DALLAS — Arkansas Gov. Mike Beebe will ask the Legislature for $125 million of state general obligation bonds to help finance a $1.1 billion steel mill in northeast Arkansas.

The bonds would be the first authorized under a state constitutional amendment that allows the state to issue tax-free debt for large economic development projects.

The large steel mill will be built near Osceola in Mississippi County, some 120 miles northeast of Little Rock and 30 miles north of Memphis, Tenn.

The Big River Steel LLC facility is the largest industrial project in Arkansas history, Beebe said.

"It's a pretty big deal," he said at a news conference in Little Rock on Tuesday.

The facility will provide 525 permanent jobs with an average compensation of $75,000 a year and up to 2,000 construction jobs, Beebe said.

Amendment 82, which was approved by voters in 2010, caps state - issued GO bonds for a project at 5% of state general fund revenues in the most recent fiscal year. The limit in fiscal 2013 would be approximately $235 million.

The 2010 amendment revised a constitutional provision to remove a stipulation limiting the state GO bonds to economic development projects with a minimum of 500 permanent jobs and private investments of at least $500 million.

The original amendment passed in 2004, but the benchmarks were so large that no project ever qualified for the bonds.

The GO bonds have to be requested by the governor and approved by lawmakers, but a statewide vote is not required.

Legislation enabling the bonds to be issued by Arkansas Development Finance Authority will be introduced soon in the General Assembly, Beebe said. Legislative leaders were at the news conference but did not speak.

Arkansas's existing GO debt is rated Aa1 by Moody's Investors Service and AA by Standard & Poor's.

The $125 million of bond proceeds would include a $50 million, five-year loan to the steelmaker, $50 million for site preparation, $20 million for subsurface pilings to stabilize the site along the Mississippi River, and $5 million of issuance costs.

Arkansas's investment will bring big returns through more employment opportunities, higher paying jobs, and increased state and local tax revenues, Beebe said.

"It's a good deal for us or we wouldn't be doing it," Beebe said.

"Building Big River Steel will mean up to 2,000 construction jobs, and it will help us recruit more supplier businesses and steel consumers to northeast Arkansas," he said.

State economic development officials estimated in 2010 that a $100 million economic incentive program with 20-year GO bonds at 5% interest would cost Arkansas $7 million a year.

The steel mill project will change the demographics of Mississippi County for generations to come, said Osceola Mayor Dickie Kennemore.

"This is going to bring a struggling Delta county out of the doldrums," Kennemore said. "This dog has got the bone."

The advanced mill will produce high-quality steel for automobile manufacturing and the oil and gas industries, said Big River Steel CEO John D. Correnti.

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