CHICAGO — The Securities and Exchange Commission is among the list of regulators now probing the failed Mamtek US Inc. artificial sweetener factory in Moberly, Mo., that received local and state financing support, including recovery zone facility bonds backed by an appropriation pledge from the city that it refused to honor last month.

UMB Bank NA, the trustee on $39 million of Project Sugar appropriation-backed revenue bonds sold through the Moberly Industrial Development Authority last year, disclosed in a filing last week that it was notified by the SEC on Sept. 8 that it would be receiving a subpoena regarding the $64 million project.

The trustee reported that it had subsequently been told by city officials that the SEC investigation had begun several months earlier and the city, Mamtek, and the property’s appraiser, in connection with the financing, had received SEC subpoenas.

Missouri Attorney General Chris Koster and the Randolph County prosecutor recently announced a joint probe of the deal and the Legislature is expected to hold hearings to review the Missouri Department of Economic Development’s role in it, which included tax credits and grants. The state provided $17.6 million in aid.

Moberly lost its investment-grade rating last month after it declined to make good on its appropriation pledge on the $39 million issue for the Chinese company. The city’s refusal to appropriate led the trustee to dip into reserves for a Sept. 1 debt payment. The city’s refusal followed the company’s default in August on a payment needed for debt service.

Proceeds were to finance the acquisition, construction, and equipping of a sucralose manufacturing and processing plant owned by Mamtek. Officials believed the project would spur economic development in the struggling central Missouri community and create hundreds of jobs. But the plant remains only half-built, and construction has halted.

In the most recent development, the former chief executive officer of Mamtek has formed a new company and hopes to take over the project. The trustee is reviewing an agreement between the city and the new company, American Sucralose Manufacturing Inc., submitted last Tuesday. “The trustee is reviewing the implications of this agreement with its counsel,” the notice read. The agreement was signed by Mayor Bob Riley and the new company’s head, Brian Cole.

Under terms of the preliminary agreement between the city and the new company, the firm must submit by Monday $250,000 to offset city costs related to the default and by Oct. 12 must submit estimates for completing the project and production plans that would generate the $4.3 million needed to cover the first five years’ of debt service. The company would be required to pay $3.2 million to the city by Oct. 26 to replenish the September draw on reserves.

The trustee also reported that last Wednesday it learned Mamtek had assigned its assets to Development Specialists Inc. to be liquidated and distributed to creditors. The trustee is reviewing the “implications of this assignment,” it wrote.

UMB said it continues to conduct its own investigation of Mamtek’s abandonment of the project and its ramifications in an attempt to determine how to “best preserve and enforce bondholder rights with respect to the collateral and possible causes of action for recovery by the bondholders.”

The fate of the project remains unclear even with the newly formed company seeking to take over, as officials have warned it could take between $30 million and $44.5 million to complete the factory.

The Moberly IDA last year sold three series of Project Sugar bonds, including $8.4 million of taxable capital project bonds, $3 million of tax-exempt capital project bonds, and $27.5 million of tax-exempt recovery zone facility bonds. The latter was issued under a federal stimulus program that allowed qualified private projects to use tax-exempt financing. Morgan Keegan & Co. was the underwriter.

The following reserves remain after the September draw: $180,000 for the A series, $217,000 for the B series, and $2 million for the C series. Another $46,000 is held in project funds on the A bonds, $2 million on the B bonds, and just $19 on the C bonds, according to the notice.

The bonds are secured by revenues expected under a financing agreement between the city and the authority. The city backed the debt with an annual appropriation pledge to make basic payments to the trustee. The bonds were rated A-minus at the time by Standard & Poor’s, one notch lower than the city’s issuer credit rating.

S&P last month lowered the bonds’ rating to CC from A-minus and placed it on CreditWatch with negative implications. It also downgraded the city’s issuer credit rating to B from A with a stable outlook.

UMB is being represented by Spencer, Fane, Britt & Browne LLP attorneys Norman Fretwell and Adam LaBoda. The latest bondholder notice is available at emma.msrb.org/EP573076-EP449712-EP849647.pdf.

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