DECATUR — After a short public hearing on Monday night with no comment from the public, city council members voted to pass an ordinance approving a $7 million industrial development bond issue for Simmons Foods, Inc.
The city will not have any liability or obligation for the bond issue, but will serve as a conduit to assist the company in acquiring financing, according to Jason Grubbs of the investment banking company, W.R. Taylor & Company, LLC.
“Basically the city is acting as a sponsor,” said Mike Jones, Chief Financial Officer of Simmons Foods.
According to Arkansas law, municipalities are able to issue revenue bonds for private companies to finance the cost of acquiring, constructing and equipping industrial facilities.
Industrial development revenue bonds offer businesses the advantages of tax-exempt business rates - in most cases 80 percent of the prime interest rate - and loan terms up to 20 years, according to the Arkansas Economic Development Commission Web site www.arkansasedc.com.
The $7 million will be used for the acquisition and expansion of the chicken processing plant in downtown Decatur, formerly owned by Peterson Farms, Jones said.
An emergency clause was added to the ordinance because it will need to go into effect before the bonds are to be issued next Tuesday.
The city council passed a resolution pledging its assistance to issue the bonds in September of 2008.
Simmons Foods announced its acquisition of Peterson Farms broiler operations on July 21, 2008.
The council’s vote was unanimous, except for David Sutton who was absent.
News, Pages 1 on 12/16/2009