A group of Farm Credit Services of America shareholders is trying to block the Omaha lender's sale to Rabobank Group of the Netherlands and keep control of it in the hands of local farmers.
About 50 shareholders, who are also borrowers, have organized a coalition called Farmers for Farm Credit and sent a letter to Paul Folkerts, the chairman of the $7.8 billion-asset Farm Credit Services of America. (It has about 57,000 shareholders in all.)
The letter, dated Aug. 30, requests a meeting with the board of directors. It complains about the "proposed sale of our lender to a foreign entity, plans to relinquish farmer control and abandon the mission of serving farmers as part of the Farm Credit System, and the loss of over $1 billion of farmer capital" in Farm Credit Services of America.
The $500 billion-asset Rabobank announced July 30 that it had agreed to buy Farm Credit Services of America for $600 million. If the sale goes through the lender will have to pay an $800 million exit fee to the Farm Credit System, whose regulator, the Farm Credit Administration, must approve the deal.
On Aug. 18 the $2.8 billion-asset AgStar Financial Services ACA of Mankato, Minn., made a counteroffer of $650 million in hopes of keeping the Omaha lender's assets in the government-sponsored Farm Credit System.
Merlyn Groot, a farmer in Manson, Iowa, and one of the co-chairs of Farmers for Farm Credit, said the group formed after stockholders began comparing notes. What they found was that the directors of Farm Credit Services of America would not talk to shareholders, and management was not forthcoming with information.
"The only response we get from the directors is they are under a gag order and can't discuss it while the management is going around telling their side of the story," Mr. Groot said. "It seems like the discussion should be open as a cooperative and include the members."
Kelly Ford, a spokeswoman for Farm Credit Services of America, said on Wednesday that the board had received the letter and planned to evaluate it. A Rabobank spokeswoman said the company had not received the letter and could not comment on it.
Farm Credit System regulations put restrictions on what Farm Credit Services of America can say to shareholders and when; the lender cannot tell shareholders any information that would go out in the information packet before the regulator has approved the deal.
Farm Credit Services of America will submit its application for approval of the deal sometime this month, and the FCA will have 60 days to review it. But shareholders say that before it files an application, they deserve an explanation of why the lender agreed to the deal with Rabobank.
Once shareholders get their information, they will have 30 days to review it before a vote. Mr. Groot says that may not be enough time to give the deal full consideration.
"I think this whole idea needs to see the light of day and stand on its merits," he said. "Just to delay and delay and delay until it's too late to get the information out to understand it is not the way to do this."
