Braidy Industries faces funding deadlines as founder contests his ouster as CEO

The founder of Braidy Industries, Craig Bouchard, confirmed this weekend that the company’s board of directors attempted to forcefully remove him as CEO and board chairman following an internal dispute related to fundraising efforts.

The possible shift in leadership — Bouchard disputes that the board had authority to remove him — comes as the company faces at least two financial deadlines that could determine whether Braidy Industries ever builds its $1.7 billion aluminum mill near Ashland.

On his Facebook page this weekend, Bouchard said the board’s actions were “without basis,” and that, if allowed to stand, their attempt to remove him “threatens significant damage to Braidy Industries, its stockholders and the Ashland community.”

“I have certain contractual rights as a major stockholder of Braidy Industries, and I am evaluating my options in light of them,” Bouchard said.

The source of the disagreement, according to Bouchard, is that he was seeking foreign investors that offered “patient capital” investments, but that the board preferred domestic investors whose terms included a 200 percent return and a sale in three to five years.

Bouchard said those domestic investors “don’t like greenfield projects and don’t particularly care about Appalachia,” but he did not provide any details on the foreign investment offers he was pursuing.

A Braidy Industries spokesperson said Monday that Bouchard “is making inaccurate assertions that do not reflect the actions taken by the board.”

Comments on Bouchard’s post resembled the conflicting opinions that have surrounded Braidy Industries since its founding.

Many were supportive of Bouchard and hopeful about the project’s long-term viability. Numerous state and local officials have said the mill’s promise of bringing hundreds of jobs to northeastern Kentucky would be an economic boon that the area desperately needs.

Others were skeptical, and voiced concern over a $15 million investment of taxpayer money that former Gov. Matt Bevin made in the company in 2017.

Whether Bouchard’s possible departure will help or hurt the company remains to be seen. State officials expressed some concern last week, but most were unable to provide details about the bizarrely-public dispute over the company’s leadership.

T.J. Morrison, the director of community and economic development for the Boyd County Fiscal Court, said he remains optimistic that the company will produce on its promise to create the mill.

“In my eyes, this is an action that happens in the business world regularly,” Morrison said. “Though the circumstance is different here, I am still optimistic about the future of Braidy Industries.”

Braidy Industries’ latest filings at the U.S. Securities and Exchange Commission, which it made in July of last year, indicate the company faces some important financial deadlines.

Based on SEC filings, it appears that the Russian aluminum company Rusal, which previously faced U.S. sanctions and offered to invest $200 million into the aluminum mill last year, could pull out of that agreement at any time.

The Rusal deal came on the condition that Rusal could pull its investment if Braidy failed to raise an additional $300 million by the fourth monthly anniversary of the closing of their deal. Rusal and Braidy entered into their agreement on July 5 of last year, and Braidy Industries has not announced that it raised the $300 million Rusal required.

By mid-July 2019, Rusal had made a one-time contribution of $60 million to the company and agreed to give another $5 million every month for eight months. Rusal would make its final $100 million contribution only after Braidy had raised an additional $300 million, according to SEC filings.

If the plan comes to fruition as described, Rusal, which was previously blacklisted by the U.S. Government for its ties to a Russian oligarch who was allied with President Vladimir Putin, would own 40 percent of the Kentucky mill.

SEC filings also show that Braidy Industries faces an additional deadline this year regarding the state’s $15 million investment.

The company has until the end of 2020 to invest $1 billion into the mill project, or the state could require Braidy to repurchase its investment, plus 8 percent interest from May 2017.

The state investment effectively makes every Kentucky taxpayer a part-owner of the company, and that, along with Bouchard’s promises of massive economic benefits to all of Eastern Kentucky, has brought an unusual amount of attention to the project.

Braidy’s deal with Rusal also generated many detractors, with several lawmakers in Washington expressing concern over the deal.

On a local level, some Facebook users who commented on Bouchard’s post said residents are disappointed over a promise that they see as increasingly unlikely.

“I think most are just tired of hearing promises of a better tomorrow and yet another blow to what could have been!” one user wrote.

The sentiment mirrors the feeling that surrounded Enerblu, a proposed battery manufacturing plant near Pikeville that promised well-paying jobs in coal country, but folded last year with nothing to show for its effort. A group of local investors sued Enerblu over their $1.2 million investment and said the company made deliberate misrepresentations about the financial viability of the company.

Morrison, the economic development director from Boyd County, said he believes there are local investors in Braidy Industries.

“As far as their feelings, I cannot speak for them,” Morrison said. “However, I am sure that they are optimistic, as am I, in the future of the company in the hands of Mr. Modrowski (the interim CEO).”

Following Bouchard’s potential firing, Braidy Industries said in a news release that its site planning and fundraising continue unabated and that the aluminum mill is still expected to be completed in 2021.

This story was originally published February 3, 2020 at 3:27 PM.