Braidy Industries CEO says media focused on 'irrelevant' questions about names of shareholders
The company planning to build a state-of-the-art aluminum plant in eastern Kentucky, with the help of a $15 million investment by state taxpayers, has only one other shareholder besides state government who is “domiciled” in the Commonwealth, according to its chairman and CEO.
LOUISVILLE, Ky. (WDRB) -- The company planning to build a state-of-the-art aluminum plant in eastern Kentucky, with the help of a $15 million investment by state taxpayers, has only one other shareholder besides state government who is “domiciled” in the Commonwealth, according to its chairman and CEO.
Braidy Industries, which formed in March, plans to build a $1.3 billion aluminum rolling adjacent to the Ohio River in Greenup County by 2020.
Commonwealth Seed Capital, a company owned by state government, bought $15 million of Braidy’s stock in May, giving taxpayers a stake in the company equal to at least 20 percent, according to state documents first reported by WDRB News in June.
Gov. Matt Bevin’s administration offered the $15 million stock buy – an unorthodox economic development incentive – as a way to beat out competitor states for the aluminum plant and company headquarters, which together will employ more than 500.
Now, the Louisville media is “waging an unimportant fight” with the state to find out identities of the company’s other shareholders, Braidy Chairman and CEO Craig Bouchard said in an op-ed published Sunday by Kentucky Today.
Earlier this month Kentucky Attorney General Andy Beshear’s office sided with The Courier-Journal in an open records dispute, saying the state’s economic development arm must reveal the company’s other shareholders as a matter of public interest.
Bevin’s administration plans to fight the decision in court.
WDRB News has also asked Beshear’s office to review the state’s refusal to identify the other shareholders, as well as Braidy Industries’ contention that it is not a public agency required to turn over documents.
Kentucky’s Open Records Act says any entity, excluding contractors, that derives at least 25 percent of its funding spent in the state in a fiscal year from any part of state or local government is required to comply with the act.
Kentucky’s stake in Braidy was revealed in documents produced by the Kentucky Economic Development Finance Authority in June, when Braidy received an exemption for some state sales taxes on construction materials for its plant.
Those documents said only Bouchard and Commonwealth Seed Capital, the state government entity, own pieces of the company worth at least 20 percent, though they did not say exactly how much of the company either shareholder owns.
In the op-ed published Sunday, Bouchard said the company has eight shareholders, only one of whom – Louisville industrialist and Braidy Industries board member Charles Price – is “domiciled” in the state besides Commonwealth Seed Capital.
The company’s six other shareholders “are located in other states or countries,” Bouchard said.
Seeking to quell concerns about connections between the company’s unnamed shareholders and Bevin or others in state government, Bouchard said Price and his company “have no business with the commonwealth, or any of its agencies.”
Bouchard also noted that the $15 million in funding from Kentucky taxpayers is only 1 percent of the $1.3 billion cost of the aluminum mill.
“Don’t get me wrong, this is a very important 1 percent participation,” Bouchard wrote. “…We placed great value in the state having ‘skin-in-the-game,’ and it played a role in our choosing Kentucky. But, it is 1 percent.”
Bouchard’s op-ed did not explain, however, how the $15 million gives state taxpayers at least 20 percent of the company, making the state Braidy’s biggest or second-biggest shareholder alongside him.
In an email Monday, Jaunique Sealey, Braidy’s vice president of marketing and business development, declined to say how much of the company’s equity is owned by state taxpayers, or what portion of the $1.3 billion for the plant will come from investments by shareholders like Commonwealth Seed as opposed to money borrowed by the company.
“We never discuss the private business of our employees, customers, suppliers, or shareholders,” Sealey said.
Even if Kentucky’s $15 million is only 1 percent of the cost of the plant, taxpayers could still own a significant chunk the company’s equity if Braidy mostly relies on debt to finance the $1.3 billion.
In an interview in June, Terry Gill, secretary of the Kentucky Cabinet for Economic Development, said Braidy could be expected to borrow funds for the plant because interest rates are historically low.
“Like most companies, they would prefer to do more of this with debt given the capital markets today and the relatively inexpensive cost of capital,” he said.
Bouchard, in the op-ed, said the company is trying to strike a balance between being transparent to the public and maintaining confidentiality agreements with its other, private shareholders.
“We are more than happy to provide as much information and transparency as we can, within the normal boundaries of a private company – but not beyond,” Bouchard wrote. “That is a fair position.”