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Mississippi taxpayers could be on the hook for $69 million loan to KiOR

By   /   August 13, 2014  /   No Comments

 KiOR photo

FROM TREES TO FUEL: KiOR’s Columbus, Mississippi plant is designed to turn biomass into gasoline and diesel fuel.

By Steve Wilson | Mississippi Watchdog

Biofuel manufacturer KiOR’s financial struggles might leave Mississippi holding the title to another failed green energy project.

According to the company’s quarterly report, KiOR, without additional financing, won’t be able to meet its financial obligations past Sept. 30.

One of its biggest creditors is the state of Mississippi. The company owes the state $69.275 million on a no-interest loan to build a first-of-its kind plant to convert wood pulp into gasoline, fuel oil and diesel fuel in Columbus. It missed its most recent semi-annual payment of $1.875 million to the state, which granted forbearance June 3, but that ends Oct. 31.

The company revealed in its most recent quarterly report it has bled $24 million in the past quarter and $629.3 million since the company was founded in 2007.  The company’s stock price was down to 23 cents per share on the New York Stock Exchange on Wednesday after its first offering sold at $15 per share in 2011.

The state’s possible loss on KiOR would dwarf both the Yalobusha County beef plant (more than $50 million in a loan given in 2003 under the administration of then-Gov. Ronnie Musgrove) and Twin Creeks Solar ($26 million in 2010). If KiOR defaults on its loan, the administration of then-Gov. Haley Barbour would be responsible for more than $95 million in taxpayer money spent on failed green energy ventures.

According to KiOR, the Columbus facility is in an “idle state,” and work on upgrading the plant, operational since 2013, has ceased. The company made $312,000 in the first six months after selling 99,000 gallons of gasoline, diesel and fuel oil, well below the plant’s stated capacity of 13 million gallons per year.

The company said in the filing it has $800,000 cash on hand as of July 31. The plant, even in an “idled state,” costs from $6 million to $10 million to run annually. In the filing, the company said revenue from the Columbus plant, if restarted, will be “limited and unpredictable, at least in the near term.”

It wouldn’t be the first time the state of Mississippi was left holding the bag for a failed green energy venture. The state loaned Twin Creeks Solar $26 million in 2010 to build a solar panel production facility in Senatobia in north Mississippi. The 85,000-square-foot facility opened in 2011, but it closed in 2012 after the company was liquidated.

According to Mississippi Development Authority spokesman Jeff Rent, the state still owns the former Twin Creeks facility and is still trying to sell it.

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Steve Wilson is a writer and a journalist. He serves as the Mississippi Bureau Chief for Watchdog.org. Beginning his career as a sports writer, he has worked for the Mobile Press-Register (Ala.), the LaGrange Daily News (Ga.), Highlands Today (Fla.), McComb Enterprise-Journal (Miss.), the Biloxi Sun Herald (Miss.) and the Vicksburg Post (Miss.) His bachelors degree is in journalism with a minor in political science from the University of Alabama. He served four-plus years in the United States Coast Guard after his high school graduation and is a native of Mobile, Ala.

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