Baard Energy coming up short on state loan requirements
COLUMBUS — A $4.5 million state loan for the Baard Energy coal refinery project, due to lapse on June 30, contains conditions that Baard Energy appears not to be able to meet. If Baard’s partner, the Columbiana County Port Authority, decided it wanted to close on the loan, it couldn’t legally do so.
The State’s original loan offer contained the following requirement:
“Borrower will invest $91,711,143 in [the Project, namely] the acquisition and site preparation of 525 acres of land . . . . Borrower must finance a minimum of 25% of the total project costs prior to loan proceeds being disbursed.”
The “Borrower” is the Columbiana County Port Authority. Twenty-five percent of $91,711,143 would be $22,927,785.
On August 8, 2009, Port Authority CEO Tracy Drake wrote State officials as follows:
Baard will receive approximately $8 million in equity investment in September, 2009 (which when combined with Baard’s to date investment of over $9 million, totals over $17 million). We hereby request that this amount be accepted as satisfying the minimum total pre-project financing requirement contained in the Term Sheet for disbursement of loan proceeds (previous minimum requirement was 25% of the CCP anticipated bond financing).
This would lower the pre-loan financing requirement from 25% to 18.5%.
The asserted Baard investment of “over $9 million,” however, was spending that had nothing to do with the project supported by the loan, according to a Baard Energy official. The spending was detailed in a November 17, 2008 memo by Baard Vice President Stephen Dopuch:
Baard has already invested approximately $10 MM in the development of ORCF [Baard’s Ohio River Clean Fuels coal refinery] project including site evaluations, feasibility engineering, market studies, coal studies, engineering, and other work related to plant permitting, as well as CO2 sequestration and enhanced oil recovery feasibility studies.
None of these activities support the loan project, “the acquisition and site preparation of 525 acres of land.” This means that the Port Authority was really asking State officials to accept only the “$8 million in equity investment in September, 2009” as the pre-loan financing requirement. $8 million would be only 8.7% of the total project costs.
State officials accepted these proposed changes. As of April 15, 2010, however, Baard Energy had failed to reach even this lowered standard.
In August 2009, Baard went on the market looking for $8 million in investment. As of April 15, 2010, only $1.4 million had been sold, according to a Baard Energy filing with the Securities and Exchange Commission.
As of that date, then, and assuming all $1.4 million would be invested in the site acquisition and preparation project, Baard could only show that it had raised 1.24% of the total site project costs.
— Paul Ryder, Organizing Director, Ohio Citizen Action