PEPCON Production Inc. has yet to complete financing on its $60 million plant in Cedar City, but construction is forging ahead and official groundbreaking ceremonies are scheduled Saturday, the company said.
An unidentified, out-of-state financial institution is still reviewing PEPCON's loan, and officials expect the deal to close Nov. 30, said PEPCON president Jim Peveler."We were in Cedar City (Wednesday) at the site where the lender was doing its due diligence work that's done on every kind of real estate transaction," Peveler said, noting the delay doesn't mean financing is in jeopardy.
The potential lender is not First Interstate Bank of Utah, as was reported earlier, but an out-of-state institution that won't be named until the transaction is closed, Peveler said. He added that other lenders have been contacted to maintain a backup if the proposed loan falls through.
The state had lent its name and $33 million in bonding capacity as an incentive for PEPCON to relocate its previous Nevada operations in Utah. But, Peveler said, more money is needed to meet construction costs because of an anticipated change in classifying the plant's product from an oxidizer to an explosive, requiring stricter building standards.
Also. the financing PEPCON is now seeking would be a straight real estate loan, Peveler said, not requiring the cost of underwriting and selling bonds or other debt instruments.
A subsidiary of Las Vegas-based based American Pacific Corp., PEPCON is one of the country's few producers of ammonium perchlorate - an oxidizing agent used in rocket propellant motors such as the space shuttle boosters.
The firm's plant near Las Vegas was destroyed last May by a series of explosions, killing two workers. PEPCON, in desperate need to get back on line, named Cedar City as a new site for the plant last summer after state economic development officials launched an aggressive campaign to relocate its new plant in Utah.
Those same state officials and local leaders will hold ceremonies Saturday in Southern Utah State College's Centrum arena to welcome PEPCON, which will eventually employ 150 workers at its new plant located 15 miles west of Cedar City.
Peveler said the plant should be on line to produce 24 million pounds of ammonium perchlorate by May and final completion is scheduled for August. The facility has capacity to produce 40 million pounds of the rocket fuel component.