Big River Steel Closes Financing, Construction Is Next (UPDATED)

Arkansas’ $1.3 billion steel mill superproject in northeast Arkansas has closed on its private equity financing. Next up, construction and maybe another superproject.

State officials and Big River Steel CEO John Correnti said the financing portion of the deal — which closed yesterday – was a whirlwind event with all of the moving pieces of the project coming together in less than 48 hours.

“It was a lawyerfest,” Correnti said. “It’s a lot of work by a lot of people.”

Private equity investors are fronting $1.25 billion of the $1.3 billion superproject. Those investors have to spend $250 million before any portion of the state’s $125 million can be tapped. The city of Osceola and Mississippi County are also fronting a combined $16.5 million in financing.

The superproject was announced in January 2013 is expected to create 500 steel mill jobs.

State economic officials and public investors, led by the Arkansas Economic Development Commission, the Arkansas Development Finance Authority, and the Arkansas Teachers Retirement System, joined Correntti for an interview with Talk Business & Politics on Tuesday afternoon.

“We’ve jumped the largest hurdle by closing the financing. Meaning the equity partners put their $300 million in, we sold the bonds yesterday,” said AEDC director Grant Tennille. “Where we go from here, at the earliest possible date, construction will begin.”

Correnti said that should be in July, although heat, wet weather, mosquitoes and travel logistics may push a formal ceremony back to September for a “cornerstone” announcement.

He said there is still engineering work to be completed and construction contracts to finalize.

Correnti, Tennille and others said the Big River Steel Mill superproject was unique in that a start-up company, not an existing one, was the first to utilize Arkansas’ Amendment 82 mechanics. That amendment, approved by voters, gives the state legislature authority to issue bonds for mega-projects that will create more than 500 jobs and make major infrastructure investments in state.

Tennille said that the complexity of the Big River experience now proves that Arkansas can handle other big deals and it has put the state on the map for other superprojects.

“We think we’ve got the assets now that make us an automatic first look,” he said.

When asked if there were any other superprojects on the immediate horizon, Tennille added, “You can deduce that. I would say that now that we’ve shown how we can do it, we’ve had some other people express some interest.”

UPDATE:  Nucor Steel, which operates two steel mill facilities in Mississippi County, issued a statement in response to the Big River Steel financing achievement.

The North Carolina-based steel maker indicated it would continue to pursue legal action to stop the Big River Steel factory from being built, contingent on an air quality permit.

“Nucor Steel-Arkansas and Nucor-Yamato Steel continue to believe that the air permit issued to Big River Steel LLC does not meet the requirements of applicable state and federal law, and that permitting for the Big River facility will be detrimental to the existing steelmaking operations in Mississippi County. Given these circumstances, we will continue to challenge the permit’s issuance and look forward to a final disposition of this matter.

“One of the biggest concerns is that the emissions limits proposed by Big River Steel are substantially below levels that other EAF operators have found to be achievable using the same technology, raising serious questions as to whether Big River Steel will be able to meet these emissions limits. If Big River Steel fails to meet these aggressive limits, Osceola and the surrounding northeast Arkansas area will violate National Ambient Air Quality Standards for fine particulate matter. Violating this standard would not only affect their operations, but would effectively prohibit any further industrial development or expansion of existing facilities from occurring in the region,” said Nucor spokesperson Katherine Miller in a statement.