by Max Brantley
Re the $1.1 billion steel mill that Gov. Mike Beebe has asked the state to support with $125 million in grants and loans and other inducements;
* BACKERS: I now have multiple sources saying that Koch Industries — yes, those Kochs — is the likely source of another major chunk of the private capital required for the $250 million equity pot that must be in place before the state money would flow. Yesterday, I reported that Arkansas Teacher Retirement hopes to buy 20 percent of the equity with $60 million and is expecting a rich return. The Kochs are expected to put in double that amount, according to what I'm hearing. Another private equity firm headed by a former major corporate executive is in for a share somewhat smaller than ATRS and the management team also is expected to make a contribution.
UPDATE: Koch participation confirmed. Tweet Friday afternoon from ATRS:
ATRS is proud to announce that Koch Industries will be an ATRS partner & major investor in Big River Steel. Koch is a world class investor!
Noted: the irony/hypocrisy of news that Koch billionaires are seeking to benefit from a government handout to enhance the profitability of a private investment. They fight protection of the Little Rock watershed, oppose environmental regulation, fight taxes of all sorts and universal health care and work to elect Republicans who, when they're not punishing wonen and gays, are braying about "free enterprise." (In Arkansas, many of the braying class, speaking of free enterprise, don't hold down real jobs, but live off their legislative salaries, free health insurance and lobbyist handouts.) The Kochs' privately held enterprises already include a signficant investment in Arkansas through ownership of Georgia-Pacific.
* OPPONENTS: Nucor Steel still hasn't returned my calls. Nor has its lobbyists. But two different people in Mississippi County, plus two political figures active in the deal, tell me lobbying has begun against the Big River subsidy, which would provide a significant leg up to a competitor of Nucor in its own backyard. Nucor isn't running at full production currently, nor is the steel industry in the U.S. as a whole, one buyer of Nucor steel tells me. (He also tells me that, as far as he's concerned, more competition is a good thing for him.) I talked a bit today with George Hopkins at Arkansas Teacher Retirement and others about this. Big River will have a counter argument, naturally. They'll likely say Nucor production issues are more related to the age of their plant. They'll say that the market is big enough for all the players, that new business will come mostly at the expense of the still-significant import steel business, that Big River generally will be producing a higher grade of product than Nucor. (I'm just telling you what they're saying, not vouching for it.) Finally, they'll say Big River will take its jobs elsehwere if Arkansas doesn't come across. Still, combine active opposition with some pre-existing sentiment among the new Republican contingent against government subsidies and this industrial development might not be a typical walk in the park.
* FAIR IS FAIR: Having heard early on of potential Koch involvement, I sought a coment from both the Koch-funded Americans for Prosperity lobbying group in Arkansas and an Arkansas, Teresa Oelke, now a national leader of the organization. Both said unequivocally that they opposed the Big River subsidies. Kochheads divided.
* PREDICTION: None, except that this will be more interesting than corporate welfare rollouts usually are.
UPDATE: George Hopkins' report to General Assembly on Koch investment:
I want to officially announce to the General Assembly that Koch Industries, a multibillion dollar and very successful private company, has also vetted the Big River Steel project and is committed to be a major investor in Big River Steel. Koch Industries is slated to be the largest investor in Big River Steel. LLC and has a materially larger commitment than the $60 million dollars proposed investment by ATRS. Koch Industries is a multibillion dollar private company that has a strong and proven record of being a leader in finding successful investments by extensive due diligence and deep vetting of potential investments. Koch Industries has been a very strong market participant in the natural resource and manufacturing spaces. ATRS welcomes the knowledge and business experience of a partner like Koch Industries as this Amendment 82 Super Project is considered by the ATRS Board and the General Assembly.