The Aug. 9 news that the Ohio Department of Development (ODOD) was calling in its loan did not take Willard & Kelsey executives by surprise.
“I don’t think this was a real big shock for anybody,” said Mossie Murphy, the solar group’s vice president of sales, marketing, planning and development. “We’ve been communicating with the state on this issue for four months now. Clearly, our intent is to repay the state. I cannot comment as of yet whether we’re able to do that or not. But it’s clearly our intent.”
In a letter sent to Murphy, dated Aug. 6, Diane M. Lease, ODOD’s chief legal counsel and ethics officer, formally notified the Perrysburg solar firm that since “the department has not consistently received your regularly scheduled installment payments since September, 2011,” the state agency was demanding payment in full in the amount of $4,135,855.12 with a per diem interest rate of $204.73.
Cicak
If Willard & Kelsey fails to make full payment by the ODOD’s deadline, Daryl Hennessy, assistant chief of ODOD’s business services division, said the state agency will certify the debt to the Ohio Attorney General’s office, which will then begin the legal process of trying to collect the debt.
Legal consequences
Dan Tierney, spokesman for the attorney general’s office, said once his office gets involved in collecting money, Willard & Kelsey’s interest rate on the loan will increase from 2 percent to 14 percent. The attorney general’s office has a standing policy of establishing a 10-percent-of-loan collection fee plus interest, which generally rounds out to about 14 percent, Tierney said. The fee attempts to cover the state’s man-hour and litigation costs while ensuring the state agency owned money receives full repayment of its loan, Tierney said.
“We’d like to think it won’t get to that point,” Murphy said. “But we will continue to make every effort to work toward an equitable arrangement so that we can repay the state money, because we certainly acknowledge we owe them that money.
“I think we’ve made it clear to [ODOD] and we’ve tried to be very up-front with the fact that, as we sit here today, we don’t have the resources to pay the full [$4.1] million, but we clearly want to pay the full [$4.1] million, and we’re trying to work to that end.”
Hennessy said the Ohio DOD works with companies “to make adjustments when we think it’s appropriate and necessary. We know Willard & Kelsey struggled with job creation, but at the end of the day, this is about a loan and it’s not making payments back to the State of Ohio. That’s primarily driving the request for the repayment. We wouldn’t have done a $5 million loan to them if they had not committed to creating 400 jobs.”
Willard & Kelsey was one of three companies that received ODOD demands of full loan repayment during the past two weeks, Hennessy said. The other two firms are located in Columbus and the Greater Cincinnati area.
Collateral damage
Collecting on ODOD’s loan is, “in a conceptual way,” similar to a bank repossessing an automobile when the holder of the auto loan does not make payments in accordance with the loan agreement, Hennessy said.
Willard & Kelsey’s equipment is collateral for the loan, and the state has a lien on that equipment, Hennessy said.
Failure to make full payment could eventually result is the ODOD taking possession of some of Willard & Kelsey’s machinery, including what Michael Cicak, chairman and CEO, said is a $12 million piece of robotic equipment that currently produces 140 solar panels an hour with the potential of producing as many as 240 panels an hour.
“At the end of that day, that could happen,” Hennessy said. “That will all play itself out in terms of whether it gets to the court system or not. But we don’t want the equipment. We want the loan to be repaid.”
Hennessy emphasized that ODOD has worked with Willard & Kelsey for at least two years to develop strategies to succeed.
“It’s not as if one day, we suddenly sent them a letter for failure to pay over the prior four-month period,” Hennessy said. “This loan has been out there for several years now. We’ve had 10 modifications of some sort to their existing loan agreement. We’ve deferred interest payments for them. We’ve tried in many, many ways to help the company succeed because, at the end of the day, we want the company to succeed and we want the jobs to be created.
“Despite all of these efforts over the past few years, the company has not been able to create a viable repayment model or stream of revenue, and we’ve gotten to the point where we just need to call the loan due. Ultimately, we’re responsible to the taxpayers of the State of Ohio,” Hennessy said.
‘Irrelevant to the industry’
Paul Toth acknowledged that media reports on how Willard & Kelsey invests, spends and repays taxpayer money are necessary, but expressed concern with some local coverage of the solar industry. He said coverage is focusing almost exclusively “on one company [Willard & Kelsey] that’s currently irrelevant to the solar industry because they’re still trying to develop their processes. If that’s the only thing you pick up and read about, then there’s a big challenge [for Toledo’s solar industry].”
Toth said he agrees that it appears local media is reporting on the solar industry these past nine months with a focus on job creation, repayment of state loans and the “sexiness” of the idea that there’s something nefarious going on with taxpayer money.
“That’s a big challenge, because it is not sexy to talk about things like suppliers, and 20 jobs getting hired to manufacture a wire for First Solar. It’s much sexier to talk about three guys who [allegedly] stole money from the state loan. It becomes front page news on the daily newspaper. I think there’s a better story to tell out there than what the community really knows.”
‘It’s a travesty’
Richard B. Stansley Jr., a career entrepreneur who currently serves as chairman and director of strategic business development of Innovative Enterprises, located at the University of Toledo’s Clean & Alternative Energy Incubator, agrees with Toth that the local media coverage of the solar industry is too narrow.
“It’s a travesty,” Stansley said. “Here’s what it is: We’re scandal-driven.
“They’ve sensationalized it. Nobody likes scandal and nobody likes somebody talking about what they could or couldn’t do. There are allegations that really have not been proven. That’s the first thing.
“They’re focused on some allegation made by a dead ex-CEO’s girlfriend that comes out of West Virginia, that ended up at Willard & Kelsey because a damn coke plant didn’t go. That’s how that all happened.”
The “dead ex-CEO,” William R. Mitchell, was hired by Willard & Kelsey on the recommendation of then-West Virginia Gov. Joe Manchin. In the beginning, Willard & Kelsey’s Cicak said Mitchell did an extraordinary job, but over time, that changed. Amid his departure from the firm, Mitchell alleged that the company had violated its loan agreement with the state by using the funds to pay company executives. He was fired in 2009 and died in 2011.
“Things changed,” Stansley said, “and what they did was, they moved to correct it, and as a result they’re living a consequence of allegations that were made.
“I don’t know anything about the allegations for a fact. I say, ‘Prove them.’ If, in fact, they’re true, and they did something wrong, people pay the price for that. But this is not everybody, and it isn’t representative of the solar industry.
“And what’s happening is, we’re passing judgment before we even have all the facts. And the second thing that ends up happening is we demonize an industry that has benefited Northwest Ohio. It makes absolutely no sense to me. I don’t see it. We just don’t need that kind of stuff.”
Reclaiming ownership
Stansley is adamant that Cicak has been, and continues to be, a valuable asset for Toledo.
“Mike Cicak is a man that is committed to this community,” Stansley said. “He has demonstrated it over and over again. I think he will do the right thing always. He has a lot of emotion involved in this, especially if people are making accusations.
“I’ve said to all of them, ‘If you did something wrong, you’re all big guys. Figure it out.’
“‘Own up to it. Get past it because it’s hurting all of us.’ That’s what I tell them. And I think they’re very conscious of it. I honestly don’t believe there’s anything behind what is being written.”
