Overmyer addresses $7M loan
Published 12:00 am Friday, August 24, 2007
LINDEN &8212; Hugh Overmyer, chief operating officer of Linden Lumber Company, said the proposed action to grant public funds to loan $7 million to the company and its affiliates in order to pay down current company debt is not about the Overmyers, it is about Marengo County and the employees who work at the mill.
In a press release issued by Linden Lumber, Overmyer said &8220;this is a significant decision to Marengo County, and it will have a significant impact on the economic development of the County, as well as the fate of some 425 jobs.&8221;
The Marengo County Commission has scheduled a meeting at 4 p.m. today to consider, discuss and vote upon the loan request. Overmyer said he expects the commission to make a decision on the loan during today&8217;s meeting.
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Overmyer said that during the past month &8212; after talking with Commissioner Ken Tucker &8212; he sent the commission a full business plan, a study on the economic impact of Linden Lumber on Marengo County and information about the company, along with his request for assistance.
Federal Land Bank Association of South Alabama announced the foreclosure of the company last week, including properties in Linden and Thomasville.
Overmyer said in order to preserve 425 jobs, Linden Lumber requested the county make a loan to the company, which will be secured by a first real estate mortgage on the company&8217;s plant, property and equipment.
Federal Land Bank appraised Linden Lumber&8217;s current property, which would secure the loan, in Jan. of 2007, in excess of $19 million. This loan approval, if completed by Sept. 7, would prevent the foreclosure action initiated by the Federal Land Bank, he said. Overmyer said he has been informed it will take four to eight weeks for the bond issue to be implemented if it is approved.
Overmyer said he and his family, who are the proprietors of the business, have invested millions of dollars into the company and are not planning any more personal investments.
If the loan is granted, Overmeyer said that in addition to payment of fees and costs, the company will use the funds to pay off the Federal Land Bank and purchase new, more modern flooring equipment.
Overmyer said the equipment, which will be purchased if the proposed loan is approved, was originally ordered last year.
He said since the order the equipment has been on hold for the company. If the loan is approved the equipment will be delivered and put to use. He said the equipment will help the company yield a profit.
Overmyer said he is hopeful for the future of the lumber industry and Linden Lumber.
He said the influence of the housing business controls a stronghold on the lumber industry and as the housing market improves he expects the lumber industry to improve as well.
Overmeyer is encouraged by the forecasts by the company&8217;s management.
In the press release, Overmeyer said that Linden Lumber has exhausted all resources and used every effort to seek a source of traditional type financing through banks or other resources, but this has been unsuccessful in the current business climate. He reported a debt restructure with Federal Land Bank was being developed in 2006, along with a new lender to provide a working capital loan. A declining housing market resulted in a lumber and flooring market collapse; as a result, the company was unable to close the proposed loans.
Overmyer said Linden Lumber sought to restructure their loan during the fall of last year. The loan-restructuring plan fell apart, and Linden Lumber began seeking other alternatives. Overmyer said since then the company has been unable to make principal payments on their loan.
Terry Dunnam, a 29-year employee of Linden Lumber, who currently serves as the company&8217;s chief financial officer, said, &8220;We had the two largest losses in the history of this company in 2004 and 2005, respectively. The company completed a restructuring effort and closed two business units, which were no longer viable businesses and we returned to profitability through the third quarter of 2006.
Dunman said the company hired an industry-consulting firm in February of this year for a one-year project.
Dunman also addressed concerns that the company would not be able to pay the county in light of their facing foreclosure from Federal Land Bank.
&8220;(It) is really simple when you look at the terms of the county loan, along with the anticipated debt relief from our working capital lender,&8221; he said in the release. &8220;Our debt service on an annual basis will be reduced by $2.6 million annually. That is huge for any company, and certainly paves the way for our success.&8221;
For Marengo County, this is an important economic decision, Overmyer said. A recent economic impact study, conducted by Dr. Patrick Demerath of the University of West Alabama, estimated the economic impact of Linden Lumber to be $50 million on an annual basis and more than $1 billion in the next 20 years, Overmyer said.
The Alabama Legislature adopted and the people of Alabama approved in 2004 Amendment 772 to the Constitution of Alabama, which permits the governing body of any county or municipality to &8220;lend its credit to or grant public funds &8230; to any individual, firm, corporation, or other business entity, public or private, for the purpose of promoting the economic and industrial development of the county or the municipality.&8221;
Overmyer said that of the 425 workers at Linden Lumber, 64 percent live in Marengo County.