NUMB:
990088
VERS:
SUBSTITUTE 2
REF:
XXBY:
ALD. HENNINGSEN AND GORDON
TITL:
Substitute resolution relative to a proposal from Steeltech Manufacturing, Inc. regarding its second mortgage loan from the City of Milwaukee and assigning the loan to the Redevelopment Authority of the City of Milwaukee for final disposition.
ANLS:
- Analysis -
Using federal funds, the City made a $1.4 million loan to Steeltech in 1992. This loan is substantially past due, as are all of Steeltech's other debts totaling $27.7 million. Steeltech has proposed to satisfy these obligations with a partial cash payment plus stock in a newly capitalized and reorganized company. The alternative is likely to be an involuntary bankruptcy action. The City's loan is secured by a second mortgage on its plant and equipment. The first mortgage is held by the Redevelopment Authority, which is backing $5.9 million of bonds issued to build the plant. A liquidation would not likely generate enough funds to pay both the Redevelopment Authority bonds and the City loan. This substitute resolution assigns the City loan to the Redevelopment Authority and authorizes the Executive Director of the Redevelopment Authority, in consultation with the City Attorney and the City Comptroller, to negotiate any final terms of Steeltech's proposal and accept or reject it based on the outcome of those negotiations. Funds received by the Redevelopment Authority from this payment are to be transferred, by the Authority, to the Neighborhood Improvement Development Corporation and used for community development projects in accordance with HUD regulations.
BODY:
Whereas, As of April 1, 1992, the City of Milwaukee ("City") and the Milwaukee Economic Development Corporation ("MEDC") entered into a Cooperation Agreement for the Steeltech Manufacturing, Inc. Urban Development Action Grant ("UDAG") from the U. S. Department of Housing and Urban Development ("HUD"); and
Whereas, Pursuant to said Agreement,...
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