Magness Lake, in Heber Springs, is a magnet for swans
The agenda for Monday's meeting of the board of the Arkansas Teacher Retirement System reveals one of the investors in the $1.1 billion Big River steel mill proposed yesterday for Mississippi County.
ATRS would invest $60 million upfront for a 20 percent equity stake in the venture. (That's a lot of money, but only about a half percent of some $12 billion in assets/)
More to come on this. George Hopkins, director of the System, tells me in a brief phone call that the system expects a 40 percent return on its investment after a 3.5-year startup period. About 30 percent will be in cash flow, the rest in the markup of the asset because sale of the equity in a profitable mill could be expected to bring far more than the system's initial investment. Even if the return was half that amount, it would be good for the state, Hopkins said. Hopkins added that, under terms of its agreement with Big River, the retirement system could have a similar stake in future expansion or new locations.
He said the teachers had been working with developers of the mill plan, led by John Correnti, for six months and only recently had talked with state officials about their own decision to back $125 million in state bonds to provide $75 million in direct help and a $50 million loan to the project. Further details on the investment are to be presented at a Senate committee of the whole meeting Monday afternoon. The Teacher Retirement System board moved up its meeting to consider the investment before that session. Legislative approval is required for a state bond issue under the super project amendment in the Arkansas Constitution.
Who are other contributors to the $250 million in private capital that must be in hand (along with the remaining lending commitments) before the state bonds are sold and any proceeds paid into the enterprise?
Grant Tennille, director of the Arkansas Economic Development Department, said he couldn't comment at this point on that.
A spokesman for Correnti said that information should be available eventually, but confidentiality agreements precluded his saying anything today. He indicated they'd be familiar corporate names who shared enthusiasm about the project.
Will Correnti's project in Arkansas come to fruition where it flopped recently in Mississippi? Arkansas officials are optimistic. This Mississippi news article isn't so glowing.
FYI: The state commitment goes beyond the $125 million backed by general revenues and the $60 million in public money channeled through the teacher retirement system. Also, it promises: A refund on sales tax for materials and machinery; a 4 percent income tax credit on new payroll for five years; $10 million for job training; an extended income tax credit (14 years instead of three) for recycling equipment, and a sales tax exemption on utilities.
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