October 13, 2017

Kestrel faces possible legal action over millions owed in Wisconsin

Kestrel Aircraft, which recently was evicted from Brunswick Landing for failing to pay rent for at least a year, faces possible legal action by the state of Wisconsin and the city of Superior, Wisc., over millions in defaulted loans.

Fox21, a local TV station in Superior, Wisc., reported that Kestrel owes roughly $4 million to the Wisconsin Economic Development Corp. and another $2 million to the city of Superior, funds that were supposed help pay for an as-yet-unbuilt aircraft manufacturing plant that would lead to 650 jobs.

In a followup story, Fox21 reported that Kestrel founder Alan Klapmeier — who is now CEO of Kestrel's parent company, One Aviation — says the state of Wisconsin didn't follow through on promises that he says were essential to Kestrel's ability to build the plant in Superior.

Klapmeier said he still wants to build a plant there but wasn't sure it was possible.

"Obviously we're very disappointed with this entire project and the way it came about," he told Fox21. "We still tried in good faith to keep the jobs here and have this result in a successful project, obviously Superior could benefit greatly from these types of jobs. But at this point, we'd have to say we don't know."

BusinessNorth in Duluth, Minn., reported that Superior Mayor Jim Paine would be meeting with his city council to discuss the future of the city's $2 million loan with Kestrel.

In a written statement published by BusinessNorth, Paine said Kestrel had not made payments due to the city in October 2016 and October 2017.

"The company is currently past due on its loans with the city in a combined amount of approximately $736,000," Paine wrote. "The current amount outstanding on this loan is $2,044,000."

Paine added: "In May 2017, WEDC, Douglas County and the City of Superior entered into a forbearance agreement with Kestrel in which there was agreement to delay legal action against the company to again give it a chance to become current on payments. That agreement had an August 31 deadline. Due to Kestrel's inability to show measurable progress towards obtaining financing, WEDC is now moving forward with legal action against the company. At this point, WEDC has not gone to court to recoup the funds but will pursue any and all remedies available to them. The City of Superior will confer with the City Council to determine future direction related to the Kestrel loan."

Meanwhile, Midcoast Regional Redevelopment Authority is looking for a new aviation tenant to fill Kestrel's vacated space in Hangar 6 at Brunswick Landing.

MRRA Executive Director Steve Levesque told The Forecaster that he was attending the National Business Aviation Association trade show in Las Vegas this week in a bid to woo more aircraft companies to Brunswick Landing.


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