EL DORADO SPRINGS -- Producers Grain members voted 195 to 19 here Tuesday night to avoid bankruptcy by relinquishing operations and $7.6 million in debt to the regional agricultural coopetative MFA Inc.
The 91.1-percent "yes" vote gave the proposal well over the 75-percent affirmation it needed for MFA's offer to be accepted, a board member reported. "We had wanted to give MFA 90 percent," he added.
El Dorado Springs Sun Editor Kenny Long estimated the 6 p.m. crowd at the Fraternal Order of the Eagles Lodge at 250 to 275 people, of whom 214 cast ballots, making "143" the magic number.
During heavily attended informational meetings Jan. 8 here and two nights later at the Vernon County fairgrounds home economics building in Nevada, customers who had done at least $1,000 in business with Producers Grain during calendar 2012 -- the standard of membership and voting rights -- learned that the long-established member-owned cooperative had $6.7 million in assets and had reached a state of financial untenability.
Participants indicated at the 6 p.m. Tuesday annual meeting and showdown vote that MFA's pledge to retain all 43 Producers Grain employees in Walker, Bronaugh, El Dorado Springs and Nevada was a big factor in the results. The transfer of assets is scheduled to occur within 60 days.
Producers Grain board president Jerry Brackenridge of Tiffin, MFA Regional Manager Ed Long of Springfield, and accountant Rick Westbrooke of Richmond had said the Producers board learned of a $2 million deficit last summer.
Brackenridge said MFA had guaranteed there would be no lapse in service if the takeover was approved and that the Columbia-based company had accepted all the 2012 pre-pays made by Producers customers and would deliver their fertilizers, chemicals, seed and other supplies regardless of Tuesday's outcome.
MFA also promised to spend $400,000 to $500,000 a year to modernize operations, said Brackenridge, who said Producers' problems dated to the 1990s, when it assumed $1.2 million in members' indebtedness.
The board president said directors had thought conditions might improve because Producers rebounded from a $700,000 deficit in 2009 to register a $355,000 shortfall in 2010 and break even the next year.
Westbrooke said salaries, repairs and maintenance cost $4.7 million versus $2.7 million in revenues in the 2012 fiscal year.
A former Producers Grain customer, Jim Wilson of Richards, had questioned the takeover by saying other buyers should be sought so that a better offer would enable the return of $2.4 million in equity that members would otherwise lose.
Wilson said he spent $400,000 with the company in 2010 and that it was logical for MFA, owed $5.5 million by Producers, to resolve that deficit with an expenditure of only $900,000.
However, Westbrooke said that in that scenario, MFA would have to keep running Producers Grain in the red, as it had done since August, and proffer its own bid while the process was drawn out. If another buyer weren't found, he said, the cooperative's assets might have to be sold at auction and its services stopped.
An information sheet said the company would be renamed Producers MFA Agri-Services and that the equity issue might be resolved if members' equity could be deducted on their Schedule F tax returns.
Founded in 1914 at Brunswick as the Missouri Farmers Association, MFA Inc. has 1,200 employees and more than 45,000 members, most of them farmers, in Missouri and adjacent states, according to references.
Its independent companies, MFA Oil and Shelter Insurance, were formed in 1929 and 1946.