PEPCON, under fire for allegedly selling its rocket fuel component to Iran, has announced that a $92 million loan for its plant near Cedar City has closed and that the funds were to be available Wednesday.
American Pacific Corp., PEPCON's parent company headquartered in Las Vegas, issued a statement Tuesday saying final agreements on the loan from Security Pacific Bank of Washington have been executed and delivered.The loan is toward PEPCON's new plant in Cedar City, replacing the former Henderson, Nev., facility that was destroyed in an explosion last year. The new plant, which will employ about 150 people, will be one of only two in the nation that make ammonium perchlorate, an oxidizer for solid rocket fuel.
"Construction of the plant is under way, and production is expected to begin in the summer of 1989," said Fred D. Gibson, president and chief executive of American Pacific.
PEPCON announced it was coming close to securing financing earlier this month, but reports surfaced last week that NASA was seeking to freeze the funding because of reports that PEPCON ammonium perchlorate was being sold to Iran.
The reports will be investigated, but NASA said the allegations would not hold up financial negotiations for the Utah plant. "Discussion and coordination among involved agencies is showing nothing that should preclude continued negotiations of financial arrangements," the agency said. A NASA spokesman said that, in essence, means "everything is full speed ahead" for PEPCON.
The federal government does play a role in the financing by allowing surcharges on government purchases of PEPCON's product over a seven-year period, whereby all costs of building the new plant would be recouped, according to a recent General Accounting Office report.
PEPCON's statement announcing the loan closing didn't mention the controversy about the alleged Iran sale. But the company has denied knowledge of a shipment bound for Iran.
Initial reports involved PEPCON only in a cursory way. It had sold the chemical to Girindus Corp. of Tampa, Fla. Girindus in turn sold the chemical to a Swiss company, which sold it to a West German chemical company, D.A. Dampf - which was loading it on the Iranian freighter.
PEPCON officials had said they did not know the shipment was bound for Iran. But a Las Vegas television station said it had received a tip that the company did know. The station took videotape of canisters in Nevada containing the label of the West German company. PEPCON officials told the television station those canisters must have been on returned products.