LOUISVILLE, Ky. (WDRB) – Braidy Industries, the startup company planning to build a $1.7 billion aluminum mill in Ashland, Ky., still lacks about $300 million in private investment needed to finance construction of the plant, according to a regulatory filing on Monday.
The new filing also reveals that at least half of the planned $200 million investment in the mill by Russian aluminum giant United Company Rusal -- which was announced in April -- is contingent on Braidy Industries raising the $300 million from other investors and securing construction financing.
Braidy Industries said in the filing that it has “received indications of interest from prospective investors in excess of this ($300 million) amount, (but) these prospective investors currently are not committed to make any investments.”
In a written statement Tuesday, Braidy Industries chairman and CEO Craig Bouchard expressed optimism about the project.
"Our progress building one of the largest mills in the world has gone faster than any project of this size in memory. We couldn’t be more excited about our future and the positive impact we will have on the economy of eastern Kentucky," he said.
Gov. Matt Bevin and other elected officials have touted the Braidy Industries project, first announced in 2017, and its expected 600 high-paying jobs as transformational for a struggling region of Kentucky.
In fact, Bevin’s administration invested $15 million of state money into Braidy Industries in 2017, making taxpayers the company’s biggest investor in its initial funding round. The company has since raised an additional $75 million from private sources, according to its filings.
The latest disclosure indicates Braidy Industries is looking at different ways of financing the $1.7 billion construction project other than the cheap, government-backed loans the company has floated as possibilities in previous filings.
Braidy Industries has previously said it’s seeking hundreds of millions of dollars from the U.S. Department of Energy’s Advanced Technologies Vehicle Manufacturing Program, as well as export credit support from the German government to cover equipment purchases for the mill.
In Monday’s disclosure, however, the company does not mention those options, but says it is “considering alternative debt and lease financing sources, or a combination of sources, in order to finance construction of the mill.”
Braidy Industries said it's working with unspecified "global financial institutions" to secure those forms of financing, but no commitments have been made.
Bouchard said in the statement that Braidy Industries canceled its application to obtain up to $800 million from the Department of Energy in favor of a better deal from a different lender he did not name.
"As private debt capital markets continue to embrace Braidy Industries, another party came forward with a better offer than the terms proposed by the Department of Energy. Upon examining the offer and its benefits, we cancelled our DOE application and signed a letter of intent for up to $900 million of leasing finance with another party," Bouchard told WDRB in the statement.
As in previous disclosures, Braidy Industries said Monday that it still anticipates opening the mill in 2021.
The new filing also warns potential investors that the financial projections the company released in October showing anticipated sales, operating costs and other information about the Ashland mill are “outdated” given the $200 million investment by Rusal.
As part of the deal, Rusal got a 40% stake in the mill project, leaving Braidy Industries with 60% instead of wholly owning the mill, its main business.
As for the previous financial information, “prospective investors should disregard such projections in their entirety and not rely on them when making a decision whether to invest in securities of Braidy Industries,” the company said.
Braidy Industries does not plan to release updated projections, the company said.
In addition to courting institutional and wealthy investors, Braidy Industries has been selling shares to the general public for as little as $108 through an online crowdfunding portal.
The portal indicates that it has received $13.4 million for Braidy Industries shares as of Tuesday.
Braidy Industries said Monday that it plans to close the crowdfunding offering on July 22. The bigger stock sale, in which the company hopes to raise hundreds of millions, is ongoing and has no specified end date.
Bouchard said more than 800 investors bought shares through the crowdfunding portal, including "main street Kentuckians."
"It further highlights our commitment to bring this important project to fruition for Kentucky while successfully concluding the crowd funding component as a micro-piece of our much larger private financing plan," he said.