MANKATO, MN -- Agristrand Biocomposites LLC plans to manufacture soy straw panels at the former production facility of Environ Biocomposites.

The no-added formaldehyde panels will serve as a substitute for traditional wood particleboard and MDF used in furniture, cabinets, closets and other secondary wood applications.

On its website, Agristrand said it purchased the dormant Mankato plant last year and  would invest in "considerable upgrades" with the intent of beginning production within the next couple of months. The plant will operate under the name Agristrand Mankato LLC under an exclusive world-wide intellectual property license from Agristrand Biocomposites.

The wood-products start-up is being funded by a $10.25 million capital raise. LWBJ Investment Services LLC served as the investment banker for Agristrand.

Agristrand said its product will have several benefits over traditional wood particleboard and MDF panels. "We will be producing sustainable, LEED contributing, non-formaldehyde particle board and door core products from soy straw, a by-product from Midwest annual soybean production. In an environment of rising costs for wood based composite products the abundantly available 'eco-friendly'soy fiber offers a unique 'green' value proposition in the market."

The company is developing a network of regional farmer producers for its raw materials. At full capacity, the plant would employ about 50 employees and utilize soy straw from approximately 25,000 acres of soybean growers acres in southern Minnesota and northern Iowa.

Phenix Biocomposites built the plant in 1998 to manufacture up to 40 million square feet of composite panels from a combination of recycled paper and soy waste annually. The company went through an ownership change in 2005 and was renamed Envrion Biocomposites.

Coldwell Banker Commercial Griffin Companies in Minneapolis foreclosed the Environ property in late 2010. According to a review of court documents by the Free Press, the company had not made a full payment on the building since December 2008. In October 2010, the newspaper reported that Environ's owners owed more than $9.5 million plus $1.6 million in interest on a $9.8 million bond issue made in 2005 to cover the purchase of the plant and new equipment.

Agristrand Biocomposites has joined the Composite Panel Association, the North American trade group representing particleboard, MDF, high-density fiberboard and other industrial composite panels made in the United States, Canada and Mexico.