By Lori Ehde
Agri-Energy and Broin Management are in the process of negotiating a settlement agreement over future management of Luverne’s ethanol plant.
Broin Management LLC filed suit against Agri-Energy LLC in Rock County District Court on Oct. 1, but the litigation stems from problems that started more than a year ago.
Conflict reportedly began when CornerStone board members tried to have Broin Management removed from the Agri-Energy Board to allow more freedom in making their own decisions.
Along with managing the Luverne plant, Broin affiliates have handled marketing and commodities for Agri-Energy, and the Broin family personally owns 6 percent of the CornerStone stock.
But the Broins also own shares in other regional ethanol plants, and some CornerStone board members alleged Broin affiliates weren’t securing the most profitable deals for the Luverne plant, due to what they perceived as conflict of interest.
Broin Management LLC filed suit in October to stop the board’s action to have Broin removed, and the courts supported Broin Management, which has retained a seat on the board.
CornerStone has since filed counter suits alleging conflict of interest and mismanagement, but Broin has filed to have those counter suits dismissed.
According to Norm Smeenk, chairman and CEO of Agri-Energy Ethanol Plant, the essence of the litigation centers on "differing philosophies as to how the plant should be run between the management company and board of governors."
Smeenk, Harrisburg, S.D., also serves as chairman of the board of CornerStone Cooperative.
He said Tuesday that, as far as members and the public are concerned, Agri-Energy’s viability will not be jeopardized by the outcome of the agreement.
"The plant has been profitable," Smeenk said. "People should not be concerned that the plant will close its doors."
CornerStone Cooperative owns nearly 70 percent of the business and has a 14-member board of directors elected by member investors to act on their behalf.
Co-op members have hired another marketing firm for Agri-Energy.
Former CornerStone Board Chairman Mike Pap and one of the largest investors in the Luverne plant, questions this decision.
"Luverne’s returns have never lagged behind any of the other plants owned or operated by Broin," he said.
He added that in months since the marketing contract went to Williams Energy, returns at the Luverne plant have dropped.
Smeenk said removing Broin from plant management may or may not happen. "But that’s not the focal point of our negotiations," he said. "We’re trying to resolve some issues."
Former CornerStone board member Harold Tilstra said he’s comfortable the Agri-Energy plant will continue to thrive.
"Our plant here in Luverne has its intra-family disputes, but business-wise its return on investment is as good or better than any like it," he said.
"Financially, it’s a top-performing business … that’s due partly to the good people there who run the plant."
Plant manager Rick Serie is an employee of Broin Management. He has accepted a full-time position to manage a Broin plant in Chancellor, S.D. Those duties will begin when a settlement is reached.