Atlas Carbon, the first company to commercialize a non-combustive use for Powder River Basin coal, has defaulted on a $15 million state loan and must open its doors and books to state auditors who will assess the company’s assets.
The State Loan and Investment Board on Thursday voted unanimously to find Atlas Carbon in default after several hours of testimony by company officials. The board directed the State Treasurer’s Office to “pursue any remedies established in the construction loan agreement as amended.”
The board is made up of Wyoming’s five state-wide elected officials: Gov. Mark Gordon, Secretary of State Chuck Gray, Auditor Kristi Racines, Treasurer Curt Meier and Superintendent of Public Instruction Megan Degenfelder.
The State Treasurer’s Office could seize the company’s assets that it offered as collateral, which include land, buildings and equipment at the facility located north of Gillette, as well as the company’s intellectual property, according to state documents. Treasurer Curt Meier, however, said he hopes to avoid such an action and instead devise other ways to ensure Atlas Carbon makes good on its loan obligation to Wyoming taxpayers.
“We’re hoping for a positive outcome for both Atlas Carbon and the interests of the state,” Meier told WyoFile on Friday.
Reza Hashampour, chairman and CEO of Polaris Asset Corporation, which manages finances for Atlas Carbon, said the company will work with the state to resolve the matter and that the company’s coal-refining plant will continue normal operations.
“As far as we are concerned, our operation is fully going forward and we are fully bringing product to our clients as we’re speaking,” Hashampour told WyoFile by phone on Friday. He added that Atlas’ loan repayment obligations to the state are “being addressed, and it’s going to get cured. It’s going to be a non-event for us.”
Atlas Carbon has also faced legal troubles.
ADA Carbon Solutions sued the company in the U.S. District Court of Wyoming last year for breach of contract resulting in a $76,000 judgment against Atlas Carbon in January.
New uses for coal
Atlas Carbon is among several companies courted by the state to develop new markets for Powder River Basin coal — an ambition that has eluded dozens of companies over several decades. Powder River Basin coal is primarily burned to generate electricity and is almost entirely dependent on the U.S. utility market, which is ratcheting down its use of coal in favor of renewable energy sources.
To help provide financial support to companies willing to pursue new markets for Wyoming coal, the Legislature passed Senate File 63 – Economic development programs-revisions in 2016. The law created the Economic Development Large Project loan program administered by the State Treasurer.
Atlas Carbon was awarded a $15 million loan in 2016 and the funds were disbursed in 2018. The loan came with a payment holiday of several years to allow the company to become profitable, Meier said. But when payments came due several years ago, Atlas Carbon asked for a series of extensions and loan modifications.
The state granted some of those requests, Meier said, including a lower interest rate. Still, to date, Atlas Carbon has made only a handful of payments to the state. Almost the entirety of the $15 million remains outstanding.
“It was necessary to declare a default,” Meier told WyoFile. “This was basically, I think, a wake-up call to say ‘We’ve gone as far as we can go and we need to have a very, very close look at this.'”
State Auditor Kristi Racines brought the motion to find Atlas Carbon in default of its loan obligations. Meier offered an amendment for a six-month holiday, but it failed for lack of a second.
“It was a tough day,” Racines told WyoFile. “Nobody wants to do that. But I felt that I couldn’t really see a path forward.”
Expansion hopes
Despite its financial troubles, Atlas Carbon “is a Wyoming story,” Hashampour told members of the State Loan and Investment Board Thursday. “Atlas is a Wyoming company. Atlas employs Wyoming people and it uses Wyoming coal as a main feedstock.”
Over the past two years, the company has moved from research and development to full commercialization serving dozens of clients, Hashampour said.
The company set up shop at the former Fort Union coal mine site north of Gillette, employing 27 workers. It refines Powder River Basin coal into activated carbon for water filtration as well as sorbent products to remove mercury from coal-fired smokestacks.
Currently, Atlas Carbon produces about 11 million pounds of activated carbon annually. The company is currently in talks with investors — which do not include the state, Hashampour said — to build a second refining plant at the Gillette location to add another 23 million pounds of annual production capacity.
