Later today, McCracken County and the City of Paducah will sell the property and building located at 5400 Commerce Drive (the Genova Plant). Below is a summary of the transaction from the County’s perspective and from a historical perspective.
Summary of the History and the Transaction
- This property was initially developed by the County and the City in 2004 at the cost of about 5 million dollars.
- The property was initially leased to Infinity Plastics. The Infinity Plastics Deal was a horrible 🤮 economic development deal orchestrated during the “Wayne Sterling Era” of Greater Paducah Economic Development (GPED).
- The Infinity Plastics Deal was ixnayed (pig latin for nixed) during the “Chad Chancellor Era” of GPED, and Genova Plastics was recruited to the facility in 2014.
- The Genova Deal was an incentivized lease with an equipment loan and certainly a “come up” 👊 from the Infinity Plastics disaster, in that, Genova actually hired employees.
- Genova ran out of cash right around Christmas of 2019, and a “Receiver” was appointed to “marshal the assets” for the benefit of the creditors.
- In May 2020, Utah based Plastics Services and Products, LLC (PSP) participated in a “stalking horse” bid to acquire the Genova assets and, thus, the rights to the incentivized lease and the equipment secured by the Genova equipment loan.*
- PSP expressed interest in buying the real estate from the County and the City. An appraiser was hired. After some executive session debate between the County folks and the City folks, an offer to sell at the appraised price of $3.6 million dollars was extended and then later accepted by PSP.
- The County will receive $1,777,722.29 from the sale proceeds.
- The County owes about $632,500.00 on the Genova project. I feel certain the Fiscal Court will retire this debt and that will reduce the County’s annual debt service obligation by about $196,000.00.
- The net proceeds of about $1,167,500.00 will be added to the County’s economic development fund which has a present balance of approximately $800,000.00.
- PSP will continue to make payments to the County and the City on the equipment loan which has a present day balance of about $780,000.00. The County’s share of these payments are deposited into the County’s economic development fund.
My “Take-Away” Analysis (for what it is worth)
- Our celebration of the PSP Deal is justified, in that, PSP has made the long term commitment to own the real estate in our community and will be rehiring the Genova work force. However our celebration should not be a “Staubach to Pearson long pass type” celebration, but rather, it should be a “John Riggins short yardage run in which we did not fumble type” celebration. Lots of past players contributed to this scoring drive. (My player/analogy choices from the NFC East date me as the last of the Boomers)
- We did not recruit PSP. Rather, we had good looking product available when they came looking.
- The property was good looking because it was: a) ready for use and transaction; b) there was an identified labor force at the ready; c) our geography in the middle of the country and in close proximity to I-24; and d) our GPED team was nice and accommodating.
- Our present day inventory of “product” (i.e. land that is ready for transaction) is light. We have some remaining lots at the I-24 Park and in the Commerce Park. We have the mega site on the Ohio River. However I believe it is time we start pontificating new sites for development. Exit 16, Exit 11 and future Exit 9 (a guy can dream can’t he?) are all areas close to I-24 and have the potential for low cost power. The success of the PSP Deal will be because of decisions and actions which were taken as far back as 2004. I believe now is the time to start discussing “new product” and determine where the “willing sellers” are located.
- Paducah is a cool, safe, charming community located in a county of 65,000 residents. Schools systems are excellent. Our county is at the intersection of I-24 and the Ohio River. Very nice homes are available in the $250,000 range. We have good “play” and we are “day trips” away from even “more play.” In the off chance, you are reading this and looking to locate a business in a cool spot, come look at Paducah! The contact is Bruce Wilcox at GPED.
- A stalking-horse bid is an initial bid on the assets of a bankrupt company. The bankrupt company will choose an entity from a pool of bidders who will make the first bid on the firm’s remaining assets. The stalking horse sets the low-end bidding bar so that other bidders can not underbid the purchase price. The term “stalking horse” originates from a hunter trying to conceal himself behind either a real or fake horse.
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