SD committed millions to Northern Beef plantA summary of the funds spent on the idled facility.
Following is a summary of the $30.76 million in South Dakota state government loans and grants committed to Northern Beef Packers in Aberdeen, including a substantial portion that was never awarded because of problems at the plant. The idled plant and its finances have become the subject of a federal investigation.
Most of the grants and loans were committed during the administration of then-Gov. Mike Rounds, whose last day in office was Jan. 8, 2011.
Board of Economic Development
•$5 million loan commitment from BED, which originated in January 2010. The loan commitment was most recently extended at the board meeting in February, which extended the commitment until March 1, 2014.
A “loan commitment” is a guarantee from a lender that a loan will be made if certain conditions are met. In this case, the BED loan was contingent upon the completion of construction and the meeting of certain financial and operational milestones. This loan was never made because Northern Beef never met the milestones. Although only the board can decide for certain, given Northern Beef’s pending bankruptcy, this loan might never be made.
Economic Development Finance Authority
•$20 million loan commitment from EDFA, which originated in February 2010. Sixty percent must be guaranteed by the U.S. Department of Agriculture-Rural Development’s Business & Industry Guaranteed Loan Program. EDFA’s non-guaranteed loan amount may not exceed $8 million. The loan commitment was most recently extended at the board meeting in February, which extended the commitment until March 1, 2014.
In this case, the EDFA loan was contingent upon the completion of construction and the meeting of certain financial and operational milestones. This loan was never made because Northern Beef never met the milestones. Although only the board can decide for certain, given Northern Beef’s pending bankruptcy, the loan might never be made.
Future Fund Grants
•$1 million grant to Northern Beef in December 2010 to assist with construction costs.
•$150,000 grant to the Aberdeen Development Corp. in December 2010 to conduct an economic impact study and perform marketing services with regard to Northern Beef and South Dakota Certified Beef. The Aberdeen Development Corp. expended $52,159 from this grant.
•$67,600 grant to the Mentor Group in November 2010 for the appraisal of the plant required for a financing package.
•$200,000 grant to Brown County in December 2010 for costs associated with road construction.
•$300,000 grant to the South Dakota Department of Agriculture on Jan. 1, 2011, for the South Dakota Certified Beef Program.
•$843,000 grant to Northern Beef on Jan. 1, 2011, to train up to 562 full-time employees, not to exceed $1,500 per full-time employee. Northern Beef has drawn $582,000 from this grant to train 427 employees to date.
Future Fund Grants to SD Development Corp.
•$1.2 million grant to the SDDC in June 2010 to provide a conditional loan to Northern Beef for construction costs and employment recruiting. By its terms, the loan need only be repaid if the debt coverage ratio gets to 1.5:1.
•$2 million grant to the SDDC on Dec. 30, 2011, to assist the SDDC in providing a $3 million bridge loan to Northern Beef for operating costs. The loan was paid in full on Sept. 26, 2012.