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Willard & Kelsey Solar Group Perrysburg-based Willard & Kelsey Solar Group has until Sept. 5 to pay the roughly $4.1 million it owes the Ohio Department of Development. Company executives have denied misusing state loan funds.
Perrysburg-based Willard & Kelsey Solar Group has until Sept. 5 to pay the roughly $4.1 million it owes the Ohio Department of Development. Company executives have denied misusing state loan funds.
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Published: Friday, 8/10/2012 - Updated: 2 years ago

State seeks solar firm's $5M loan money

Willard & Kelsey has until Sept. 5

BY KRIS TURNER
BLADE BUSINESS WRITER

After Willard & Kelsey Solar Group failed to make good on loan payments to the Ohio Department of Development for about a year, the state has come to collect.

In a letter dated Monday, the department called its $5 million loan due. Willard & Kelsey's inconsistent payments, which began in September, 2011, violated its May, 2009, loan contract with the state and constitutes an "event of default," according to the letter. The company has until Sept. 5 to pay the $4,135,855.12 it owes the department.

"When there is a breach of the agreement, the [Ohio Department of Development] works with the company to determine a remedy," department spokesman Stephanie Mennecke wrote in an email. "If no solution can be reached, then a formal demand is made on our end. If there is still no response, the next step is to turn it over to the [state attorney general's] office for collections."

An ongoing Blade investigation into Willard & Kelsey revealed that executives at the Perrysburg solar-panel manufacturer lent or paid themselves almost $1.4 million in company funds from 2008 to 2009 and used company credit cards to purchase airline tickets for family members and attend Detroit Tigers and Pittsburgh Steelers games.

Willard & Kelsey's former chief executive officer, who was fired in 2009, claimed company executives were compensated with funds from the state Department of Development loan. If true, those payments would violate the company's state loan agreement.

CEO Michael Cicak CEO Michael Cicak
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Current Willard & Kelsey executives have denied misusing state loan funds.

Michael Cicak, the current CEO and chairman of the board at Willard & Kelsey, declined to comment Thursday.

Mossie Murphy, the company's vice president of development, said Willard & Kelsey faced financial challenges like many other start-up companies because of the downturn in the economy and changes in the solar industry. He said that is the main reason the company is delinquent with its loan payments.

Mr. Murphy would not comment on whether the company can meet the Sept. 5 deadline to repay its loan.

The company is acquiring additional financing from its owners and is in talks with lenders, Mr. Murphy said. He declined to comment on the company's financial position, how much capital Willard & Kelsey needs to finance its operation, or if the new stream of funding could repay the state loan in full.

"As much as I'd like to talk about it, it probably would be inappropriate for me to talk about hard-dollar amounts at this point," he said, adding that the company intends to repay the state.

State's next step

If Willard & Kelsey does not repay the Ohio Department of Development by Sept. 5, the loan will be turned over to the Office of the Ohio Attorney General for collection. The attorney general's office handles collections for all state agencies. The company could have some of its solar-panel machinery taken as collateral.

The loan will continue to accrue interest if it goes to collections, Ms. Mennecke said.

There are a number of ways the state can proceed if the loan does go to collection, said Dan Tierney, a spokesman for the attorney general's office. The first priority would be collecting the whole debt, he said.

If Willard & Kelsey is unable to make a full payment, the department could set up a payment schedule with about 14 percent more interest tacked on, Mr. Tierney said. The state adds interest to cover collection fees, and that amount varies from case to case, he said.

Interest on the loan was 1 percent for the first year and 2 percent after that, according to the loan agreement.

If a debtor misses a payment and 60 days pass, the state will bring on legal counsel to handle the matter, and the attorney general's interest on the debt can be increased to about 25 to 33 percent, Mr. Tierney said. The case then could go to court, he said.

The attorney general's office does not comment on specific cases, Mr. Tierney said. The time period for completing a collection is case-specific, he said.

Mr. Murphy said Thursday that Willard & Kelsey hadn't been contacted by a representative from the attorney general's office.

CFO Mossie Murphy. CFO Mossie Murphy.
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Financial pressure

Calling the Ohio Department of Development loan due marks the end of one chapter of Willard & Kelsey's financial problems and begins another.

The company has asked the state for loan deferments, reduced loan payments, and delayed due dates for financial statements several times in the last few years. Those requests were granted until recently.

In April, Mr. Murphy wrote a letter to the department asking to delay the date for the company's 2011 audited financial statements to July 31, defer principal loan payments until January, 2013, and reduce the job creation requirement from 400 to 100.

All of those requests were denied in the Aug. 6 letter, which was written by Ohio Department of Development Chief Legal Counsel and Ethics Officer Diane Lease.

A crucial part of Willard & Kelsey's loan agreements with the state was the creation of 400 jobs. The company laid off about half of its more than 80-person work force in January.

"In light of all the factors related to this project, the department determined an amendment to the company's original job creation commitment was not warranted," Ms. Mennecke said.

The Ohio Department of Development also is reviewing an audit of the company and its use of state funding.

William Mitchell, who was the chief executive officer of Willard & Kelsey from its start in 2008 until he was fired in 2009, said in correspondence with his attorney that the company used Department of Development loan funds to pay executives. Mr. Mitchell died in 2011.

Mr. Murphy said Thursday that Willard & Kelsey moved back into a research and development phase and plans to be up and running by the end of the year. He said the company could have up to 75 employees by the end of the year and up to 125 by next spring. The company's executives hope to produce 80-watt solar panels by that time, he said.

Adding to the firm's mounting financing pressures are $1,172,065 in back payments owed to the Ohio Air Development Quality Authority, which Mr. Murphy said Willard & Kelsey also intends to pay. The authority loaned Willard & Kelsey an additional $5 million.

Because of the missed or partial payments, the authority hired a Columbus accounting firm, GBQ Partners LLC, in May to review Willard & Kelsey's finances and determine if the company is financially viable.

The Department of Development's decision to call its loan due will factor into that review, Todd Nein, interim executive director of the authority, wrote in an email to The Blade.

The authority's loan comes due next month, which is when the authority plans to make a decision about how to proceed with Willard & Kelsey.

"We acknowledge the [Ohio Department of Development] decision will have an impact on the company and we anticipate this will be part of GBQ's review," Mr. Nein wrote.

Contact Kris Turner at: kturner@theblade.com or 419-724-6103.



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