The company has struggled with transportation costs and contract prices lower than the cost of production, Hashampour told state officials, but it continues to land new clients at higher pricing. The company’s plans for a second refining plant will vastly improve its margins, he added.
Atlas Carbon is also working through an increasingly challenging financial market where “environmental, social and corporate governance” — or ESG — policies forbid some companies from investing in coal, Hashampour said.
“All Atlas needs is a little bit of time,” he told board members. “Atlas is not asking to expand the amount of the loan or security that protects the state’s interest or otherwise put this state at risk. We simply need time.”
It is a research project. Evidently they have a workable product and a market. In all fairness it takes time. 1. To bring idea to fruition. 2. Find a market for the widget. 3. Establish a fair market price. They started with idea and bringing it to fruition. I say be patient and be rewarded. It doesn’t appear anyone ran off with the money.
I remember the meeting in the Department of Transportation auditorium very well. It was supposed to be all about Cody Labs. Hank Coe had created the law that funded large support for companies hoping to bring home the bacon for an Opioid company. It did not turn out that way. The Wyoming Business Council was ill prepared. The meeting was interrupted by the WBC running out into the hallway over and over again to readjust the spreadsheets, because there were three applicants. Atlas Carbon, Standard Alcohol and Cody Labs. Hank Coe only wanted Cody Labs in the running. WBC looked bad. I watched the five electeds in that meeting. I saw all the posturing. Cloud, Mead, Murray and Balow following each entrance of the WBC with questions or comments that sent the WBC scurrying back into the hallway to readjust the amounts.
Mark Gordon had his Wyoming Constitution open and reading quietly through the most of the proceeding. He knew that the Treasurer had to do due diligence before these loans were delivered. Cody Labs never got the loan and Mr. West eventually got the building. Where is he now?
Balow dropped her two week notice on Wyoming voters and is now out of Virginia in disgrace. Cloud was sued for her failures answering public records requests, followed by Racines putting it all online for a song. Murray ran away from office to be replaced by Buchanan, who never wanted to be there. Mead was being sued by Gordon at the time of that meeting. Gordon won that lawsuit, in part, because he was the only one of those five that actually reads the Wyoming constitution.
I have read from his constitution. It is dog eared, highlighted with notes scribbled in the margins.
It is time to stop trying to take tax dollars and play venture capitalist. Leave that to the free market. Time to stop picking winners and losers.
It is time to end the WBC. Sadly, WBC looks to get a major boost in the current budget. Perhaps, this should be a signal to reconsider the funding of the Business Council. Perhaps, the WBC should borrow resources from Auditor Racines and publish every missed loan payment, every forgiven loan, every grant to a company that fails or runs to another state. Transparency would help a ton with the WBC.
How many citizens know that after a decade, one of the biggest projects in WBC history was a Laramie business park that after more than a decade has… count em… 1 tenant.
https://cirrusskywyoming.org/
“Right now, the Cirrus Sky Technology Park has one tenant: the multi-national company Underwriters Laboratories (UL).” Quoted from the website
Wonder how UL came to Wyoming? Should we talk with Mike?
Can’t make it up.
Thanks for this insight. I don’t know the details of what went into the Cirrus Sky decision; however, one seemingly large oversight was sufficient electrical capacity in the area. Even though the WAPA Snowy Range substation is located adjacent to the project, that capacity was already allocated to other customers. It was mentioned in the 2012 documents touting the project that electrical considerations were not evaluated prior to the announcement of Cirrus. It is my understanding that many companies were interested in locating at Cirrus; however, the so-called energy state overlooked the issue of electrical capacity.
I cannot find any mention of the issue in the public facing records; however, a mere 12 years later WAPA has filed a CatX for an upgrade to the Snowy Range substation.
https://www.energy.gov/sites/prod/files/2020/12/f81/CX-022754.pdf
Wow what a shock, another sweetheart deal of the tax and give away Republicans failed. Here is a fun research project Dustin, make a list of all the projects the Legislature/SLIB have funded and how much revenue or loss each has generated for Wyoming. Bet a spreadsheet with those numbers would give us a much better idea of what the conservative, small government Republican party in Wyoming really believes in.
