WALTHALL - County supervisors expect Front Line Apparel Group officials to provide third-party surety before they will lease the Red Kap building to them.
That decision came Monday as a follow-up to a meeting earlier this month with FLAG's Victor Winogradow, vice president/chief financial officer, and Ron Levine, president. The two have been negotiating with the county to rent the building for production of Army combat uniform trousers and gloves, which they say they have been awarded a contract to do.
The agreement is contingent upon the county being awarded a $750,000 Mississippi Development Authority loan to buy the building and its acceptance of the loan.
Winogradow and Levine have only pledged projected income and their "moral obligation" to the project as their personal guaranty to the county that it can make the loan payments. The Board of Supervisors, however, expected more.
"I think their intentions are good ... but I know what a $750,000 debt would do to this county too," board President Larry Crowley said. "We need some kind of security in their personal guaranty other than their signatures."
The supervisors eventually agreed that the company should be bonded for a total of $500,000 in case it defaults and is unable to fulfill the lease agreement. That figure was based upon equal responsibility of $250,000 for each of the three partners involved: the county, Winogradow and Levine.
"If they're not willing to do that, maybe we should stay clear of it," Crowley said.
Supervisor Casey Weeks said at one point, "If they can't come up with a bond or something, I say forget it."
Supervisor Mart Salley said, "We're playing with the taxpayers' money. ... It ain't worth the risk."
The company has put up $25,000 in earnest money toward its planned purchase of the Red Kap building from the real estate company that owns it, but that deal fell through. The money is sitting in escrow and the county can apply it toward the purchase price.
Also, Crowley said the MDA had approved two loans for the company of $250,000 each: one for equipment and one for training/operating capital. The loans are contingent upon the county proceeding with the loan to buy the building if awarded.
Crowley said the county will not be obligated to repay those loans if the company defaults on them but would be required to take "due diligence" in helping the other agencies try to collect on them.
No formal vote was taken but board members verbally agreed that the company should provide either a letter of credit, physical security or bond worth $500,000 before closing the deal. Front Line must also agree to take responsibility for the upkeep of the building, including insurance, with the county having the option of conveying the building to Front Line at any point the company wants to pay off the note.
Board attorney Buchanan Meek Jr. was to draw up the necessary papers and advise the company's attorney that the surety requirements would be essential for the deal to go through. He was to also request a copy of it government contract for review.
According to the discussion, the board hopes to close the deal by Dec. 1. The board's next meeting is Oct. 31.
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