The board of trustees for the Arkansas Teacher Retirement System on Tuesday authorized an initial investment of $12.8 million in a company called Blue Oak Arkansas LLC that plans to build an electronics recycling plant in Osceola.
System Executive Director George Hopkins said he expects construction of the plant to begin in April and to last 14 months.
Afterward, John Correnti, chairman of Big River Steel that plans to build a $1.1 billion steel mill near Osceola, said that he is chairman of Blue Oak Resources of Burlingame, Calif., an investor in Blue Oak Arkansas.
He said Blue Oak Arkansas wants to build an electronics recycling plant that would employ 50 to 75 workers.
In a telephone interview Tuesday, Correnti declined to provide more details on the project because he said "it's not closed yet." He said he hopes to provide more details by the end of this month.
The proposed plant's workers should be paid an average wage of about $50,000 a year, according to a retiree system report.
The project's cost could total up to $35 million, according to a Delta Trust report to the system.
In addition to the system, Hopkins said the other investors in the project would be SMS Siemang of Dusseldorf, Germany, Blue Oak Resources, Global Principal Partners of Cleveland and the Arkansas Development Finance Authority, which would chip in $3 million.
The project also would be financed with several million dollars in federal tax credits and a $2 million loan from the Arkansas Economic Development Commission, he said.
The teacher retirement system would have about 38 percent ownership of the firm, while Blue Oak Resources would have about a 37 percent share. SMS would own nearly 13 percent, the Arkansas Development Finance Authority about 8 percent, and Global Principal Partners would own about 4.5 percent, according to the Delta Trust report.
Hopkins told the trustees that system officials have been reviewing and working on the proposed investment in Blue Oak Arkansas LLC since last summer. Their interest was piqued by the work of a California private equity firm. That company, Kleiner and Perkins, was working with specialists to find a solution to process unwanted cell phones, computers, televisions, garage door openers and other electronics.
Blue Oak Arkansas LLC would process about 20 tons a day of electronics waste, operating about 7 days a week and 50 weeks a year, he said.
A British company called Tetronics will provide the patented technology used to treat the waste in an environmentally safe way with a plasma furnace, Hopkins said.
"We would be a toll provider in that somebody else would own the waste," Hopkins explained. "We would never buy the waste initially and then we would get a toll for processing it and then we get to keep a piece of the precious metal revenue stream.
"Our view of this was it was another double win," he said. "Number 1, this facility will come to Arkansas if we invest in it. Second of all, we see as a great return opportunity."
The system ultimately could invest $18 million in the company under the resolution adopted by the trustees Tuesday.
In addition to the initial cash investment of $12.8 million in the company, the system would have a right to invest another $600,000 in the firm after a year, if the firm doesn't need that money as a result of construction costs exceeding certain projections, Hopkins said.
The system also could be required to invest $1.3 million more, which is set aside as a 10 percent contingency in the case additional money is needed to cover increased costs involved in the project, he said.
The system also would have the option to buy out the Arkansas Development Finance Authority's $3 million investment in the company at a later date, Hopkins said.
"If this thing works as well as we hope, this will just be phase one of several phases and perhaps this will even spread to other areas," he said. Blue Oak Arkansas would have the exclusive right to use Tetronics technology in North America, he said.
Hopkins said the system's staff and Delta Trust of Little Rock, which reviewed the proposed investment for the system, both recommend the investment. He said he expects a 20 percent annual investment return from the project.
Gene Eagle, president of the Arkansas Development Finance Authority, said the authority's board hasn't yet approved a proposed investment in Blue Oak Arkansas LLC. He declined further comment.
Scott Hardin, a spokesman for the Arkansas Economic Development Commission, said, "We don't have any specifics to share on the Blue Oak project as it is still being worked."
Metro on 03/19/2014