Laserfiche WebLink
Na1Vavt 3-2` zv/ I <br />Request for Action <br />To <br />8tetaa Humber <br />Economic Development uthority 16.3 <br />Agenda Section <br />Meeting Date <br />Prepared by <br />General Business <br />March 20, 2017 <br />Amanda Othoudt, EDD <br />Item Description <br />Reviewed by <br />Subordination of Security Interest Request for <br />Cal Portner, City Administrator <br />Patriot Converting <br />Reviewed by <br />Action Requested <br />Approve, by motion, a resolution approving subordination of security interest for Patriot Converting, Inc. <br />Background/Discussion <br />At their January 19 meeting, the Economic Development Authority approved a $200,000 Jobs Incentive <br />Microloan to Patriot Converting, Inc. to renovate an existing facility and purchase new equipment. <br />Patriot Converting was required to secure the loan by providing the EDA with a first lien security interest <br />in certain equipment acquired with the loan. The EDA also held a second position blanket security <br />interest in all Patriot's equipment subordinate to Riverland Bank. In addition, the EDA received a <br />personal guarantee. <br />In October, Patriot purchased new equipment for use at their Elk River facility. They relocated some of <br />their existing equipment to their facility in Iowa to make room for the new equipment. The EDA <br />approved the First Amendment to the Loan Agreement and the Fust Amendment to the Security <br />Agreement allowing Patriot to amend the equipment provided as security for the loan. <br />Patriot has since refinanced a portion of equipment originally financed by Riverland Bank at their Elk <br />River facility with Central Minnesota Development Company on behalf of the SBA. As a requirement of <br />the refinancing, the SBA has required that Patriot obtain the EDA's consent to subordinate its security <br />interest in all equipment owned by Patriot located in Elk River to the SBA and Riverland and thereby <br />have a 3' lien position in such equipment. The EDA will continue to have a 2' lien position subordinate <br />to Riverland in all other equipment at the facility. <br />Financial Impact <br />None <br />Attachments <br />■ Amendment to the Loan Agreement <br />■ Amendment to the Security Agreement <br />■ UCC Filing <br />• Resolution <br />IIIEIEI 11 <br />NATURE <br />