Home » NEWS » Banking & Finance » ASA postmortem: industrial recruiting is a constant cycle of death and life

ASA postmortem: industrial recruiting is a constant cycle of death and life

developmentBy JACK WEATHERLY 

Raising $1.2 billion for an industrial project can be a daunting task, if not a deal killer.

For economic developers in Mississippi, American Specialty Alloys’ protracted and secretive efforts in that regard became an issue that ultimately sent the project south to Pineville, La.

American Specialty started out last year with a show of force that augured well for Mississippi.

It established an office in Columbus, and hired one of the top law firms in the state, Butler Snow, and lined up Yates Construction, one of the top builders in Mississippi.

Yet by Feb. 20, what had started out with such promise was officially gone, though it appears that it was dead long before that date.

Mississippi Business Journal interviews with the founder of the company, Roger Boggs, and the executive director of the Golden Triangle Development LINK in the days leading up to the Louisiana announcement foreshadowed the dissolution of a relationship.

Brent Christensen, executive director of the Mississippi Development Authority, said in a prepared statement sent to the Journal on Monday that its policy is that “certain due diligence milestones must be reached for a project to proceed to the next level.” Christensen declined to talk specifically about American Specialty.

Discussions between Boggs and the Louisiana Economic Development, the state’s lead agency, began in November, according to its Feb. 20 release announcing the deal.

Between September and November “things had begun to unravel,’” said Joe Max Higgins, executive director of Golden Triangle Development LINK.

MDA “just wore out asking [Boggs] for financials,” he added.

Higgins said the deal began to fall apart after a silent partner pulled out in October.

Higgins had said earlier that Boggs said that the Danieli Group, which will build the equipment for the production of the aluminum alloy for autos and provide technological guidance, was to be a major investor.

Danieli’s chairman, Bernard Villemin, said that “we never presented our Group as a major investor or minor” in American Specialty.

Talks with Mississippi officials started in March 2014, including meetings with Gov. Phil Bryant, legislative leaders and officials of the Mississippi Development Authority and Golden Triangle Development LINK.

Higgins has been vocal and demonstrative in recent weeks about the company’s refusal to provide evidence of funding and commit to a timetable for achieving it.

The LINK, Higgins said, put a prime 826-acre site back on the market last month after American Specialty refused to commit to providing proof of funding by April 1.

Boggs had not communicated with the LINK, or, according to Higgins, the state agency since November. That’s when the startup company began talks with Louisiana, that state’s officials announced in its release.

Boggs told the Journal on Feb. 17 that the company was “oversubscribed,” and that it was simply going through the arduous process of selecting the “right people and the right money.”

Louisiana Economic Development announced three days later that it would provide a $34 million performance-based grant for “infrastructure costs” for redeveloping an old International Paper site at Pineville, which is adjacent to Alexandria and on the Red River. Yates Construction will build the structure that will house the mill. The agency also offered training and tax incentives.

A call to the Central Louisiana Economic Development Agency on Tuesday was not returned.

The Red River Waterways Commission stands ready to build “a dock” for the plant costing between $1.5 million and $3.5 million at no cost to American Specialty, according to Ken Guidry, executive director.

Higgins said that Lowndes County owns two harbors on the Tennessee-Tombigbee Waterway at Columbus and would not have had to build such a facility.

The Louisiana grant would be “payable in installments upon the company meeting capital investment and payroll targets,” the agency said in the release.

Efforts to get the agency to explain what it requires of American Specialty in terms of an investment timetable were unsuccessful.

The company upped the ante in Louisiana, saying that in full operation the mill would employ 850, compared with the eventual 650 at at an unnamed site, whose average annual salary would be $85,000, it had promised before the Louisiana announcement.

In addition, another 600 jobs would be created by “corporate partners” on the 1,200-acre Pineville campus, the release stated.

Higgins said combined incentives for American Specialty from the LINK and the Mississippi Development Authority were “significantly more” than that.

Total contribution from LINK and Lowndes County would have amounted to $21 million, and the state agency was ready to provide “much more than that,” Higgins said.

The MDA has little to show for investing in startups in recent years.

During the tenure of Gov. Haley Barbour, the state issued $175 million in loans and other financial backing for three alternative energy projects that were to create hundreds of jobs each.

Two of the projects — Twin Creeks Technologies, which was to produce solar panels in Senatobia, and KiOR, which was to produce biofuel out of wood chips at a Columbus plant — have shut down with no jobs to show for the state commitment. The third, a solar panel plant owned by Stion Corp., employs 200 in Hattiesburg.

Higgins and steel entrepreneur John Correnti parted ways in 2012 after Correnti did not make deadlines and extensions of them.

Correnti, a minority partner in the highly successful predecessor to the Severstal steel plant in Columbus, now owned by Steel Dynamics, subsequently wanted to build a silicon steel plant in that city, but pulled out after falling out with Higgins.

Correnti missed a deadline for finalizing his financing package, and the LINK gave him another 90 days, another date he missed, Higgins said. When the LINK asked him to put $150,000 into an escrow account to be held till financing was completed, he said Correnti got angry and said he would build the plant in Mississippi, just not Lowndes County.

A $200 million silicon plant is now under construction at Burnsville in north Mississippi. A group led by Correnti is a minor investor in the facility.

But when land at Columbus was being held for him, a potentially far bigger project, a Yokahama Tire plant, chose West Point in Clay County. Production at the $300 million first phase of four is expected to employ 500.

The Yokahama decision to pick West Point was, nevertheless, a win for the Golden Triangle Development family, which includes Clay County as one of its members.

Meantime, in the world of industrial recruitment, there’s always the next deal.

Higgins said the Golden Triangle and the MDA have been contacted by an “aerospace and automotive forging” company that is talking about creating 700 jobs and capital investment of $700 million.

The site under consideration? The 826 acres that had been held for American Specialty.

BEFORE YOU GO…

… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Jack Weatherly

Leave a Reply

Your email address will not be published. Required fields are marked *

*