AgStar Financial Services, based in Mankato, MN, announced at press time a five-point proposal to preserve its neighboring Farm Credit System lender, Farm Credit Services of America (FCSA) based in Omaha, NE. AgStar had earlier submitted a proposal to FCSA, but the new proposal comes on the heels of the recent announcement that the Board of FCSA had accepted an acquisition offer from a Dutch-based banking conglomerate, known as the Rabobank Group.
Under the AgStar proposal, stockholders of FCSA would continue to own and control their lending association, retain borrower rights and protections, receive a cash distribution of $650 million and ongoing patronage allocations in future years. Dependent on future profitability, the total potential value of the AgStar proposal could exceed $1 billion to FCSA stockholders.
According to Paul DeBriyn, president and CEO of AgStar Financial Services, “People have told us that not only did the Board sell FCSA too cheap, but they are also deeply concerned about losing their ownership, voting control, borrower rights and protections they have come to value as a member of the Farm Credit System (FCS).”
FCS says the primary focus should be on what's best for rural America.
“Rural America has changed dramatically in the 88 years since the Farm Credit System was established,” says Marc Knisely, president of Minnesota Valley FCS. “We can and should be doing more for rural America, and we view the recent decision by FCSA of America to exit the Farm Credit system as a symptom of these deeper underlying issues.”
FCSA serves Iowa, Nebraska, South Dakota and Wyoming. It was announced in July that FCSA had agreed to be acquired by Rabobank. That same day, Farm Credit System voiced its opposition to the merger.