oklahoman. Distributed by Knight Ridder/Tribune Business News.
