After a barrage of lobbying from several politicians from both parties, the U.S. Export-Import Bank has agreed to the full $35 million in loan guarantees that former Malden Mills CEO Allan Feuerstein needed to secure funding to regain control of his company.
The Export-Import Bank is a government entity designed to help American companies compete in the global marketplace against companies that receive government subsidies. The bank made $7.4 billion worth of loan guarantees last year, and, according to critics, the majority of those guarantees went to companies that made large political contributions.
Last August, Fuerstein was granted $20 million in loan guarantees (SEW_0337) that were heavily burdened with liens and stipulations. In a letter sent to the Export Import Bank, New Hampshire Senators Sununu and Judd Greg said, “(We) wish to convey our concern that some of the conditions imposed by the Export-Import Bank may negatively effect Malden Mills ability to complete its refinancing package and save the 1,200 U.S. manufacturing jobs it currently maintains.”
Feuerstein claims that he is much more dedicated to keeping production in the U.S. than the current owners of the company, who are his former creditors led by GE Capital Corp.
“If I dont win this one, its a deal breaker. I lose,” Feuerstein told a local paper. “I guess its wrong to say I lose. I would say my employees lose and the community loses.”
“The bank cannot justify backing companies like Enron and Halliburton and then hold back on Malden Mills,” said Massachusetts Senator and Democratic presidential hopeful John F. Kerry in a statement.
Without the guarantees, Feuerstein had hit a virtual wall in his negations with creditors. The liens gave the bank rights to much of Maldens property, plants, equipment, and brands which made the creditors uncomfortable.
Feuerstein wrote in a letter to the bank last month, “Our negotiations with GE Capital can no longer proceed productively without our presenting stronger Ex-Im Bank participation.”
In the latest decision, the bank has removed its lien on both the Polartec brand name worth $60 million, and the $10 million lien on Feuersteins partner company, Winn. As a result Feuerstein can now go to his potential lender, KeyBank, with much more collateral, and secure the $92 million loan he needs to by back the company.
>>> Were sure the timing for this deal is no coincidence. With the New Hampshire primaries right around the corner, politicos are fighting to put their name on a deal that will save 1,200 American manufacturing jobs, a stat Kerry in particular will play to the hilt in the coming weeks
