JACKSON - Mississippi's state auditor apparently is interested in a beef processing company's finances and the possibility it may end up in bankruptcy.
While Auditor Phil Bryant says he can't confirm or deny an active investigation, his office is charged with tracking such economic development bond projects and the $35 million-plus taxpayer investment.
Bryant on Tuesday said he's concerned about a possible bankruptcy filing for Mississippi Beef Processors LLC, based in Oakland in Yalobusha County in north Mississippi. He said his office is working with Attorney General Jim Hood on the matter.
If the company files bankruptcy, the state faces the potential loss of its $35 million loan "and in a worst-case scenario we could be responsible for that loan to Community Bank," Bryant said.
House Agriculture Committee Chairman Bo Eaton, D-Taylorsville, said he welcomes an audit of the facility.
"The plant was built to try to promote jobs in a depressed area and also to help the agricultural interests of this state, primarily the beef industry," Eaton said.
Earlier this month, company founder Richard Hall approached lawmakers about pumping another $5 million for the project, saying mechanical problems were hampering the operation. "The state will not put any more money into the project," Eaton said Tuesday.
State Agriculture Commissioner Lester Spell said he didn't want to discuss specifics about the beef plant's apparent financial problems. "You're always concerned about investment you have in new products and startup," Spell said at the Capitol Tuesday.
Bryant's office released a report detailing the $43.5 million in total state financial commitments to plant. Those obligations included a $35 million state-guaranteed bank loan; a $5 million grant from the Land, Water & Timber Board and a $3.5 million management contract from Land, Water & Timber.
Hall did not immediately return a call Tuesday from The Associated Press seeking comment.
The 154,000-square-foot plant opened in August and was scheduled to employ 429 at its peak and process 1,000 head of cattle per day. It was unclear how many people were employed at the plant or whether there had been any layoffs. The plant is supposed to have an $8 million payroll.
Bryant said he understood Hall is looking for outside investors to sell part of the company or to provide some of the needed capital. Bryant said it would be a "great benefit" if investors were found.
The company was beset with problems before it opened. According to the auditor's report, budget overruns at the facility began in February 2003, and in May 2004, Hall asked the Land, Water & Timber Board for another $1.5 million loan. That request was denied. However, an agreement was reached in September, allowing for the release of $1.5 million of collateral held by Community Bank.
A January 2001 study by the Mississippi State University Extension Service estimated the plant's total impact on annual industry sales at $139.8 million, which includes $91.3 million of processed beef sold to wholesalers. Total employment impact, considering spin-off jobs in support industry, would be 1,168, the study said.
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