Group 7 KimberlyAlonzo Stephen Hebert Myles Bragman Tuan Nguyen Kenneth Krogstad Anthony Silvio

1. Group 7 KimberlyAlonzo Stephen Hebert Myles Bragman Tuan Nguyen Kenneth Krogstad Anthony Silvio Alexander Guinn Sean Gonzales

2. Background • MME is a cooperative and an ethanol production plant • Ryland Utlaut was the CEO and major factor in starting the plant • $58 million needed to build the plant • Half raised through local farmers and banks while the other half was financed • The plant ran 353 days a year and only went down for routine maintanence

3. Central Problem • Entry of new firms into the ethanol market • Large firms have entered the industry, saturating the market • POET, VALERO, Archer-Daniels Midland

4. Goals • Liquidity for the shareholders • Stop the corn commitment • Risk Reduction • Reduce ethanol production costs • Profitability

5. Constraints • Increased competition • New Technologies • Risk • Blend Wall • Decrease in Government Incentives

6. Alternatives • Sell the plant • Missed initial $280 million dollar deal involving a 6 plant merger • Current appraisal as of 2010 is 50 million • Expand and acquire new plant • Increasing economies of scale • Maintain Current Status • Continue doing what made them successful in the past

7. Pros/Cons of Selling the Plant • Pros • Liquidity for the shareholders • Reduce all risk (increasing competition) by getting out of the industry entirely • Cons • Other companies would not look out for farmers like MME did • Lose the impact on local corn prices

8. Pros/Cons of Acquiring a New Plant • Pros • Increase the economies of scale • Existing plants can be acquired for less than building a new plant • Pass on the success of MME to other plants • Cons • Increasing MME’s risk in a volatile industry • New technologies may make these existing plants outdated

9. Pros/Cons of Maintaining Current Status • Pros • No point in fixing something that has been deemed successful • Steady output, quality/commitment of workers, and a conservative management help MME maintain a successful status • Cons • Risk of increased competition • No such thing as maintaining a current status when dealing with competitive risk

10. Alternative Chosen • Sell the plant • High market saturation • Eliminates both goals and constraints due to exiting of the ethanol industry

11. Implementation • Sell the company at current appraised $50 million value • 20% in Cash and 80% in Stock of the Company • Additional contractual agreement to guarantee continual purchase of local corn