State agency closes Arkansas rice mill

Southwind $8.3M in arrears on bonds

The Southwind Milling Co. rice mill,  at  the Port  of Pine Bluff’s industrial development district on the Arkansas River, was closed down Monday by the state Department of Agriculture.
The Southwind Milling Co. rice mill, at the Port of Pine Bluff’s industrial development district on the Arkansas River, was closed down Monday by the state Department of Agriculture.

The state Department of Agriculture on Monday closed a Pine Bluff rice mill that effectively shut itself down three weeks ago when it laid off 35 workers without notice while also defaulting on $10 million in loans guaranteed by the state.

Officials with two state agencies said Monday that Southwind Milling Co. is $8.3 million in arrears in payment on bonds backed by the state to help with construction costs. Settling that debt, along with other issues related to the company and the mill's future, is tied up in a civil lawsuit filed against Southwind by a former vendor in Jefferson County, officials said.

The Agriculture Department's "cease and desist" notice served on Southwind prohibits the movement of rough rice in or out of the mill, according to Adriane Barnes, a department spokesman.

She said the notice "completely shuts down the mill" until the company gets on better financial footing "by securing more bonds or finding more cash capital" and complying once again with the state Public Grain Warehouse Act.

The notice was prompted, she said, by "financial deficits" reflected in company records as it sought to renew its state license to store grain. The renewal date was July 1, and state regulators warned the company last week that the shutdown order was imminent, Barnes said.

Barnes declined to give details of the "financial deficits" found in company records, saying the information is private and not subject to the state Freedom of Information Act.

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State and Jefferson County economic development officials in June 2014 touted an announcement by Argentinian-owned but Florida-based Optimum Capital that it would spend several million dollars to build a 50,000-square-foot rice mill in the Port of Pine Bluff's industrial development district along the Arkansas River. Up to 80 people eventually would be hired to help the mill process about 14 tons of rough rice per hour, the company said.

The Arkansas Economic Development Commission and the Arkansas Development Finance Authority in 2015 each approved bond guarantees of $5 million for the mill's construction. The development commission earlier had made loans to Southwind Milling Group, a division of Optimum Capital, when it purchased land in the industrial park.

Also in 2015, Optimum officials announced that Luther King Capital Management, a Fort Worth investment firm, would add $9 million, to a total investment of $32 million, to complete the rice mill's construction and to renovate a 251,000-square-foot storage building across from the mill site.

The mill didn't open until October 2015, some eight months later than planned, and has had problems periodically since.

The state Agriculture Department closed the mill for about four days last September because of a grain shortage and a complaint over nonpayment -- both violations of the Public Grain Warehouse Act.

Last winter, Southwind employees called the Arkansas Democrat-Gazette to complain that the company had suddenly stopped making payments on their insurance premiums -- a problem not discovered by those employees until they went to see a doctor or pharmacist. The company resumed the premium payments a few days later.

John Workman, who led Southwind's sales team, was one of 35 workers laid off June 12.

"To be blunt about it, they ran out of money after lying to a bunch of people that things were going fine," Workman said Monday. "They rounded everybody up that Monday and let us go."

A new management team arrived in January, expanding the payroll and overhead, Workman said. "Sales were good," he said. "I booked a lot of contracts and brought back a lot of customers they lost because of mismanagement last fall."

Southwind, Workman said, was a small player in the rice industry in Arkansas, the nation's largest rice producer.

"It isn't a huge mill. It's not a Riceland, it's not a Producers," he said, referring to two giants in the industry, Riceland Foods and Producers Rice Mill, both based in Stuttgart. "Because of a lot of overhead and being poorly run, they didn't have enough money to buy rough rice" for the milling operation that was the company's lifeblood, Workman said.

Another former worker, who asked not to be identified, said the company effectively shut down its milling operations when it laid off workers and left only management at the site.

Officials with Optimum couldn't be reached for comment. The company is based in Argentina but has citrus investments in Florida and also manages about 22,000 acres of farmland in Mississippi and Arkansas. A telephone number for the company was for a fax line, and contact information on the company's website was a generic email address.

Lou Ann Nisbett, president of the Economic Development Alliance for Jefferson County, spent years trying to develop the industrial parcel eventually taken over by Southwind. "It's unfortunate," she said Monday of the mill's problems. "They say they're restructuring the company and hoping to reopen."

The Port of Pine Bluff and the county economic development group aren't owed any money by Optimum, she said.

Nisbett said at least three people, including a general manager, still work at the mill.

Telephone calls to Luther King Capital Management and to the mill's general manager were not returned.

A Section on 07/18/2017

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