Barley malting plant lands biggest loan package ever – Montana Board of Investments members approve loans totaling $33.7 million

The Montana Board of Investments approved $33.7 million in loans for the new barley malting plant being built north of Great Falls, the largest loan package in the board’s 20-year history.

By JO DEE BLACK
Tribune Staff Writer

Milwaukee-based International Malting Co. is building a $50 million to $65 million plant, capable of processing eight million to 12 million bushels of barley a year.

Malt is used in brewing beer and as a flavor additive for other foods.

The loan comes from the state’s $670 million permanent coal-tax trust fund, the deposit point for coal severance taxes in Montana.

Staff members for the Board of Investments, a division of the Montana Department of Commerce, originally recommended granting only one of the final package’s participation loan — an $18.5 million 15-year deal.

However, IMC appealed to the board members and in the end was approved for an extra $8 million with shorter terms.

"We were never nervous about IMC’s credit, this is a company with strong finances," said Tim Ryan, a member of the Board of Investments. "This was totally about how many eggs do you want in one basket? How comfortable are you with that much money in one deal?"

The other two parts of the loan package include a $6.7 million, 15-year value-added business loan and a $500,000 infrastructure loan. (See box on 5A)

The board’s president, Dick Anderson, president of Dick Anderson Construction in Helena, said the size of IMC’s loan is not jeopardizing funding for other pending projects, and the in-state loan programs have more money to lend.

Right now $150 million of the trust is being used for loans to Montana businesses, just more than 22 percent of the total. The Montana Legislature has said the Board of Investments should strive to use 25 percent of the trust for such programs.

Anderson said a compromise for the second participation was reached after IMC agreed to put more of its own money as well as funds from private lenders into the deal.

"The board members thought this was an excellent project, exactly the type of project the in-state investment was set up to fund when it was established in 1984," said Carroll South, the executive director of the Board of Investments.

Montana’s Director of Agriculture Ralph Peck said all along IMC indicated Montana’s in-state loan program was an important piece of their financing plan.

"It was very, very important in their decision to locate this plant in Montana, in Great Falls," Peck said.

In the long run the malt plant won’t be a huge windfall for Great Falls in terms of jobs, but it could have a significant impact for the agriculture industry in Montana.

"Adding value to our state’s products, to get that mark-up on the products right here, is one of the biggest charges in economic development," said Ryan, who also heads the Montana office of the U.S. Department of Agriculture’s Rural Development agency.

This year Montana farmers harvested 41.8 million bushels of barley. Premiums are paid for barley that meets the requirements to make malt.

The two-year construction phase of the malt plant is a nice opportunity for Montana contractors too, said Anderson.

"I know they are out there getting quotes from Montana firms," Anderson said. "Obviously they’ll need some specialty work that no one in Montana does, but the immediate economic impact of the project will be in the construction industry."

Montana contractors working at the site now include Mesaros Excavating, Great Falls Sand and Gravel and Wickens Construction of Lewistown.

The concrete foundation bid was won by Northcentral Construction, a North Dakota firm.

Friday’s rain showers slowed work at the site. Backhoes and dump trucks had been running 24 hours a day.

"We’ve enjoyed this rain, but if it would have just missed that little spot, we would have been pleased," said Philip VanRensburg, IMC’s director of corporate engineering.

The project is on schedule now, but that status will depend on the weather, he said.

For the past few years Montana’s drought conditions have afforded large construction windows through the winter months.

A building will start going up at the site in November, but IMC is still in negotiations with the materials supplier for the building, VanRensburg said.

http://www.greatfallstribune.com/news/stories/20030915/localnews/261250.html