Note 3 - Investment in Joint Ventures.

3 Months Ended

Mar. 31, 2012

Investment In Joint Ventures [Text Block]

Note 3.  Investment in Joint Ventures.

At March 31, 2012, the Company’s investments accounted for using the equity method of accounting consisted of the following: (1) 30 percent interest in Illinois Corn Processing, LLC (“ICP”), which operates a distillery, and (2) 50 percent interest in D.M. Ingredients, GmbH (“DMI”), which produces certain specialty starch and protein ingredients.   

On February 1, 2012, Illinois Corn Processing Holdings (“ICP Holdings”), an affiliate of SEACOR Energy, Inc., exercised its option to purchase an additional 20 percent of the membership interest in ICP.  The sales price was $9,103 and was determined in accordance with the LLC Interest Purchase Agreement.  Following its exercise, ICP Holdings owns 70 percent of ICP, is entitled to name 4 of ICP’s 6 advisory board members, and generally has control of ICP’s day-to-day operations.  The Company owns 30 percent of ICP and is entitled to name 2 of ICP’s 6 advisory board members.   The transaction resulted in a pre-tax gain of $4,055.

The Company does not have the power to direct or control the activities of ICP that most significantly determine the economic performance of this investment.  These responsibilities had historically been shared equally with the Company’s joint venture partner; however, now ICP Holdings owns 70 percent and is generally entitled to control ICP’s day-to-day operations.  In addition, Management has determined that the Company does not have the power to direct the activities of ICP that most significantly impact economic performance, or have an obligation to absorb losses or the right to receive benefits from ICP that could be significant to ICP, and accordingly, the Company should not consolidate ICP.

Certain Rights of Joint Venture Partners and ICP’s lender

- Joint Venture Partners

Pursuant to the ICP Limited Liability Company Agreement, each joint venture party initially had 50 percent of the voting and equity interests in ICP.  Control of day-to-day operations generally is retained by the members, acting by a majority in interest.  Following its exercise of its option referred to above, ICP Holdings owns 70 percent of ICP and generally is entitled to control its day-to-day operations. However, if SEACOR Energy Inc. were to default under its marketing agreement, referred to below, the Company could assume sole control of ICP's daily operations until the default is cured.

The ICP Limited Liability Company Agreement originally provided for the creation of an advisory board consisting of three advisors appointed by the Company and three advisors appointed by ICP Holdings. Following its exercise of ICP Holdings’ option exercise referred to above, this board now consists of two advisors appointed by the Company and four advisors appointed by ICP Holdings.  All actions of the advisory board require majority approval of the entire board, except that any transaction between ICP and ICP Holdings or its affiliates must be approved by the advisors appointed by the Company.

- ICP’s lender

The ICP Limited Liability Company Agreement gives the Company and its joint venture partner, ICP Holdings certain rights to shut down the Pekin plant if ICP operates at an EBITDA loss of $500 in any quarter.  Such rights are conditional in certain instances but are absolute if EBITDA losses aggregate $1,500 over any three consecutive quarters or if ICP’s net working capital is less than $2,500.

Losses of such nature are also events of default under ICP’s term loan and revolving credit agreements with its lender, an affiliate (sister company) of SEACOR Energy, Inc., which, upon any requisite notice and/or lapse of time, would entitle the lender to impose a default rate of interest, foreclose on ICP’s assets and, in the case of the working capital deficiency or successive losses, enforce the closure provisions referred to above.

Maximum Exposure to Loss

On January 29, 2010, ICP acquired the a steam facility that services its operations for $5,000, of which approximately $2,000 remained payable at December 31, 2011.  On January 19, 2012, $1,000 was paid, equally by the Company and SEACOR Energy Inc., leaving at March 31, 2012, $1,000 still payable.  The Company’s portion of the remaining commitment of $500 plus the Company’s investment balance is the maximum exposure to losses.  A reconciliation from the Company’s investment in ICP to the entity’s maximum exposure to loss is as follows:

	March 31,		December 31,
	2012 (a)		2011
Company’s investment balance in ICP	$	7,704	$	11,777
Plus:
Funding commitment for capital Improvements		500		1,000
The Company’s maximum exposure to loss related to ICP	$	8,204	$	12,777

(a)   The Company’s investment balance in ICP at March 31, 2012 reflects the sale of a 20 percent interest effective February 1, 2012.

Summary Financial Information

Condensed financial information of the Company’s non-consolidated equity method investment in ICP is shown below.

	Quarter Ended		Quarter Ended
	March 31,		March 31,
	2012		2011
ICP’s Operating results:
Net sales (a)	$	58,053	$	57,567
Cost of sales and expenses (b)		56,925		57,409
Net income	$	1,128	$	158

(a)Includes related party sales to MGPI of $15,994 and $16,259 for the quarters ended March 31, 2012 and 2011, respectively.

(b)Includes depreciation and amortization of $1,259 and $1,289 for the quarters ended March 31, 2012 and 2011, respectively.

The Company’s equity in earnings (loss) of joint ventures is as follows:

	March 31, 2012			March 31, 2011
ICP (30% interest) (a)	$	473		$	79
DMI (50% interest)		(36	)		45
	$	437		$	124

(a)   The Company’s ownership percentage of ICP was 50 percent through February 1, 2012, when the Company sold 20 percent of its investment.  From February 2, 2012 through March 31, 2012, the Company's ownership percentage in ICP was 30 percent.

The Company’s investment in joint ventures is as follows:

	March 31, 2012		December 31, 2011
ICP (30% interest) (a)	$	7,704	$	11,777
DMI (50% interest)		345		370
	$	8,049	$	12,147

(a)   The Company’s ownership percentage of ICP was 50 percent through February 1, 2012, when the Company sold 20 percent of its investment.  From February 2, 2012 through March 31, 2012, the Company's ownership percentage in ICP was 30 percent.