Despite Financing Change, Premier Aluminum Expansion Still On

Racine, WI-based Premier Aluminum is proceeding with a planned expansion, but its financing strategy has changed. The permanent-mold foundry is adding a 51,000-ft² addition to its 40,000-ft² plant in a $7-million project. The cost includes operating equipment, and the additional space will replace warehouse facilities that are being leased.

According to the Racine Journal-Times, the project was to have been financed with industrial revenue bonds (IRB) issued by the City of Racine. Now, however, because of general confusion in capital markets Premier and its parent company will proceed with the project using their own financing arrangement.

Premier Aluminum is a subsidiary of Ligon Industries, Birmingham, AL. Ligon manufactures hydraulic cylinders, among other things, and its holdings include Harmony Castings, in Harmony, PA; TPi-Arcade Inc., Arcade, NY; and Watry Industries, Sheboygan, WI.

Premier casts component parts (1 to 100 lb) for heating elements, gasoline dispensing equipment, robotics, machine tools, construction and transportation equipment, and a variety of other products. It has not described its expansion project.

IRBs are a common device that local or state governments use to encourage business relocations or expansions. An IRB is a loan that the government creates by issuing a bond that investors buy. Technically, the government then owns the project being developed, which is leased to the business.

Ligon and Premier Aluminum concluded that the general economic uncertainty made it impossible to predict what revenue would be generated by the bond in six months time (when the expansion is expected to be completed), and that fact made it impossible to locate investors for the IRB.