As some of you may remember, a few years back Governor Mike Beebe, with overwhelming support from our "pro-free market" Republican legislators, voted to shovel an incredible amount of money to a private business for them to start a steel mill in Northeast Arkansas. They even risked the teacher's pension fund by directing it to buy $50 million dollars worth of stock in this start-up. In 2013 I described that deal in an article entitled "Beebe Overbids the Most.
Obviously, I was against the anti-free market, crony-capitalist proposal but I don't count because I am just a regular person like you. The only difference is you complain about these things on Facebook and I write them down in a blog before I complain about them on Facebook. The people who matter right now are officials of the Republican and Democratic parties. This is because people like you keep voting for them, and participating in their primaries. Please stop doing that. They are destroying our state by your permission. But I digress.
The leadership of both political parties, in their superior wisdom, were united in deciding to blow us peasants off and do it anyway. Well, by the time the plant got operational in 2015 steel prices had collapsed due to massive oversupply as I documented here
. This was perfectly predictable because taxpayers consistently get ripped off in these "pubic-private partnerships".
Now its 2018 and there is still a massive oversupply of steel globally. The U.S. is considering draconian steel tariffs that experts assure us will initiate a costly global trade-war
. It is a risky and desperate move but it may be necessary to save what is left of our steel industry.
So does anyone know if "Big River Steel" is making a profit? A real profit, not a number pumped up by all those wheel-barrows of your tax dollars that they dumped into it? If they are not making a profit what is the value of the $50 million dollars in stock now? Bear in mind that last August they borrowed $1.255 Billion
which was secured by their assets. At least some of that was for "working capital." If you are not expanding, and they are not, then why do you need to borrow money for "working capital" if you are making a profit? The answers may be hard to find because the mill seems to be owned by a private LLC that Bloomberg financial can't even find an address or phone number for
This has all the classic signs of the instances where the insiders get a huge amount of capital raise, use it to buy stuff and then borrow against that stuff, and then give themselves large salaries and bonuses until it becomes clear that the operation was never really making a profit and was operating on borrowed money, a significant portion of which was skimmed by those operating it before it collapsed and left shareholders with nothing. Not say that is what is happening here, but if it was, this is what it would look like at this point.