Marengo County Commission approves loan for Linden Lumber
Published 11:59 pm Tuesday, March 10, 2009
In 2005, the commissioners approved a $4-million bond issue to renovate the Marengo County Courthouse. The measure, approved Tuesday, will tack five years onto to the original 20-year bond, providing the county with the $1.5 million needed to make the loan to Linden Lumber without increasing the county’s annual payment.
The county is currently paying $465,000 annually towards that bond issue.
The loan was actually approved last year in a split 3-2 vote decision by the commission. Commissioners Calvin Martin and Jerry Loftin voted against it. However, there were some stipulations the commissioners asked Linden Lumber’s parent company, AHI, to meet before the loan could be finalized.
“All of the documents have been hammered out over the past few months,” said county attorney Woody Dinnning Jr. “The personal guarantees have been put in place, and escrow funds ($150,000) have been put in place to serve the debt for two years in case something happens.
“This vote is not to approve the loan. That has already been done.
This is to refinance the bond issue and authorize commission president Jerry Loftin and the county clerk (Meredith Hammond) to execute the documents necessary to complete the action.”
After going into a executive session for about 45 minutes, the commissioners voted to approve refinancing the 2005 bond issue with a 3-1 vote. Martin voted against the motion and commissioner Dr. Ken Tucker was not present for the meeting.
When the commission learned that Linden Lumber was on the verge of foreclosure nearly two years ago, it worked to try to determine a way to keep this local major employer in operation.
At its regular meeting on Aug. 24, 2007, the Marengo County Commission approved to begin the process for a bond issue to loan up to $7 million to Linden Lumber.
That loan was contingent upon four stipulations being met: That there would be an independent audit of Linden Lumber; that an independent audit be done of the assets the county would be taking mortgage on; and that the county approve the restructuring of the loan with Wachovia Bank and Federal Land Bank.
AHI bought Linden Lumber early last year, but the financial problems persisted. The company laid off 125 workers in November.
The move to approve the $1.5 loan to Linden Lumber has been a heavily criticized move, especially during the current economic climate.
Commissions said Tuesday the loan is expected to be used to purchase equipment for Linden Lumber.