To preserve dozens of jobs, the Colusa County Board of Supervisors approved a resolution authorizing the release of the county’s financial interest in a large local company.
Under the approval of the Board, Premier Mushrooms, Inc. entered into a Community Development Block Grant loan agreement totaling $4.6 million dollars in November 2012. This loan was part of a total debt restructuring effort with Farm Credit West intended to retain existing jobs at Premier Mushrooms and funds came from the State’s Community Development Block Grant Program.
Last week the Board voted to relinquish this debt to allow for the complete asset sale of Premier Mushroom, Inc., to Rakhra Mushroom, a Colorado Mushroom Farm is located in Alamosa, Colo.
“The Board of Supervisors released the county’s financial interest in the loan because the county would not receive a repayment in either case, but by releasing its financial interest the existing jobs can be preserved which was the purpose of the original loan,” said Greg Plucker, director of Community Development for the County of Colusa.
Plucker said if the County did not release their financial interest established by the original loan then the deal would not go through and Premier Mushrooms would be forced to close.
“The county would also not receive a repayment on its loan and the existing jobs would be lost,” Plucker said.
To repay the loan, Premier Mushrooms began making 24-month interest only payments in March of 2013. After this time, Premier Mushrooms was expected to make principal and interest payments with the final payment due February 2033.
A few months before the principal and interest payments were to start in March 2015, Premier Mushrooms approached the county and requested that the principal and interest payments be deferred until January, 2016 and that the interest only payments continue until that time because their financial situation could not support the increase in monthly payments, Plucker said.
This Board of Supervisors approved this request.
“Subsequent to the first loan modification, Premier Mushrooms requested and the County approved four other loan and subordination agreement modifications between January of 2016 and August of 2018,” Plucker said. “These requests were made because Premier Mushrooms was unable to make the scheduled principal and interest payments.”
County staff was then informed in September 2018 that Premier Mushrooms was exploring potential financial investors or buyers to address their continued financial struggles.
Three months later, Premier Mushrooms informed County staff that a buyer had submitted an offer with the intended to not only keep the plant open but expand operations as well. However, the purchase offer was far less than the outstanding debt, leaving the original loan unpaid should the sale be finalized.