Equity Redemption Plans Can Provide Liquidity, Tax Relief

摘要

Due to recent reductions in profitability in the ethanol industry, now may be a perfect time for ethanol production companies to implement equity redemption plans. Equity redemption plans can provide important liquidity for investors and at the same time provide important tax relief for certain companies and an enhanced return for those that continue as owners. While equity redemption plans are typically considered when margins are favorable and companies are flush with cash, those are frequentlv the most difficult times to find willing sellers. However, when margins are less favorable, sellers may be more willing to consider a sale of their investment. In addition, due to less favorable commodities prices, many owners may welcome the ability to convert their ethanol plant investment into cash.