Bryant steering away from startups like failed Twin Creeks
Published: December 4,2012
JACKSON — Gov. Phil Bryant says he’d prefer that the state not invest in startup companies like failed solar equipment firm Twin Creeks. The Republican says he’s steering the Mississippi Development Authority away from loaning or giving money to such companies.
“I do not have a preference for startup companies,” Bryant told The Associated Press. “I am conservative because of my audit background and would look more toward companies such as Nissan, Severstal, heavy manufacturing companies with a background in the industry, a clear record of achievement. That would be more of a targeted industry for this administration.”
In a separate phone interview with AP, Bryant’s predecessor, Republican Haley Barbour, defended the state’s $27.7-million investment in Twin Creeks, a San Jose, Calif., firm that’s liquidating after a bank pushed the company into selling its technology. The company was supposed to invest $132 million and create 500 jobs in Senatobia.
The state signed its incentive deal with Twin Creeks in April 2010, when Barbour was governor. His second term expired in January 2012.
Barbour said he’s confident that the company will repay any money that Mississippi officials can’t get back from the building and equipment that were funded with state loans to the city of Senatobia.
“The state will recover all of its incentives given to Twin Creeks,” Barbour told AP. “I am not worried at all. I think that the risk to the taxpayer is next to nothing.”
Barbour referred to Twin Creeks’ offer to give the state an estimated $1.25 million in cash, plus the rights to up to $8 million in royalties from patents that were sold to GT Advanced Technologies of Nashua, N.H. for $10 million.
He predicted that Senatobia would lease the building for enough money to cover its loan payments to the state. MDA has waived the first payment of $1.2 million. Senatobia was supposed to collect that amount by Dec. 31 and pass it on to the state by Jan. 5. The state loaned Senatobia $18 million to prepare the site and build the building. It gave another $1 million in grants for site work.
Barbour also said the state’s investments in Twin Creeks and a number of other alternative energy firms under his administration were not overly risky. Besides that company, Mississippi also signed agreements with alternative energy companies including solar panel maker Stion; smart window maker View, formerly Soladigm; solar silicon maker Silicor Materials, formerly Calisolar; biofuels maker KiOR; and biofuels maker Virdia, formerly HCL Cleantech.
Barbour says the state was careful to choose companies that were successful in raising money from private sources.
“You can look at all sorts of companies that are in the growing stage and some of them never make it,” Barbour said. “We’ve been very serious in making sure that the resources put in by the private sector were such that there was a good chance the business would succeed. This is the only company of this type that hasn’t made it.”
Barbour cut the ribbon on the Twin Creeks plant in May 2011. Twin Creeks was supposed to go into commercial production after that, but state and local officials said that never happened. There are hints, though, that the state was worried about Twin Creeks within months.
An Oct. 7, 2010 email from Twin Creeks CEO Siva Sivaram to site selection consultant Dennis Cuneo, described as a Twin Creeks senior adviser, asked Cuneo to reassure Barbour that Twin Creeks was in sound condition.
“Please let him know that we ain’t going bust,” Sivaram wrote, stating the company would “likely” sell out its first two years of production in advance and was close to landing $50 million more in financing.
Good Jobs First, a Washington D.C., group that questions many of the inducements that governments provide to private businesses, said Mississippi isn’t the first state to lose big to an alternative energy company. Research Director Philip Mattera cited Evergreen Solar’s bankruptcy in Massachusetts, after that state had given the company $31 million in grants and incentives. Advanced battery maker A123 Systems filed for bankruptcy after getting more than $125 million in tax credits and aid from Michigan.
“These things are risky and it sounds like Mississippi is paying the price for a risk that didn’t work out,” Mattera said. “The company was unproven and it sounds like the technology it was using was unproven. That might be a little too much risk for the public sector.”
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