Hoiseth tells committee company has been a ‘great customer’
The restructuring of Dee, Incorporated’s debt structure is just about complete in the wake of the City Development Policy & Review Committee on Thursday agreeing to, in the words of CHEDA Executive Director Craig Hoiseth “reboot” Dee’s loan through the City’s Intermediary Relending Program (IRP). Dee originally took out a $250,000 loan in 2012 and has paid about half of it off, Hoiseth told the committee, and Dee is now looking for the loan to be increased back up to its original $250,000.
“This is the last piece of the puzzle,” Hoiseth said.
Nick Nicholas, Paul Cwikla and Charles Henre became owners of Dee in 2012.
The Development Policy & Review Committee doesn’t meet that often, and Thursday’s sit-down was the first since several new appointees were named to the committee by Mayor Wayne Melbye. The new-look committee is comprised of Brad Brekken, chair, council members Jake Fee and Dennis Regan, Mark Landsverk, Matt Hann, and Don Boone.
The terms for the rebooted loan are for 10 years at 4.5 percent interest. Thursday’s action brings Dee’s total balance of loans from the City and CHEDA to $600,000.
Much of what is spurring Dee’s debt restructuring is the way that primary lenders look at “WIP,” which stands for “work in progress” when considering the equity that a borrower is putting up when seeking financing. At any one time, Hoiseth and Nicholas have explained previously, Dee might have $1 or $2 million worth of WIP in the factory and foundry in the form of machined aluminum parts for auto and engine manufacturers or other clients. But the way WIP is looked at has changed, Hoiseth said Thursday, and that Dee might only get credit on the equity front for a “bunch of melted aluminum” and not the actual parts being manufactured.
So Dee wants to get to a point in its financing and debt structure where WIP does not need to be taken into consideration and there is no reliance on existing inventory, Nicholas previously explained.
Indications are that Dee is coming off a strong 2017 and the prospects for the foreseeable future look encouraging as well. Hoiseth said they have an excellent track record on making previous loan payments, and he recommended the committee’s approval of the refinancing.
“Dee has been a great City customer,” Hoiseth said. “They’ve had a good year and they’re growing.”
Nicholas has previously detailed Dee’s difficulty in maintaining a sufficient number of skilled, trained employees, but he told the CHEDA Board last month that things were looking up on that front, in large part to Dee contracting with Doherty Staffing Solutions, which recently relocated from Valley Tech Park to a North Broadway location downtown.
“It’s working out pretty good,” Nicholas said.
How it works is that people who start working at Dee are officially Doherty employees for four months, at which point they become Dee employees.
“It’s not that people weren’t doing their jobs, but Doherty has much more outreach,” Nicholas said.