Preferred Shares: A Local Investment Opportunity
As you probably know by now, Menomonie Market Food Co-op is expanding our reach and service in the Chippewa Valley, having signed an agreement to purchase part of City Lot 7 in downtown Eau Claire and building a new store there.
You are probably also aware that Menomonie Market Food Co-op is committed to locally-sourced products, supporting farmers and producers, and preserving our communities’ access to healthy, local food.
These two aspects of our mission and purpose are coming together this summer in a way that is unique to co-ops. I’m talking about the opportunity for every owner to make a local investment that is secure, pays good dividends, directly supports a strong cooperative presence in the Chippewa Valley, and helps reduce the financing costs for the new store.
Unlike private businesses and corporations, co-ops can sell Class C shares, also known as “preferred shares,” to their owners to provide capital for new projects. Our co-op is offering 4,000 preferred shares at $500 each to owners who live in Wisconsin and are in good standing. If we sell them all, we’ll raise $2,000,000, or about a quarter of the project’s cost.
What are “preferred shares”?
Preferred shares pay a dividend. Owners of preferred shares do not receive additional voting rights, but they do have equity in the co-op (a claim on the residual value of the co-op—the origin of the term “preferred”). There is no market for the shares once they are purchased, and they cannot be sold. The board could decide not to pay the dividend if the co-op doesn’t have the resources, and the board cannot pay a patronage refund unless the dividends have been paid. Menomonie Market Food Co-op has always paid its Class C share dividends!
Our co-op has also applied for several grants and has received purchase credits from the city of Eau Claire, which will help reduce the amount we borrow from traditional financial institutions.
Does your purchase of one share for $500 make a difference in this scenario? Yes, absolutely! If you can invest more than that, wonderful. If you have more than $50,000 to invest, please ask for someone to contact you when you fill out the request form.
During our preferred share sale in 2013, we were the smallest co-op in the country to raise $1,000,000. Some owners bought many shares, some bought one or two, and every single purchase helped move us forward. You can read our General Manager Crystal Halvorson’s take on the Menomonie store project here.
We intend to once again illustrate the economic power of individuals working together for a large and worthy goal. You can request an investment packet at mmfc.coop/expansion; this is our way to keep track of your interest.
On behalf of the Menomonie Market Food Co-op Board of Directors, I hope you will take advantage of the opportunity to invest directly in our co-op.