Gulf Coast Spinning ‘fairy tale’ still has no ending

Once upon a time there was a promise that a shining castle would be built that would create hundreds of permanent jobs. This castle, to be located in a new industrial park, would attract more castles to the area, it was said.

The land’s governor made the announcement. Work began at the site.

Then the fairy tale ended -- and not happily ever after for the residents of the land where the castle was to be built. The fate of that castle is now tied up in court, so the story has not yet fully ended.

When Gulf Coast Spinning said it would create over 1,000 direct and indirect jobs, people believed the company.

Was Gulf Coast just spinning a yarn or was it a victim of unforeseen economic conditions? Perhaps that question will be answered when the civil suit involving Gulf Coast and Cleco is resolved. Then again, maybe it won’t.

HISTORY OF ISSUE

Gov. Bobby Jindal announced in December 2013 that Gulf Coast Spinning would be built in Bunkie. Gulf Coast had promised to invest $130 million in the cotton yarn spinning plant that would create 307 direct jobs and approximately 722 indirect jobs.

Ground-breaking and site preparation work on the 588,000 sq.ft. plant began in July 2014. Iron and other construction materials were delivered to the site, but then the project stalled.
Gulf Coast assured everyone there was no cause for alarm.

In June 2015, the alarm sounded.

Gulf Coast said it had to shut down the Bunkie project and move into an existing structure because of commitments it had to provide cotton yarn to customers.

Company officials said the spinning plant would open in the old General Motors plant in Shreveport.

It didn’t. In fact, the plant didn’t open anywhere.

FUTURE LINKED TO SUIT

Former CEO Dan Feibus would not comment about the future of Gulf Coast or about the reasons for its fall.

“The only thing Gulf Coast is doing now is this lawsuit,” he said, referring to the suit against Cleco alleging the utility company failed to fulfill its obligations to help Gulf Coast secure start-up funds.

Feibus is no longer with Zagis USA but still has a financial interest in Gulf Coast and the lawsuit.

Gulf Coast’s attorney Jerry Harper also said everything that remains of Gulf Coast is involved in the litigation.

He said Gulf Coast lost a contract worth over $300 million because the company could not build the yarn spinning plant in Bunkie or find a suitable existing location where it could open a plant in time to meet the contractual obligation..

Cleco put up $11 million in an effort to have GCS locate in Bunkie. It ran a special electrical line from its power plant in St. Landry, about 10 miles from the industrial park, and constructed a substation in Eola.

Feibus said in June 2015 that Gulf Coast fell victim to “believing promises of funding that didn’t materialize, but the company will make adjustments and continue the project.”

There has been no visible continuation of the project.

The aborted project also resulted in liens against Gulf Coast by the contractor and against the contractor by his subcontractors who did work at the site before the plug was pulled.

General contractor Alfred Palma LLC filed a lien for almost $1.7 million “for work associated with building slab, building shell, site paving and grading, site utilities, basic electrical and mechanical related to office building.”

Subcontractors filed liens totaling almost $1.4 million against Palma.

SUIT AGAINST CLECO

Gulf Coast sued Cleco in September 2015 “for failure to fully perform an alleged verbal agreement to lend or otherwise fund its startup costs to the extent of $6.5 million,” Cleco noted in a December 2016 report. Gulf Coast claims Cleco promised to assist the textile company to raise the $60 million it needed to build the spinning plant.

Cleco sought to “cultivate a new industrial electric customer which would increase its revenues under a power supply agreement that it executed with Gulf Coast,” the Cleco report noted.

Cleco’s motion to dismiss the suit was denied by the district court in December 2015, by the 3rd Circuit Court of Appeal in June 2016 and by the Louisiana Supreme Court in November 2016.

Parties in the suit agreed in February 2016 to stay all proceedings pending attempts to settle the matter. That stay was lifted by the 12th Judicial District Court in May 2016 at Gulf Coast’s request.

Harper said he could not go into details about the case, which is currently in the evidence-gathering “discovery” phase as both sides prepare to take the matter to court.

He said the suit arises “out of CLECO’s failure to fulfill its commitments to Gulf Coast in connection with a multi-million dollar spinning mill planned for Bunkie. The suit alleges that Cleco is responsible for Gulf Coast’s loss of a $300 million advance sales contract, the loss of the spinning mill and, regrettably, the loss of hundreds of jobs in Avoyelles Parish.”

Harper also noted Cleco’s attempt to have the suit dismissed was rejected by the district court, 3rd Circuit Court and Supreme Court.

“We have no further comment on these matters, except that Gulf Coast is committed to proving its case when discovery is complete and the case is called for trial,” Harper added.

A spokesperson for Cleco said the utility company has nothing new to say about the suit, other than it is still in the pre-trial stage and no trial date has been set.

In its December 2016 report, Cleco said it “believes the allegations of the petition are contradicted by the written documents executed by Gulf Coast and are otherwise without merit and that it (Cleco) has substantial meritorious defenses to the claims alleged by Gulf Coast.”