BIDPA stands to lose in Isaacson sale

BERLIN -- The Berlin Industrial Development and Park Authority stands to lose as much as $640,000 if the sale of Isaacson Steel’s warehouse business goes through to Presby Steel, LLC. But city officials say they will support the sale to keep the jobs and in the hope that some of the money can be recouped over time.
The U.S. Bankruptcy Court in Manchester next Tuesday will consider an asset purchase agreement between Isaacson and Presby. A North Country company based in Whitefield, Presby Steel is owned by David Presby, who also operates Presby Environmental.
The agreement calls for Presby to pay $225,000 for the assets, steel inventory, customer list, and the good will of Isaacson’s warehouse business. Presby will not be purchasing the company or its debts.
Under the terms of the agreement, Isaacson will terminate its lease with BIDPA, which owns the building housing the warehouse operation, so Presby can enter into a lease for the approximately 20,000 square foot space. BIDPA has not signed a lease with Presby yet but a nonpublic session of the board is scheduled for today.
Isaacson moved its warehouse business into one of BIDPA’s buildings in the Maynesboro Industrial Park back in 2006. BIPDA agreed to renovate the building including adding a loading dock. The authority also agreed to purchase some equipment including an interior overhead crane, forklift, rack system, and cutting table because it could bond the improvements and equipment at a lower interest rate than the company. Isaacson agreed to cover the bond payments in its lease payments.
To pay for the renovations and equipment, City Planner Pamela Laflamme said BIDPA borrowed $625,000 from the N.H. Business Finance Authority in a 10-year loan and put up approximately $300,000 from its own reserves to be paid back over 12 years.
“We’ve been getting a monthly payment from Isaacson that covered the lease, the loan from BIDPA, and the loan from the Business Finance Authority,” said Laflamme.
Laflamme said there is currently $640,000 left on the two loans. In the purchase agreement, Isaacson proposes allocating $100,000 from the sale price to compensate BIDPA for the equipment. That would reduce BIDPA’s exposure to $540,000. But Passumpsic Savings Bank, which is Isaacson’s largest creditor, is objecting to the terms of the agreement and cited in particular the payment to BIDPA. In its motion, Passumpsic charged BIDPA “is generously provided for while the bank is left with a mere token payment”.
Mayor Paul Grenier said he supports the sale and is hopeful BIDPA in the future can recover some of the money it will lose if the sale goes through.
“BIDPA is making every effort possible to recover those funds over time in the lease payment,” he said.
But he estimated BIDPA will still lose as much as $400,000.
Laflamme said residents should understand the money is not from general taxpayer funds but comes from BIDPA’s own assets.
“This does not affect the city’s general fund and tax rate. This is all affecting BIDPA’s assets,” she said.
Grenier said the city’s overall consideration is the approximately 20 jobs at Isaacson Steel.
“BIDPA is willing to take a substantial loss to keep the jobs,” Grenier said. “Our intent is to keep the new company in operation.”
Included in the asset agreement with Isaacson is a requirement that Presby sign a letter of intent to interview and retain as many of the current employees as possible.
Grenier and Laflamme said Presby has told BIDPA that he is interested in expanding the business. The agreement reveals Presby’s lease with BIDPA will include an option to lease additional space in the building.
Laflamme said Presby has a reputation as an innovator and the BIDPA board is looking forward to working with him. If the agreement is approved by the bankruptcy court, Grenier said he is very optimistic about the future of the warehouse business.
The mayor said the city will do what it can to help Isaacson President Arnie Hanson sell Isaacson Structural Steel - the fabrication business on Jericho Road that employs about 100 people. No offers have been received for the business although an Illinois company, Heico Companies, is reportedly interested in the operation. One sticking point has been the fact the facility was built on the site of a former city landfill.
“We will do whatever is necessary, including taking ownership of the land, to keep the operation going and the jobs in town,” Grenier said.
 Isaacson Steel and Isaacson Strustural Steel filed for Chapter 11 reorganization last June. Isaacson President Arnie Hanson could not be reached yesterday for comment.