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Plastics firm to buy Ag Pro, produce fuel

Nov 21, 2006 (Watertown Daily Times - McClatchy-Tribune Business News via COMTEX) -- MASSENA -- Michelex Corp. plans to acquire its Industrial Park neighbor Ag Pro Ltd. to break into the alternative fuel business.
The plastics manufacturer will use stock and cash to purchase $12 million in assets from the soybean processor and construct an addition to the current Ag Pro building in the park, Michelex announced Monday.

The Ag Pro plant is capable of processing 150 tons of soybeans for animal feed each day. That capacity would be increased to 250 tons for biodiesel production and add as many as 50 jobs, Michelex President Thomas Gramuglia said, adding the real benefit would be to farmers.

"I thought that the farmers in St. Lawrence County really needed to have a cash crop," Mr. Gramuglia said. "There's a lot of farmland that's not utilized right now."

The 250 tons per day of soybeans is enough to produce about three million gallons of biodiesel each year. With soy currently fetching $7 a bushel, Mr. Gramuglia estimated the plant would have to tap 90,000 acres, worth about $280 per acre.

"To the individual farmers in St. Lawrence County, that means $20 million total per year," he said.

Michelex plans eventually to produce 10 million gallons of fuel each year, which would require some 833 tons of soybeans each day. Currently, there are an estimated 600 to 800 acres of soybean crop in the county, though agencies like Cornell Cooperative Extension have worked to spark interest in recent years.

The company recently filed the preliminary application needed to make loan arrangements through the St. Lawrence County Industrial Development Agency, which can offer development incentives like tax-exempt financing and lower interest rates.

"I think it's significant in that they're two local businesses merging together and putting together their resources to create more jobs," said Raymond H. Fountain, chief executive officer of the IDA, which has offered initial support for the acquisition.

Mr. Gramuglia said he intended to acquire Ag Pro by the end of the year and hopes to be producing the first fuel from the plant by mid-2007. The industrial park is already targeted to be the site for an ethanol fuel processor that hopes to produce five million gallons a year.

"There's a lot of attention already. We've talked to several firms over the last few months," Mr. Fountain said.

Among the key factors are numerous federal and state tax breaks extended to alternative-fuel entrepreneurs and Massena's low-cost power, which plays an important role in production, he said.

Ag Pro began production of soy-based animal feed in 2002 after two decades of planning. In 2003 the plant went on a several-month hiatus owing to low demand and high bean prices.

A contractor sued the company in state Supreme Court for about $100,000 in unpaid bills in 2004. A countersuit demanded $250,000 from J.E. Sheehan Contracting Corp., Potsdam, for incomplete work. In 2005, HSBC Bank, Buffalo, filed suit for more than $1.2 million in outstanding loan payments, but the plant has remained in production.

"We've been under mutual discussion for a number of months," Mr. Gramuglia said.

A representative of Ag Pro did not return calls seeking comment.

Michelex, a manufacturer and distributor CD and DVD packaging, recently emerged from some financial troubles of its own when it settled a $3 million outstanding loan lawsuit in April.


By Shane M. Liebler

To see more of the Watertown Daily Times, or to subscribe to the newspaper, go

to http://www.wdt.net.

Copyright (c) 2006, Watertown Daily Times, N.Y.

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Posts: 5178 | From: Up North | Registered: Dec 2005  |  IP: Logged | 

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Originally posted by casviper:
I guess by tomorrow we will be at our year low and if it breaks that then subpenny is a guarantee.

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Posts: 2473 | Registered: May 2006  |  IP: Logged |