Jared Hunt column: W.Va. owed millions for Coldwater site
The West Virginia Economic Development Authority, Wood County Development Authority and United Bank will have millions of dollars on the line in the looming bankruptcy proceedings for soon-to-be defunct retailer Coldwater Creek.
The company has benefited from two rounds of loans to finance construction of its 960,000-square-foot distribution center in Wood County.
The center had been a feather in the cap for state and local officials since it was announced in 1998. The hub was featured in the state Commerce Department’s recent “Business at the Speed of Life” advertising campaign.
But now state and county officials will have to scramble to find a new tenant for the massive distribution hub along Interstate 77 in Mineral Wells. They’ll also have to settle up the outstanding balance on the loans used to build the facility.
In its bankruptcy filings, Sandpoint, Idaho-based Coldwater listed $278.5 million in assets and $361.3 million in debt.
The state Economic Development Authority is still owed more than $8 million from its loans, authority executive director David Warner said. United Bank, which helped finance the construction and expansion at the facility, is also owed about $15 million from its loans, according to development authority records.
As with most state economic development deals, the financing deals are a bit complicated.
Coldwater Creek doesn’t actually own the Wood County distribution center, it’s owned by the county development authority (that helps with the property tax bill). The company pays $344,292.10 a month to lease the building from the local authority. That money is then used to pay off the loans.
United and the state development authority originally provided $18 million in loans to the Wood County Development Authority to finance the original construction. United provided $11.35 million in financing while the state provided $6.65 million to the Wood County authority.
(Original reports about the loan package in 1998 said the state would lend the company $10 million on a 15-year loan to build the facility. Warner said that amount was not accurate; the loan that closed in May 1999 was for $6.65 million.)
The state Economic Development Authority’s original loan still has an outstanding balance of nearly $2.5 million.
In 2006, the state development authority provided $7.5 million to help expand the facility by 352,000 square feet. That loan still has an outstanding balance of $5.7 million.
United also provided another $12 million loan to finance the expansion.
Warner said state officials are concerned about the Coldwater bankruptcy. He said the state has been in contact with United Bank over the matter; local officials have been in talks with the company.
Warner also pointed out the state’s loans do not come from taxpayer money provided by the Legislature. The authority issues bonds (backed by special revenue funds from the state Lottery) to raise the money it lends to businesses.
He said it would be premature to comment on what could happen to the Wood County building or whether the state authority will get back any of its money through bankruptcy proceedings.
He did say both the state authority and United Bank have a shared first deed of trust on distribution center and an assignment of lease with Coldwater Creek. The shared lien means the two lenders share in expenses and proceeds from sale of collateral in the ratio equal to the total amount of debt outstanding.
That means if the state has $1 million outstanding and the bank has $2 million, they would share in a 2-to-1 ratio, with 66.6 percent going to bank and 33.3 percent.