CHICAGO – The auction of assets from the half-built Mamtek US Inc. artificial sweetener plant in Moberly, Missouri raised about $1.8 million, according to the trustee who represents holders of $39 million of defaulted revenue bonds issued for the project.
The trustee UMB Bank ordered the liquidation of assets after a marketing process failed to find a buyer interested in taking over and completing the project to establish a sucralose manufacturing plant.
The auction was held on Oct. 24 but UMB did not issue a bondholder notice with the results until Monday. “The sale was heavily advertised, and included numerous bidders both in person and on the internet from the United States and other countries,” the new notice reads. “The Mamtek assets to be sold included the potential to purchase individually or all together all of the machinery and equipment, real property, contract rights and intellectual property.”
No bids were submitted for the property itself or the intellectual property -- which consists of patents and patent applications relating to sucralose production – so those assets remain on the selling block.
The machinery and equipment sold at auction is expected to net about $1.8 million. “Bondholders should, however, be cautioned that this is an estimate only which was provided by the auction professionals and all monies from successful bidders has not yet been collected,” UMB said. After all sales are finalized, the trustee intends to make a distribution to bondholders within the next forty-five days.”
The amount ultimately will be based on UMB’s analysis of what monies are received from the auction and what it may need to cover future legal expenses.
Moberly handed over control of the project to UMB after Mamtek defaulted on payments to the city last year. Moberly in turn reneged on its appropriation pledge that supported the debt. The bonds were sold in 2010 through the city’s economic development authority to help finance the project built by a subsidiary of the Chinese company Mamtek International.
Standard & Poor’s in March downgraded to D its rating on the issue. The city lost its investment grade rating for its decision not to honor its appropriation pledge. Local and state prosecutors and federal regulators recently filed civil and criminal complaints alleging theft, fraud and securities violations against Mamtek’s former head Bruce Cole.
The trustee and other creditors forced the company into involuntary bankruptcy and various lawsuits and other legal claims have been lodged against Cole and the underwriter Morgan Keegan & Co. and bond counsel Armstrong Teasdale LLP.
The charges leveled by local, state and federal authorities accuse Cole of pocketing some of the proceeds to stave off the foreclosure of his Beverly Hills home and lying to the city and investors about the nature, timing and viability of the project.
Bondholders’ ultimate recovery remains unclear as bankruptcy trustee Bruce Strauss is also analyzing possible claims against former Mamtek officers and Strauss has already filed a lawsuit against Cole for breach of fiduciary duty.
The state awarded $17 million in subsidies to the project although the company never received the state aid.