The city of North Vernon may be out $1.4 million dollars with little chance of recovery. That’s the message from City Attorney Larry Greathouse, who gave his opinion of Windstream Technologies’ business and financial standing during Monday night’s city council meeting.
Greathouse was tasked by the council to look into the alternative energy company after company founder and CEO Dan Bates talked to the council July 25th. When Windstream Technologies opened its plant there in 2011, it received a 10-year, $1.4 million loan from the city, through its Redevelopment Commission and Tax-Increment Financing funds. Since the loan was issued, repayments to the city have been irregular. Shawn Gerkin, North Vernon Clerk-Treasurer, says that the money the city has received has essentially been enough to cover the interest payments, leaving the $1.4 million balance largely intact. Part of the loan agreement includes a scheduled balloon-payment of several hundred-thousand-dollars, which was due August 1st.
When Bates addressed the council last month, he explained that the balloon-payment was part of the problem in getting Windstream’s financial house in order. He said that he is working with a law-firm out of Raleigh, NC to restructure the company. Bates said that the payment, along with the company’s stock price, is making it difficult to attract investors. Bates said that, while investors like the products being manufactured by Windstream, they get “spooked” when they learn about the company’s financial situation. He added that the immediate goal is to restructure and make Windstream “look presentable” to investors.
The due-date for the balloon payment has come and gone and Greathouse told the council that he isn’t nearly as optimistic as Bates is. “Windstream is bankrupt,” said Bates. He added that, for all intents and purposes, the company has little in the way of assets and “in no position” to attract new investors.
Brian Hatfield, who represents District 4 on the city council, asked Greathouse what could be done. The answer is “not much.” Greathouse said that he wouldn’t recommend that the city file a lawsuit, due to Windstream’s lack of assets. He called any judgement that the city might receive as “totally uncollectable.” In addition, said Greathouse, a lawsuit would hurt the company’s attempt to become presentable to the Securities and Exchange Commission. He recommended that the council “wait and see” what happens. The council agreed and took no action.