Equity Method Investments

9 Months Ended

Sep. 30, 2013

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investments.

As of September 30, 2013, the Company’s investments accounted for on the equity method of accounting consist of the following: (1) 30 percent interest in ICP, which manufactures alcohol for fuel, industrial and beverage applications, and (2) 50 percent interest in D.M. Ingredients, GmbH, (“DMI”), which produces certain specialty starch and protein ingredients.   

Processing completed a series of related transactions on November 20, 2009 pursuant to which Processing contributed its Pekin plant and certain maintenance and repair materials to a newly-formed company, ICP, and then sold 50 percent of the membership interest in ICP to Illinois Corn Processing Holdings (“ICP Holdings”), an affiliate of SEACOR Energy Inc.

On February 1, 2012, ICP Holdings 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.  Processing owns 30 percent of ICP and is entitled to name 2 of ICP’s 6 advisory board members.

Under a marketing agreement between ICP and the Company, (the “Marketing Agreement”), ICP manufactured and supplied food grade and industrial-use alcohol products for the Company, and the Company purchased, marketed and sold such products for a marketing fee.  Effective January 1, 2013, the Marketing Agreement expired. The Company has sourced minimal product from ICP since April 2013.

ICP’s term loan and revolving credit agreement with an affiliate of SEACOR Energy Inc. expired as of December 31, 2012 and has not been renewed.  The Company has no further funding requirement to ICP.

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 certain if EBITDA losses aggregate $1,500 over any three consecutive quarters or if ICP’s net working capital is less than $2,500.  For the quarter ended March 31, 2013, ICP experienced an EBITDA loss in excess of the $500 threshold. Such shutdown notice was provided by the Company on April 18, 2013 under the terms of the ICP Limited Liability Company Agreement, and such notice was rejected by ICP Holdings. The Company has not withdrawn its election as of the date of this filing.

The ICP Limited Liability Company Agreement provides for a new allocation of profit and loss when notice of shutdown is rejected by ICP Holdings.  From an accounting perspective, the Company will continue to allocate profit and loss 30 percent to the Company and 70 percent to ICP Holdings in accordance with U.S. generally accepted accounting principles.

Summary Financial Information

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

	Quarter Ended						Year to Date Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
ICP’s Operating results:
Net sales (a)	$	52,580		$	47,813		$	146,807		$	164,804
Gross profit	148			45			(900		)	2,075
Net income (loss)	$	(585	)	$	(448	)	$	(3,472	)	$	311

(a) Includes related party sales to MGPI of $110 and $9,697 for the quarters ended September 30, 2013 and 2012, respectively, and $3,510 and $40,331 for the year to date periods ended September 30, 2013 and 2012, respectively.

The Company’s equity in earnings (loss) of Joint Ventures based on unaudited financial statements is as follows:

	Quarter Ended						Year to Date Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
ICP (30% interest) (a)	$	(135	)	$	(134	)	$	(1,042	)	$	229
DMI (50% interest)	44			4			80			(65		)
	$	(91	)	$	(130	)	$	(962	)	$	164

(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 September 30, 2013, the Company’s ownership percentage in ICP and accounting profit and loss was 30 percent.

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

	September 30, 2013		December 31, 2012
ICP (30% interest)	$	5,856	$	6,898
DMI (50% interest)	496		403
	$	6,352	$	7,301