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Controversy rising over mill that is yet to be built

Posted at 4:18 PM, Feb 11, 2020
and last updated 2020-02-12 05:19:50-05

FRANKFORT, Ky. (LEX 18) — In 2017, promises were made that high paying jobs were coming to northeastern Kentucky thanks to a new aluminum mill.

The $1.7 billion mill is being built by Braidy Industries, who said 1,500 construction jobs and 650 full-time mill jobs would be created. At the time, it created a lot of hope in a community that needed jobs.

"That's a wage you can support a family on and that's what we need in this area," said Rodney Vance, who attended the announcement ceremony for the mill in 2017. "We've got a lot of hard working folks, a lot of dedicated folks and they just look for opportunities like this."

But nearly three years later from that day, there's still no mill. In addition to that, the company recently went through a corporate management change when its CEO and founder, Craig Bouchard, was replaced as the company's leader.

This raised concerns about the mill. The legislature, which approved a $15 million investment into the mill, wanted answers. On February 4th, Sen. Christian McDaniel, the chairman of the Senate Appropriations and Revenue Committee revealed he's been trying to get Braidy Industries to appear before the committee, but had not had much luck. So, he made a demand.

"With the ongoing confusion surrounding that project and the investment of tax payer dollars, it is imperative that they will be here next Tuesday," said McDaniel at the February 4th meeting. "I sincerely hope that they choose to not snub the committee, who provides oversight to the incentives they have received, and do not snub the taxpayers of the Commonwealth."

That brings us to Tuesday, February 11th, the deadline set by McDaniel. Briady Industries showed up, with its new interim CEO, Tom Modrowski, leading the presentation before lawmakers.

“I’m as confident today as I was three years ago when we started this project,” said Modrowski.

The team of Braidy executives showed lawmakers a video of what the mill will look like and said they are finally ready to build.

"Our team has been working for over two years now on putting together the design of the mill and we are just finalizing the very last details of it," said Gregg Whigham, Braidy's General Manager of Primary Operations. "So we feel like we are ready to move forward and we are a shovel ready project."

But do they have the money to build it? Despite getting a $15 million boost from Kentucky in 2017, the project stumbled to raise enough private funds to get the mill's construction started. So lawmakers asked pointed questions about the company's finances.
That's when Modrowski revealed the company currently has $65 million on hand and $200 in commitments for the project. However, he said they still need to raise $500 million before the end of the year. And if they can't raise the $500 million, they lose the $200 million in commitments.

“We’re focused each and every day to breathe life into this project,” Modrowski said. “Our current board is very active working to raise the balance of that equity each and every day. ... It is our expectation that this will happen by the end of the year.”

Lawmakers expressed their hopes that the project succeeds because it would provide a much needed economic boost in an area in need of jobs. However, they wondered what happens to Kentucky's $15 million investment if Braidy fails.

"In the event that you are not successful in raising that half of a billion dollars by the end of this year, will the Commonwealth be in any position to recover the investment that we have made?" asked McDaniel.

Modrowski replied by saying there is no "plan B".

"We are focused - laser focused - every day we wake up to make sure this facility gets built. That's our focus," said Modrowski. "We don't think about a plan B."

However, Senator Morgan McGarvey says the plan B involves Braidy returning Kentucky's money, if it fails. He says they agreed to that when they signed their contract with the state.

"There are contractual terms that Kentucky gets that $15 million back plus interest," said McGarvey. "So I think, you will see the legislature go back to Braidy Industries, if they're not successful, and say we want the taxpayer money back with interest."