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Sweet deal: American Crystal agrees to pay debt with sugar

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Moorhead-based American Crystal Sugar will be giving millions of pounds of sugar to the federal government as it defaults on a $71.2 million loan, the Forum of Fargo-Moorhead reports.

The government program was established to provide relief when a glut of sugar depresses prices.

American Crystal CEO David Berg said forfeiting the sugar -- which was used as collateral for the loan -- is the best option due to low sugar prices.

The Star Tribune reports that 195 million pounds of sugar will be forfeited to pay back $46.6 million worth of the debt.

Originally, the company had put up more than 300 million pounds of sugar as collateral to secure the $71.2 million loan.

Berg tells the Forum that defaulting on the loan will not cause a "hit" to the company, but instead will benefit its financial health.

The forfeiture marks the second time American Crystal has defaulted on a government supported loan, as the company defaulted in the 1990s under similar market conditions, Berg told the Forum.

The sugar will remain in warehouses until the government decides how to use it, the paper says.

The Star Tribune says the barter will likely cost taxpayers tens of millions of dollars since the market supply for sugar far exceeds demand.

The default on the loan comes about four months after locked-out workers with American Crystal returned to the job after a 20-month-long contract dispute.

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