Kestrel works to catch up on loans
A meeting with state officials last month charted a course of action for a Superior aviation company experiencing some financial turbulence.
Kestrel Aircraft failed to make November, December and January payments on two loans administered by the Wisconsin Economic Development Corporation — a $2 million state loan and a $2 million federal loan — according to a Monday update from the state.
Following a meeting Jan. 31 where the company’s finances were discussed, WEDC began working with Kestrel to possibly modify the loan agreement. The goal of the modification, according to a news release from WEDC, would be to make sure the company has the cash flow it needs to be successful.
“We want to give Kestrel ever opportunity to succeed,” said Mark Maley, spokesman for WEDC. “There is the potential here to bring much-needed jobs to Superior and northwestern Wisconsin, and WEDC wants to pursue every avenue to make sure that happens.”
Loan modifications are fairly common for businesses that work with WEDC, according to Maley. It is not unusual for startup companies to have cash flow problems in their early stages.
That is especially true when designing a new aircraft, according to Dick Nystrom, president of the board of directors for Douglas County’s Revolving Loan Fund.
Kestrel has failed to pay the last two quarterly payments due on a $500,000 loan through the Revolving Loan Fund, Nystrom confirmed. But he anticipates working with the aviation startup to modify the terms of the loan.
Two years ago, Kestrel announced plans to build its single-engine turboprop, carbon composite airplane in Superior, bringing the promise of up to 600 jobs. The business currently employs about 60 people in Superior and 30 in Maine, according to spokeswoman Kate Dougherty.
In addition to the state-administered loans and tax credits, the city of Superior provided a $2.4 million loan to Kestrel, with annual payments set to begin in October.
Superior Mayor Bruce Hagen said he feels confident about the company’s progress to date. Kestrel is about 70 percent completed with its Federal Aviation Administration certification process, he said, and there have been a lot of discussions with possible investors recently. It’s a project in process, and a big one at that, the mayor said, and it is bound to have its ups and downs.
This is the second time Kestrel has fallen behind on payments to WEDC. In October, the company paid a lump sum that covered missed payments in July and September.
Dougherty said at the time that the failure to pay the loans was an oversight, not a problem with cash flow.