A proposed $1.68 billion aluminum mill near Ashland — pitched by Kentucky Gov. Matt Bevin as a business that will “transform the economic landscape of Eastern Kentucky for generations to come” — still needs $400 to $500 million of capital before it can begin construction, according to documents filed with the U.S. Securities and Exchange Commission.
Braidy Industries hopes to open its mill in 2020, employ 600 people at an average salary of $70,000 a year, and, in the words of its CEO and board chairman Craig Bouchard, “rebuild Appalachia with technology.”
The company received an unusual $15 million equity investment from the state in May 2017, along with preliminary approval for $10 million in tax incentives, but the company’s public offering filed with the SEC shows it still needs hundreds of millions of dollars before the project can get off the ground.
The investment from the state, which makes all Kentucky taxpayers partial owners of the company, is contingent on Braidy’s success. The state could request repayment if the company fails to invest $1 billion in its mill by 2020, or fails to have at least half of its employees working in Kentucky.
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The public offering also shows Braidy Industries has applied for a $1 billion loan from the U.S. Department of Energy, and $500 million from the German government to purchase equipment, though neither deal has been approved.
The $1 billion of debt financing from the Department of Energy would run over 10 years.
Braidy — which has 58 employees, according to SEC filings — is offering its stocks through Netcapital Funding Portal, an Internet-based crowdfunding platform, and is negotiating with investors for equity investments of up to $200 million, but none of those investors have committed to the project.
“The potential financing for the Braidy Atlas mill is not committed,” the company told the SEC. “The construction and development of the Braidy Atlas mill, which is currently expected to cost approximately $1.68 billion, will require significant amounts of new financing and capital including from the proceeds of the offerings.”
Bouchard owns about 25 percent of the company’s stock and controls appointments to the board of directors.
The projected cost of the plant has jumped at least $300 million since April last year, from $1.3 billion to nearly $1.7 billion, and the actual cost of the mill may be “significantly higher” than the current $1.68 billion estimate, according to the SEC filings.
Jaunique Sealey, Braidy’s executive vice president of business development, said in statement to the Herald-Leader that the last 30 days have been “another great month in the history of our company.”
She said the mill has already pre-sold its first 7 years of production. In its SEC filing, though, the company said none of those potential customers are contractually obligated to buy Braidy’s products.
“We are still on track to get to production at all deliberate speed, as we have said publicly on many occasions and have made no recent statement to the contrary,” Sealey said.
Elected officials, including Bevin, met at the company’s planned site location in June for a groundbreaking ceremony touted as a major step toward a diversified Eastern Kentucky economy.
Steve Towler, Boyd County Judge-Executive, compared Braidy Industries to AK Steel, which employed between 4,000 and 5,000 people in Boyd County during the company’s peak years, he said.
“Now, in 2018, we have Braidy Industries,” Towler said. “What a promise they bring to our community.”
In a news release about the groundbreaking, Greenup County Judge-Executive Bobby Carpenter said he has “waited 24 years for a project like this to come to Greenup County.”
“This project and what will follow will change our county for generations to come,” he said.