State Board of Investments OKs $12.5 Million loan package for revitalized Jore

New Jore Corp., the Ronan power-tool accessories and drill-bit manufacturer bought at a
bankruptcy auction last year, has qualified for $12.6 million in loans substantially underwritten by public
money, state Board of Investments Executive Director Carroll South said Tuesday.

By JOHN STROMNES of the Missoulian

It is the largest loan package the Board of Investments has participated in since its establishment in 1984,
South said.

The Board of Investments will provide New Jore with $9.7 million from the state Coal Tax Trust Fund, and
Mountain West Bank of Helena will provide the rest. Mountain West Bank was a significant creditor in the
old Jore bankruptcy action.

Of the $9.7 million in public funds, $6.2
million is a "value-added" loan with a
below-market interest rate of 2 percent for the
first five years, conditional upon the creation
of at least 15 new jobs. The 2 percent rate
amounts to an interest rate subsidy of 5
percentage points below the market rate for
such loans, South said.

The term of the value-added loan is seven
years, with the first five at 2 percent, and the
last two at 6 percent.

The legislation for such loans is designed to
encourage growth of "value-added" industries
in Montana, such as Jore’s light-manufacturing
plant, and job creation.

The remainder of the public-money
participation in the loan package – $3.38
million – has an interest rate of 7 percent –
the market rate for such commercial loans.
But this rate can be reduced through
documented job creation, by as much as 2.5
percent if 50 or more jobs are created.

Jore now employs about 285 people, according to Gerald McConnell, president and chief executive officer of
the privately held corporation. He said the company will easily meet the job-creation requirements.

The company was bought out of bankruptcy last April by Frank Tiegs, a Pasco, Wash., businessman, for
$32 million. He immediately sought a $1 million federal economic development loan from the state
Commerce Department’s Community Development Block Grant program for operational capital; it was
granted last September through the Lake County Economic Development Corp., Lake County and the city
of Ronan.

Tiegs also sought and was granted substantial property tax relief spread over eight years from Lake
County under another economic-development incentive program passed by the Legislature. County
commissioners approved that tax incentive last August.

Last summer, Tiegs was quoted as saying Jore needed a $20 million, 15-year, 3 percent fixed term loan or
its equivalent from public entities like the Montana Board of Investments and the CDBG program to keep
operating in Montana.

”From the beginning, Mr. Tiegs has been offered a lot of incentives to relocate the business. He said he
didn’t want to do that. But he needed some show of interest from the state of Montana to match those
incentives,” McConnell said.

The $9.5 million in loans from the state Coal Tax Trust Fund represents a substantial show of interest,
McConnell agreed.

McConnell said the $12.6 million in new loans will be used to retire debt and to purchase new equipment to
help Jore break into the highly competitive industrial drill-bit market. This was a major focus of the original
Jore Corp.’s business plan in the two years prior to bankruptcy.

McConnell said a significant patent-infringement lawsuit against the old Jore Corp., called the Kouvoto
litigation, which carried over from the bankruptcy to New Jore, has been concluded in favor of New Jore after
a jury trial in U.S. District Court in Missoula last week.

He said the corporation is doing well financially, despite the turmoil of bankruptcy and its aftermath.

”Last year was a record year – the combined new and old Jore had record sales and record earnings,"
McConnell said.

The original Jore Corp. was founded in 1990 by Matt and Mike Jore of Ronan, based on patented designs
of Matt Jore. It grew by some valuations to be a $70 million publicly held company before it collapsed in
2000-2001, burdened by enormous debt, excessive labor costs and inexperienced management.
Stockholders lost everything in the bankruptcy, as did many unsecured creditors.

The company continued operations during some 11 months of Chapter 11 bankruptcy, and was purchased
for $32 million by Tiegs last April. After the purchase, the Chapter 11 bankruptcy was converted to Chapter
7 for what was not included in the purchase.

These assets not purchased by Tiegs amounted to some $1.8 million in outstanding claims old Jore has
against others, to be collected through litigation, or the threat of litigation. Any money collected would be
used to help repay the major secured creditors, and to pay the bankruptcy trustee.

Reporter John Stromnes can be reached at 1-800-366-7186 or at [email protected]

http://missoulian.com/articles/2003/04/23/news/mtregional/news06.txt