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American Crystal Sugar Will Default On $71.2 Million Federal Loa - Valley News Live - KVLY/KXJB - Fargo/Grand Forks

Update: ACS CEO Says Reports on Defaulted $71.2 Million USDA Loan is Not Accurate

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Update...

American Crystal Sugar officials say the company did not default on a 71.2 million dollar loan, despite recent reports to the contrary. The loan was given to American Crystal Sugar through a U.S. Agriculture Department program that provides relief when a strong sugar supply depresses prices. Valley News team's Regina Reese spoke with the CEO to get his side of the story.

CEO of American Crystal Sugar, David Berg wants to set the record straight on recent reports accusing the company of defaulting on a 71.2 million dollar loan.

"This is a normal tool out of many commodity price support for wheat, corn, soybeans, stuff like that.. and sugar. It's been around for ever and ever and ever. Fortunately the price of sugar has not been at these low levels for a long time so we have not had to use it, but this year we are using a basic tool that has been around for many, many, years," says Berg.

Berg mentioned that the loan comes from the USDA'S long-standing sugar program under the 2008 Farm Bill.

According to Berg, this year the oversupply of Mexican sugar has flooded the U.S. market and in response, American Crystal forfeited sugar as collateral to combat low market prices.

The forfeiture of loans is not uncommon. As many as $300 million dollars in government loans could be forfeited so far this year by various major companies across the U.S.

Despite the flooded sugar market and low consumer prices, American Crystal Sugar says its financial health is stable.

Original Story.... 

American Crystal Sugar will default on a government loan of $71.2 million under a program that provides relief when a glut of sugar depresses prices. 

David Berg, American Crystal Sugar president and CEO says forfeiting the sugar put up as collateral was the best option, given very low sugar prices. 

The loans end with the crop year, which concludes Tuesday. 

The forfeiture is under a U.S. Agriculture Department program. It is the result of sugar being cheaper and more plentiful that at any time in the past decade. 

Berg says defaulting on the loan does not present a financial hit to the company. He says the default is beneficial to American Crystal Sugar's financial health, and that's the way the program is designed to work.

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