FCEC Merger Update
Apr 30, 2024
Thank you to the membership for your strong participation in the special meeting vote on April 15th. Following the vote we heard from many of you asking for the opportunity to vote on the potential merger with FCEC & Kanza again. After more due diligence and talking with many of our producers, the boards of directors of FCEC and Kanza unanimously decided to complete another vote for the membership of FCEC.
In conversation with members, the boards learned that many objections to the merger stemmed from some misunderstandings. We have more details in the enclosed FAQ addressing topics that may have impacted the vote. Our employee teams and boards have been working on this merger since August 2023. We have built great relationships across our two cooperatives and are confident that this it the right decision for your coop’s future.
A special member meeting will be held on May 23 for FCEC’s membership to veto on the merger. A 2/3 majority vote is required for the merger to pass. To learn more, please join us at the member informational meeting:
FCEC Member Informational Meeting: May 16th at the Farm Bureau Building on the Sedgewick County Fairgrounds, 229 E. South Ave, Cheney starting at 7:00 pm.
FCEC Special Vote: May 23rd at the Farm Bureau Building on the Sedgewick County Fairgrounds, 229 E. South Ave, Cheney from 5:00 pm – 9:00 pm. Meal will be provided to either stay and eat or grab and go.
We understand your time is valuable and want to thank you for your continued engagement. Both boards and employee groups agree that this is the best way forward for our cooperatives. FCEC members are strongly encouraged to vote YES for the merger to ensure our future success. If you have questions about the merger, please reach out to your General Manager or Board members.
Summary Of Merger Agreement Garden Plain Kanza (PDF)
Q: Why are we voting again?
A: In March the boards of directors of member-owned FCEC and Kanza Cooperative Association met and voted to sign a Definitive Agreement and Plan of Merger to move forward with a member vote to combine the two cooperatives. After April 15th, both boards met independently and voted unanimously to bring this vote to the FCEC membership again. Following the member vote, we heard from our members that they were disappointed with the outcome and wanted the opportunity to re-vote. We listened to our membership and wanted to ensure that all FCEC patrons had the opportunity to vote.
Q: What is going to happen to the CEA Equity of FCEC merges with Kanza?
A: As per the CEA operating agreement, the FCEC’s equity investment will be returned in full. This is consistent with CEA’s past practices. The CEA equity disbursement will be used to help fund the combined cooperative’s grain position. Kanza has been incredibly successful marketing grain for its patrons and this will lead to stronger returns for the membership. With the increased volumes from FCEC and the superior grain marketing team at Kanza, the combined entity will be better together.
Q: I heard Zanza had a poor financial year
A: Both companies are financially sound. Persistent drought has created challenges for many cooperatives in Kansas. Kanza & FCEC have felt these pressures, too, but both had positive pre-tax earnings in 2023. FCEC & Kanza have also been making substantial investments in recent years back into the locations and equipment that are used to service their members. Both companies continue to maintain strong balance sheets.
Q: If the merger is approved, how will equity and patronage be handled?
A: If the merger is approved, the cooperative will have a fair and equitable approach to patronage and equity distributions. All FCEC current allocated equity will be redeemed at 1:1 ratio into Kanza equity. Kanza has a $2,500 base capital requirement. Existing and future equity allocations and redemptions will remain at the discretion of the Board of Directors.
Q: I heard that FCEC members will need to write a check to buy Kanza equity, is this true?
A: This is not true. If FCEC members do not have $2,500 worth of base capital they will be required to do enough business to earn this amount before receiving equity retirements. As common stockholders, they would still be eligible to view and receive patronage payments.
Q: How many board members would the combined cooperative have?
A: The board will consist of 9 current Kanza board members and 2 current FCEC board members plus 1 additional associate board member from FCEC. Moving forward, the 11-member board will consist of 6 members from the West region and 5 members from the East region.
Q: If the merger is approved through the member vote, who will be the new General Manager?