Now you are talking Mark! Folks like Hank Coe that created the high risk program would have been all in Wyoming Caucus. That would be republicans identified by WYO RINO, and large PAC donations relative to total donations. Some like to call them Democrats in disguise!
I find Mr. Rashampour’s remarks flippant and don’t believe that he’s taking this loan default as seriously as he should: “He added that Atlas’ loan repayment obligations to the state are “being addressed, and it’s going to get cured. It’s going to be a non-event for us.” I would like to remind him that $15 million in public funds is a significant amount, and that he should address this default with the gravitas it deserves. Not that Mr. Rashampour lives here; while he wants to portray Atlas Carbon as a Wyoming company, he lives in Kentucky, according to a January article in the Cowboy State Daily.
My guess is that the terms are quite favorable to today’s commercial loans, and yet this company is in default. I want to commend State Auditor Racines for bringing the motion to declare the company to be in default. The company needs to be held accountable to the people of Wyoming.
Thanks for your comment on Reza as it sent me down the rabbit hole. In essence the only people associated with this project are no longer in their roles with the exception of Mr. Hashampour on the business side. On the political side the people that brought you this debacle are still in place and in fact got a promotion. Mark Gordon went from Treasurer to Governor for instance, bringing the same old “energy experts” along for the ride as Randall Luti is still by his side.
The announcement of this loan after the long and arduous trek through the legislature was informative as it shows that maybe, just maybe it was hard for the government to provide this gift because taxpayers were never supposed to be involved in picking winners and losers. The Atlas announcement states that the company would use that investment to grow sales from 16 million to 32 million pounds and the results indicate that sales have dropped to 11 million. I think this line in the article is absolutely gold – “We’re no Peabody (Energy Corp.), but we’re chipping away at it,” …
https://www.atlascarbon.com/news/%2415-million-state-loan-clears-for-gillette-based-atlas-carbon
Seems to be a common story for our legislators – anxious to fund fly-by-night schemes, but can’t approve any expenditures for our state citizens that need it the most, like Medicaid and the student summer lunch program that come with federal funds. Much better to throw the money away than do something that even hints of supporting a progressive agenda. As a third generation Wyoming native, I’ve become very tired of our “most conservative” state reputation. “The Stay Behind State” might be a better acronym.
That’s a good one. When I moved to Laramie in 1974 to attend grad school a couple of things happened soon after. The state got rid of required vehicle inspections and soon after they did the same thing for used mobile homes. I heard a new saying going around regarding this action that Wyoming was happy to get ” Colorado rejects” as they had tough inspection rules so I heard the saying that Wyoming was ” beautifully backwards “. After graduation I moved to Gillette to work in the social work sector and I saw hundreds of those Colorado rejects surrounding the city needing repair especially in the winter. Water lines freezing up was the most constant issue.
The State of Wyoming has a sterling record on recouping the many millions of dollars in sweetheart special interest loans of taxpayer money to the private sector , doesn’t it ?
Wyoming Republican lawmakers and Republican elected/appointed officials have gone against the grain of their own party platform’s small government anti-welfare beliefs by routinely bankrolling special interests and subsidizing pet projects. Over the long haul it has been a losing proposition. To my mind much of it was negotiated in the shade or with about as much transparency as drilling mud. Your lavish GOP showed no hesitation in apoproving millions in ultra-low interest loans and outright grants to the Cody Labs pharmaceutical company in Cody that was a major enabler of the national opioid crisis in the early 2000’s , holder of one of only two or three opium import licenses back then and a bulk producer of opioid precursors to the major pillmakers. Then there’s all the support given to the oil gas and coal industry on ridiculously generous terms not provided to other business sectors . Except of course the Ag Industry – especially red meat and wool- which has always been dependent on government support. By some reckonings Wyoming producers are/were per capita some of the most heavily subsidized in the nation , and it is the State not the Feds doing it . Good old boy GOP mostly , although the minority party Dems are not blameless , just outspent 10 to 1.
Bottom Line: the Wyoming Republican Hegemony really does not follow free market principles. They only say they do.