State reaches settlement with failed Twin Creeks
Published: January 16,2013
SENATOBIA — The state of Mississippi settled a lawsuit Tuesday with Twin Creeks, a California solar panel company that went out of business after the state spent $27.7 million to construct a building for the business in Senatobia and buy equipment, The Associated Press has learned.
“I believe we will make a full recovery of state tax dollars through this settlement,” Gov. Phil Bryant told The Associated Press, which obtained a copy of the settlement from Bryant’s office. “The Mississippi Development Authority is eagerly marketing the building for a new high tech industry to provide jobs and income to the citizens of Senatobia,” Bryant said in a statement.
Bryant denied the company’s request for another $25 million from the state and sought to get money back from Twin Creeks quickly, said his spokesman, Mick Bullock.
Until the state leases Twin Creeks’ building in Senatobia and sells its used equipment, it appears unlikely the state will get all its money back, though.
The agreement states that Twin Creeks will immediately pay back $1.25 million and that the state will get rights to $10 million in possible royalties over time. Mississippi will also get rights to sue an equipment maker that Twin Creeks says made a defective piece of equipment.
Finally, the state will get a share of any money that Twin Creeks receives from a lawsuit filed by a more famous solar firm that went bust, Solyndra. Twin Creeks says it has antitrust claims against Chinese solar panel makers that parallel those made by Solyndra in a $1.5 billion lawsuit Solyndra filed in October. Solyndra went bankrupt owing the federal government $535 million, sparking criticism of President Barack Obama’s energy policies.
Twin Creeks CEO Siva Sivaram didn’t immediately respond to an email seeking comment Tuesday night.
The company promised to create 500 jobs in 2010, when Gov. Haley Barbour persuaded the Legislature to loan the company $50 million at no interest for 20 years, channeling the money through the city of Senatobia. The city was supposed to collect lease payments for the building and equipment and pay off the debt to the state.
The state loaned $18 million to prepare the site and build the 85,000-square-foot building. It gave another $1 million in grants for site work. And it spent more than $8 million for equipment. But before Twin Creeks could produce more than a token number of solar panels, American panel manufacturers were swamped by low-price Chinese competition.
Twin Creeks, which raised at least $93 million in private startup money from venture capitalists, tried to change its business model to make machines that would make extremely thin solar panels. But the company decided to pull the plug. It told Mississippi officials that it was selling its technology to a Massachusetts firm, GT Advanced Technologies for $10 million, and liquidating.
Mississippi officials scrambled to sue Twin Creeks in Tate County Chancery to block the sale, but were unsuccessful. The company originally offered to pay the company $1.25 million in cash and 20 percent of future royalty payments from GT, up to $8 million. Under the deal signed Tuesday, the state will get all of the first $5 million in royalty payments and $5 million of the next $10 million. Because GT pays royalties at a 5 percent rate, that means GT has to sell goods or collect licensing fees worth $300 million.
The deal also says the state won’t demand that the city of Senatobia make payments on the loan until the building is leased. The Mississippi Development Authority has said it is showing the building to potential tenants. The structure is much more expensive, per square foot, than basic industrial space, meaning only specialized tenants are likely to pay enough for the state to be able to repay the loan over 19 years as originally planned.
The city will pay for utilities and upkeep, while the state will pay for insurance and security.
Twin Creeks, which never had more than about 25 employees in Mississippi, is in the process of vacating the building, Senatobia Mayor Alan Callicott has said.
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