COLUMBUS — Mississippi has warned biofuel maker KiOR that it could demand immediate repayment of the company’s entire $69.4 million debt to the state, plus $8 million in interest, if the company doesn’t make its loan payment before a grace period runs out.
Marlo Dorsey, a spokeswoman for the Mississippi Development Authority, said the state sent the letter yesterday.
“Due to the expiration of the forbearance period, KiOR and KiOR Columbus, LLC have been advised of the state’s intention to accelerate the obligations owed under their loan if no payment is made by the end of the grace period on Wednesday,” Dorsey wrote in an email to The Associated Press. “MDA continues to communicate with KiOR in hopes of reaching a quick resolution and will remain vigilant with respect to the State’s rights and remedies outlined in this project.”
Mississippi has first claim to the assets of KiOR Columbus, the company’s Mississippi subsidiary.
A spokeswoman for KiOR did not immediately respond to a request for comment yesterday evening.
Calling the loan could force KiOR into bankruptcy and entangle the plant in litigation, even though state officials have said their primary goal is to find a new owner for the plant, recouping as much money and as many jobs for the state as possible.
The Pasadena, Texas, company borrowed $75 million from Mississippi to build a refinery in Columbus meant to make fuel from wood chips. But the $230 million plant never worked as designed and KiOR has laid off almost all of its workers.
If payments are made regularly on the loan, no interest is charged. But Dorsey said yesterday that the state will seek interest in the event of a default.
KiOR, deeply indebted and low on cash, missed a $1.8 million installment Friday. The state had already delayed the deadline for that payment by 120 days, in exchange for a $250,000 payment. A three-day grace period on that delay will expire at midnight Wednesday.
At the same time the forbearance agreement was signed delaying the payment, KiOR hired investment bank Guggenheim Partners to sell the company or raise money.
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