A: Pending a positive member vote Alan Woodward, current CEO of Kanza, will be the General Manager / CEO of the combined organization. Rusty Morehead, current CEO of FCEC, will remain on the management team of the combined entity as a key employee.
In conversation with members, the boards learned that many objections to the merger stemmed from some misunderstandings. We have more details in the enclosed FAQ addressing topics that may have impacted the vote. Our employee teams and boards have been working on this merger since August 2023. We have built great relationships across our two cooperatives and are confident that this it the right decision for your coop’s future.
A special member meeting will be held on May 23 for FCEC’s membership to veto on the merger. A 2/3 majority vote is required for the merger to pass. To learn more, please join us at the member informational meeting:
FCEC Member Informational Meeting: May 16th at the Farm Bureau Building on the Sedgewick County Fairgrounds, 229 E. South Ave, Cheney starting at 7:00 pm.
FCEC Special Vote: May 23rd at the Farm Bureau Building on the Sedgewick County Fairgrounds, 229 E. South Ave, Cheney from 5:00 pm – 9:00 pm. Meal will be provided to either stay and eat or grab and go.
We understand your time is valuable and want to thank you for your continued engagement. Both boards and employee groups agree that this is the best way forward for our cooperatives. FCEC members are strongly encouraged to vote YES for the merger to ensure our future success. If you have questions about the merger, please reach out to your General Manager or Board members.
Summary Of Merger Agreement Garden Plain Kanza (PDF)
Frequently Asked Questions (FAQ) for Members
Q: Why are we voting again?A: In March the boards of directors of member-owned FCEC and Kanza Cooperative Association met and voted to sign a Definitive Agreement and Plan of Merger to move forward with a member vote to combine the two cooperatives. After April 15th, both boards met independently and voted unanimously to bring this vote to the FCEC membership again. Following the member vote, we heard from our members that they were disappointed with the outcome and wanted the opportunity to re-vote. We listened to our membership and wanted to ensure that all FCEC patrons had the opportunity to vote.
Q: What is going to happen to the CEA Equity of FCEC merges with Kanza?
A: As per the CEA operating agreement, the FCEC’s equity investment will be returned in full. This is consistent with CEA’s past practices. The CEA equity disbursement will be used to help fund the combined cooperative’s grain position. Kanza has been incredibly successful marketing grain for its patrons and this will lead to stronger returns for the membership. With the increased volumes from FCEC and the superior grain marketing team at Kanza, the combined entity will be better together.
Q: I heard Zanza had a poor financial year
A: Both companies are financially sound. Persistent drought has created challenges for many cooperatives in Kansas. Kanza & FCEC have felt these pressures, too, but both had positive pre-tax earnings in 2023. FCEC & Kanza have also been making substantial investments in recent years back into the locations and equipment that are used to service their members. Both companies continue to maintain strong balance sheets.
Q: If the merger is approved, how will equity and patronage be handled?
A: If the merger is approved, the cooperative will have a fair and equitable approach to patronage and equity distributions. All FCEC current allocated equity will be redeemed at 1:1 ratio into Kanza equity. Kanza has a $2,500 base capital requirement. Existing and future equity allocations and redemptions will remain at the discretion of the Board of Directors.
Q: I heard that FCEC members will need to write a check to buy Kanza equity, is this true?
A: This is not true. If FCEC members do not have $2,500 worth of base capital they will be required to do enough business to earn this amount before receiving equity retirements. As common stockholders, they would still be eligible to view and receive patronage payments.
Q: How many board members would the combined cooperative have?
A: The board will consist of 9 current Kanza board members and 2 current FCEC board members plus 1 additional associate board member from FCEC. Moving forward, the 11-member board will consist of 6 members from the West region and 5 members from the East region.
Q: If the merger is approved through the member vote, who will be the new General Manager?
A: Pending a positive member vote Alan Woodward, current CEO of Kanza, will be the General Manager / CEO of the combined organization. Rusty Morehead, current CEO of FCEC, will remain on the management team of the combined entity as a key employee.