EGE seeks alternative lender in plant purchase
ESCANABA – The company planning to buy Escanaba’s power plant is seeking an alternative lender as a backup in the event its current financer cannot resolve issues delaying funding.
That was the message City Manager Jim O’Toole gave at council’s regular meeting Wednesday during an update of Escanaba Green Energy’s (EGE) status in purchasing the facility.
EGE has been negotiating to buy the city’s power plant for $1.6 million for nearly a year and a half. A sale agreement has been reached but EGE has had setbacks with acquiring the $30 million needed to buy the property and convert it to burn biomass.
O’Toole said the city met with EGE on Tuesday to discuss the company’s financial model. The city also offered EGE any guidance in the process, he added.
“We’re still trying to understand the financing package,” O’Toole told council. “We did offer to help them through the Michigan Economic Development Corp.”
The city is selling the facility because it is less costly to purchase power from a supplier compared to generating electricity in the coal-fueled plant.
In a letter to the city manager on Wednesday, EGE President Charles Detiege said the company remains committed to buying the power plant but its primary lender, Provartis, is facing delays in forwarding loan monies.
“We continue to have a firm lending commitment from the private lender Provartis for the entire transaction and this commitment remains in force,” stated Deteige.
“However, Provartis has run into regulatory delays in Hong Kong as it sought to forward funds from Hong Kong to London and is still trying to resolve these issues.”
Detiege stated EGE has been working diligently during the past month to secure a backup funding source and is looking at a specialized project funding program.
“This group has indicated to EGE that it will be sending an offer – full terms and conditions – very comparable to the Provartis offer that is on the table,” he added.
Detiege said he is hopeful that by July 17, EGE will be able to report to council which lender the company will be using as well as have a commitment letter from the lender.
Following O’Toole’s update, recently-appointed council member Marc Tall commented that the city needs more than a commitment from EGE. He added he would like to see action from the company.
Last week, Tall was appointed to fill the vacancy on council created when Mayor Pro Tem Brady Nelson passed away on June 15. During Wednesday’s meeting, council appointed Pat Baribeau as the new mayor pro tem.
In other business, council accepted an $8,835 grant to purchase wildland firefighting jumpsuits for Escanaba Public Safety. The grant is from Assistance to Firefighters, a federal program which is funding 95 percent of the purchase. The city is providing $400, or five percent of the costs of the equipment.
Public Safety Director Ken Vanderlinden told council the jumpsuits weigh less than the current gear and will help combat fatigue and dehydration.
In other action, council renewed the lease of 14 acres of city-owned property to the Great Lakes Sport and Recreation Club for a three-dimensional archery range.
Council approved blocking off the 800-1400 blocks of Ludington Street for the downtown’s Sidewalk Daze on July 19.
Use of the city marina, Aronson Island Boat Ramp, and the North Shore Boat Launch was authorized by council for the B.A.S.S. Michigan State Championship Bass Fishing Tournament on July 23-28.
Council authorized the Pedals by the Bay Bicycle Show to take place near the bandshell at Ludington Park on Aug. 3.