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County won't wait for Mexican investor
An investor from Mexico has agreed to take over payments owed to Red Willow County by Pawnee Aviation, but county commissioners were not satisfied and want full repayment of the $300,000 taken out by revolving loans and a grant.
"This keeps going on, like an afternoon soap opera," said Commissioner Leigh Hoyt Monday morning by phone at the Red Willow County regular commissioner's meeting. Hoyt could not attend the meeting but participated by phone.
Red Willow County Commissioners rejected the offer made by Robert B. Schultz, Pawnee Aviation attorney, who said in a letter that Javier Romero, a real estate developer, has agreed to take over payments owed by Pawnee in exchange for certain manufacturing rights in Mexico. Instead, commissioners directed McCook Economic Developer Director Rex Nelson, who administers the county's revolving loan program, to request by letter the full amount due, plus interest, in one month.
Pawnee Aviation, a helicopter kit company owned by Ron Willocks, borrowed $200,000 from the county's revolving loan fund and utilized a $100,000 grant. So far, Willocks has paid a total of $4,416.40 in repayments of the nearly-four year old loan. The grant must also be paid back because jobs were not created and maintained.
At their Aug. 25 meeting, Red Willow County Commissioners agreed to wait until Monday for a response from Pawnee Aviation about how the company plans to pay back the money.
Since then, the county has received a $3,524 electronically-wired payment and on Monday, commissioners heard from Nelson who shared with them a letter he received Saturday from Pawnee's attorney.
According to the letter, Romero would make monthly payments by wire transfer totaling $10,374 to several entities, including $3,524 to Red Willow County, $4,711 to the MEDC that includes rent, $1,250 to Fribel in a private loan and $889 to AmFirst Bank.
The intent is to start with good faith payments and then negotiate full payment or refinancing of all debts, the letter said.
It also added that Romero has agreed to advance funds for Willock's personal expenses but not enough for him to move back to McCook.
"That will have to wait until he has a steady income," Schultz said in the correspondence. Willocks has a complete helicopter kit that the buyer will pick up and pay off the balance as soon as he can test fly the prototype, which should occur shortly, Schultz explained in the letter. The funds from this sale will be used to pay debts to suppliers.
Nelson said although he was not entirely comfortable with the letter, it still represented some kind of repayment option.
Still, several key criteria were not addressed, he said, such as who has controlling interest in Pawnee and an exact payment plan.
Red Willow County Attorney Paul Wood agreed that the letter was too vague and did not address specific issues. There are no exact dates for the payments and in his opinion, a whole new settlement agreement would have to be drawn up if the county decided to accept re-payments based on this offer.
If the county accepts this, it would "reduce in writing, yet again, another settlement agreement," Wood stated.
He was also concerned that if the payments were accepted by the county, it could be construed as a waiver of past breaches of the loan and grant payments and thus harm future chances for the county to pursue a lawsuit if needed.
"Lots of luck, suing someone in Mexico," he mused.
Yet a lawsuit wouldn't necessarily get the county its money back, he added later in the meeting, as it is unknown at this point exactly how much there is to recover.
"You don't know what you'll get if you sue," Wood said.
Commissioner McNutt noted that the letter left a lot of unanswered questions and that it would take several years before the money was repaid at $3,500 a month. The full amount should just be paid and done with, he said.
Later in the meeting, Commissioner Hoyt agreed and said he was surprised that an attorney drafted such a letter.
"The lawyer should have known this wouldn't fly," Hoyt said of the lack of definite dates of future payments.
Commissioner McNutt asked about collateral and Nelson responded that there is some equipment Pawnee left in storage in McCook but that the equipment is so specific to the helicopter kit that it cannot be re-sold easily.
Nelson added that he accompanied Willocks last week when he removed some equipment from storage. After the meeting, Nelson said Willocks removed a partial helicopter kit but much of the equipment remains, such as templates and fixtures.
County Attorney Wood advised that Commissioners to specify what kind of payment they want from Pawnee.
"It's time for you to communicate: we want our money by this certain date," Wood said. He added that commissioners should add that the wire payment received last week would not be accepted at this point.
On a motion from Commissioner Downer, he and McNutt agreed to direct Nelson to send a letter back to Pawnee requesting the full $300,000 owed, plus interest, by Oct. 6. Nelson said after the meeting Monday that interest accrued amounted to about $40,000.