BY MICHELLE MILLHOLLON
Capitol news bureau
October 22, 2012
State officials started putting a plan in place Friday for selling or leasing a financially troubled cane syrup mill near Lake Charles.
The first step, which the Joint Legislative Committee on the Budget embraced, is to buy $7 million in outstanding debt tied to the mill.
The next step will be for the state Bond Commission to allow the Louisiana Agricultural Finance Authority to borrow the money to buy the debt.
State Agriculture and Forestry Commissioner Mike Strain told legislators that he will find dollars to market the Lacassine syrup mill in order to sell or lease it.
“We’re not going to do a fire sale,” he said.
Strain said the state must finalize a bank payment plan by December or risk the mill being seized by creditors.
The state is involved in the mill because former state Agriculture and Forestry Commissioner Bob Odom put up taxpayer money to build the facility and guaranteed loans designed to eventually turn it into an ethanol plant.
Strain, who called the mill a boondoggle when he successfully ran against Odom, estimated Friday that $80 million of taxpayer money is tied up in the project.
Lake Charles LLC was supposed to buy the mill from the state.
Louisiana Green Fuels Group owns the bulk of Lake Charles LLC. The Colombian Santacoloma family runs Louisiana Green Fuels Group.
Over the years, Lake Charles LLC has struggled to generate revenue and to repay loans. The Lacassine mill is idle. The parts to build an ethanol plant are unassembled on the site.
LAFA rejected the Santacoloma family’s request in March for a 90-day extension to get its finances in order. Instead, LAFA demanded the Santacolomas immediately pay roughly $3 million in overdue payments. The demand was not met.
Strain said the site appraised for $6.4 million, far less than the state spent to build the mill.
The Legislative Auditor’s Office traced the project’s financial history and determined the state spent millions of dollars over the years to help a group of southwest Louisiana sugarcane farmers that never numbered more than 30.
The spending began in 1998, when the state spent $6 million to build a loading facility in Lake Charles and to buy flat rail cars and box containers to move cane by rail in an effort to decrease farmers’ transportation costs and road congestion.
Strain told the Joint Legislative Committee on the Budget on Friday that the banks must be paid or the mill will be seized.
State Sen. Brett Allain, R-Jeanerette, came to Strain’s defense, pointing out that the commissioner inherited the project when he took office.
Allain said he was on the LAFA board when the project came through and voted against it. He said he later was booted from the board.
State Sen. Dan “Blade” Morrish, R-Jennings, said he regrets not doing something to stop the project from proceeding.
The syrup mill is in Morrish’s district.
Morrish said Strain’s strategy is a reasonable way for the state to get out of a bad situation.
He said the mill should appeal to someone.
“It is a great location. It is on a rail spur,” Morrish said.
He said it would not be right for the state to default on a mill-related loan held by a Louisiana bank.
Like the state, Morrish said, the bank was sold a bill of goods.