Braidy Industries still needs $500 million. On toughest questions, company stays mum.

Leaders of a controversial $1.7 billion aluminum mill planned for northeastern Kentucky, which received a $15 million taxpayer investment in 2017, left lawmakers’ most pressing questions unanswered Tuesday morning during a Kentucky Senate committee hearing.

Less than two weeks after a bizarre and public change of leadership at Braidy Industries, the company provided some project updates: it still needs to raise $500 million for the project — the same figure estimated in the company’s 2018 SEC filings — and it will almost certainly miss a deadline to invest $1 billion in the mill by the end of 2020.

Though Braidy’s leadership said the company was making progress, they declined to answer some of the most pressing questions: Why exactly did the company’s board push out former CEO Craig Bouchard; what happens to the taxpayers’ $15 million investment if the company folds; and if the company fails to raise $500 million by the end of 2020, will it be able to begin construction anyway?

Just two lawmakers on the Senate Appropriations committee — Chairman Chris McDaniel, R-Taylor Mill, and Morgan McGarvey, D-Louisville — pushed the company for information about its progress and financial status.

“We need to understand: are you going to be able to get this facility operational; are you going to be able to raise the money; where is the money going to come from; and how can you reasonably go to people in Kentucky and say ‘This plant’s going to be built and it’s going to be kept on track?’” McGarvey said.

In addition to the state’s $15 million investment in 2017, which makes Kentucky taxpayers partial owners of the company, Braidy Industries benefited from a $4 million federal Abandoned Mine Lands grant that was awarded to help shore up the site at EastPark Industrial Park in northeastern Kentucky.

Lawmakers’ questions came after a presentation and status update from the company, which included an animated video showing what the mill would look like if it is completed. The company’s tone during its opening statement was upbeat, reassuring lawmakers and residents of northeastern Kentucky that the mill is on schedule.

Braidy’s General Manager of Primary Operations Gregg Whigham, called the project “shovel-ready,” and interim CEO Tom Modrowski said the mill has secured necessary permits and land at the 240-acre site.

If the company does fulfill its promises to build, they expect massive economic results. A letter from Braidy’s board chairman, who did not attend Tuesday’s hearing, referred to an economic impact report from entrepreneur James Koch that estimated the mill would generate 8,247 additional jobs in a six-county area, and 18,025 in the state overall.

Those promised results have been hailed in a region that has yet to bounce back from the decline of the coal industry, the more-recent shuttering of AK Steel’s Ashland plant, and the planned closure of the Our Lady of Bellefonte Hospital.

Braidy’s recent change in leadership, though, renewed concerns over the slow-moving project and whether taxpayers can expect a return on their $15 million investment.

On Jan. 30, Braidy Industries issued a press release saying CEO Craig Bouchard, had stepped down. The next day, however, Bouchard disputed that statement and said he would remain the company’s CEO and board chairman.

The company has stood by its decision, with Modrowski saying today that the board “made these changes because they want to see more progress faster.”

“We are confident the changes we made will yield that progress,” he said.

Sen. Robin Webb, D-Grayson, and Sen. Phillip Wheeler, R-Pikeville, stood by the project. Webb, in particular, expressed confidence, saying the leadership change was not unusual or remarkable in the corporate world.

“I believe in this project, I believe in the need for this project,” Webb said.

Though some officials remain confident, and all say they want the project to succeed, Braidy Industries still must raise $500 million before it can move forward, and has only $65 million on hand. The company has an additional $200 million of commitments for funding, but that money is predicated on whether it can raise $500 million, Modrowski said.

Braidy’s SEC filings indicate 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 their investment agreement at any time.

Rusal’s agreement contained a provision that it could exit the deal if Braidy failed to raise $300 million by the fourth monthly anniversary of the closing of their deal, in July of last year, according to SEC filings.

In addition, the company will almost certainly fail to meet a deadline included in its taxpayer investment agreement that required the company to invest $1 billion in the mill by the end of 2020. That agreement allows the state to attempt to recoup that investment, with 8 percent interest, if the company fails to meet the deadline, according to SEC filings.

McGarvey and McDaniel both expressed other concerns, including a reference in SEC filings to a $3.575 million note that former CEO Bouchard issued to a third party, which that third party can convert into shares of Braidy Industries.

When McDaniel asked who the third party was and what the terms of that agreement were, Modrowski declined to comment.

“We’ve got to make sure that we stay on them, that this plant gets built, and if they’re not able to raise (the money), what happens next?” McGarvey said.

This story was originally published February 11, 2020 at 11:59 AM.