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RESOLUTION AUTHORIZING THE AMENDMENT OF THE FORGIVABLE MINNESOTA INVESTMENT FUND LOAN AGREEMENT AND ASSOCIATED PROMISSORY NOTE HELD BY ST PAPER 1, LLC TO SUPPORT THE SALE OF THE PAPER MILL LOCATED AT 110 NORTH CENTRAL AVENUE TO SOFIDEL AMERICA, CORP.
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CITY PROPOSAL:
WHEREAS, on October 5, 2022, city and ST Paper 1, LLC (“ST Paper”) entered into a forgivable Minnesota investment fund loan agreement (“MIF Loan Agreement”) in the amount of $3,000,000 and associated promissory note and personal loan guaranties (one by Sharad Tak and one by Tak Investments, Inc. (together the “Guarantors”)). The term of the loan is through July 1, 2028. There are continuing requirements to maintain 80 new jobs for the term of the MIF Loan Agreement; and
WHEREAS, on December 22, 2023, ST Paper gave written notice to the city of its intent to sell the paper mill to Sofidel America, Corp. (“Sofidel”) and requested amendment of MIF Loan Agreement and associated promissory note and release of the guarantors; and
WHEREAS, the city reviewed the financial capacity of Sofidel to assume the MIF Loan Agreement and Promissory Note without personal loan guaranties.
BE IT RESOLVED, that the proper city officials are authorized to enter into an amendment to the MIF Loan Agreement and promissory note, and to release the guarantors, substantially in the form of the attached Exhibit A, authorizing the transfer of the MIF Loan Agreement and Promissory Note from ST Paper to Sofidel and releasing the Guarantors.
Statement of Purpose
STATEMENT OF PURPOSE: This resolution authorizes city officials to enter into an amendment to the MIF Loan Agreement and promissory note, and to release the guarantors. This resolution is part of a package of resolutions facilitating the transfer of the paper mill owned by ST Paper located at 100 North Central Ave. to Sofidel America, Corp., (“Sofidel”). Sofidel intends to continue to operate the paper mill for the production of tissue paper. ST Paper purchased the paper mill in 2021 and has invested over $56 Million dollars in construction and new equipment. At the time of ST Paper’s purchase, the city supported the private investment through two loans and tax abatement. A development agreement was also entered into between the city and ST Paper. ST Paper has met the requirement of 80 new jobs created, however, the requirement to maintain those jobs is continuing for the life of the loans and development agreement which have not yet expired. The change in ownership requires substituting Sofidel for ST Paper’s responsibilities in the agreements. In addition, the city utility, Comfort Systems, seeks authorization to continue to charge the new owner a preferred water rate of 0.5161 cents per unit. The paper mill is the utility’s largest water customer.