FARGO, N.D. - North Dakota Public Service Commissioner Tony Clark says the agency may look for legal help beyond the state Attorney General's office to help preserve more assets for unpaid farmers in the Anderson Seed Co. insolvency.
In February, assets of Anderson Seed of Mentor, Minn., were sold to U.S. affiliates of Legumex Walker Inc. of Winnipeg, Manitoba. Anderson Seed, a sunflower company, had operations in Minnesota, South Dakota and North Dakota. Some of the same family owners separately sold St. Hilaire Seed, also in Mentor, which specializes in dry edible beans. Besides the three jurisdictions, the PSC is looking at the way grain may have been moved around the region, and potentially whether the buyer is coming in and seeking to license some of the same elevators.
The PSC unofficially estimates that North Dakota farmers alone may file claims totaling $2.5 million. Farmers have until June 14 to file claims. "The clock is running," Clark says.
The commissioner says PSC agency officials are meeting with attorneys from the Attorney General's office the week of May 7 to ask for help with its duties as trustees.
The PSC also recently met with a group of farmers who wanted information about the case. One couple in that meeting had bought a different elevator, in which they had assumed the liabilities. They wondered why that wasn't the case with Legumex Walker when it bought Anderson Seed. "Their (Legumex Walker's) position is they bought the assets, period," says Illona Jeffcoat-Sacco, a PSC attorney.
"There are lots of technical, legal questions that have to do with having three states' laws in place," Clark says. Some questions involve the physical assets themselves, including when assets were liquidated, who got paid and what are the facts surrounding that. "Should those assets be available to producers, as opposed to whoever did get paid?"
A purchase order document filed by Anderson with the PSC may reveal the fate of some of the seed inventory.
The document says Legumex Walker agreed to purchase $1.922 million in grain inventories from Anderson Seed on Jan. 13, linked to the February sale of St. Hilaire Seeds, the edible bean company, and Anderson Seed, the sunflower seed company.
The deal involved 31,000 hundredweight (cwt.) of black oil dehull-grade sunflowers, and another 31,000 cwt. of "con oil" dehull grade sunflowers from Anderson Seed, and only from the company's Mentor, Minn., and Redfield, S.D., locations.
According to the agreement, Legumex Walker paid 75 percent of the purchase price upon delivery and the remaining 25 percent -- $480,000 -- within five business days of the closing of "the Transactions," which were to have been complete by Feb. 15. If the transactions weren't complete within 10 days of that date, Anderson Seed would have to repurchase the seed, with 2 percent interest per month.
"Buyer wishes to buy sunflower seed from Seller (Ron Anderson, CEO of St. Hilaire) in contemplation and in furtherance of the Transactions," and to "induce Buyer to continue negotiating the Transactions," the agreement says.
The grain transaction was signed by Anderson and Legumex Walker president Joel Horn, two weeks before the North Dakota PSC had received a complaint about Anderson Seed.
Jon Austin, a Minneapolis-based spokesman for Legumex Walker, confirmed that the 25 percent figure, or $480,000, remains withheld from the seed purchase, pending complete "satisfaction of terms" in the purchase deals. He declined to say what all the terms are, but says environmental uncertainty at the Redfield, S.D., plant is not one of them, because that deal was separate.
Austin says the company has been buying sunflower seeds through the St. Hilaire Seed grain buying license for weeks and has new license applications pending under the Legumex Walker Sunflower name in all three states.
The company is anxious to establish relationships with customers based on Legumex's 40-year track record, he adds. He says Legumex knows farmers are business people and hopes "they are able to support us." He says Legumex understands that "a lot of farmers may be unhappy with Anderson," but emphasizes that the Minnesota companies are separate from Legumex. He acknowledged Legumex assumed the liabilities of St. Hilaire Seed, and not of Anderson Seed because of "concerns we had."
Clark says the PSC knows about the $480,000 -- the final 25 percent from the Jan. 13 deal by Legumex Walker to purchase 62,000 cwt. of sunflowers from Anderson Seed. The PSC is studying whether to argue in court that the amount should be applied to a trust for unpaid farmers. Clark says it is this kind of question that the PSC may be seeking specialized legal help for. An outside lawyer could be appointed as a special assistant to the state's Attorney General for the purpose. He acknowledges the PSC staff is stretched by three insolvencies and may need to ask for more help in its biennial budget, especially "if there's a desire for the commission to get into financial auditing, versus physical inventories (of elevators)."
Clark also notes that the Falkirk (N.D.) Farmers Elevator, an elevator that is also being investigated by the PSC, and the St. Hilaire Seed/Anderson Seed cases have a common thread. St. Hilaire Seed purchased 42,000 cwt. of dry edible beans through Falkirk, Clark says. He thought the deal was done on April 5. "St. Hilaire is still owed on that," Clark says, meaning that Falkirk is supposed to have the inventory to cover the deal. Legumex Walker announced its purchase of the company on Feb. 15.
The PSC has received an application for a grain license from Legumex Walker for sunflower receiving stations at Durbin and Selz in North Dakota. The company purchased St. Hilaire Seed and assets of Anderson Seed of Mentor, Minn., which formerly owned the two sunflower delivery points. He says the PSC won't act on that yet because of "issues that are intertwined."
In another matter, attorney Rauleigh D. Robinson of Menoken, N.D., on March 16 filed a lawsuit against Anderson Seed on behalf of Morton County, N.D., farmers Glenn and Lisa Gerving of Glen Ullin. The Gervings claim that at the time their sunflowers were purchased, the company had no intention of paying for them. Anderson Seed had until about April 23 to respond. Anderson Seed denied it had any fraudulent intent. A hearing is set for July 17.