$6 million sought in suits over failed Minnesota plant

WELLS, Minn. — Three recently filed lawsuits are seeking a combined total of more than $6 million against businessman Stephen Singleteary and his company Singleteary Food Solutions for unpaid loans related to his efforts to re-open the Wells food processing plant.

Singleteary secured over $8 million in public funding or public backed loans, including 2009 stimulus funds, and invested a significant amount of personal capital into the project. But the plant never fully opened and never created any permanent jobs.

Lawsuits

Pioneer Bank of Mankato took ownership of the plant last year through foreclosure proceedings. The bank started advertising the property in February as a “turnkey meat processing facility.”

Pioneer Bank filed two of the lawsuits: one for more than $5.3 million, for two large 2010 loans guaranteed by the USDA, which was made possible by 2009 stimulus funding; and one for $181,851 for the remaining balance of a $3.6 million loan guaranteed by the state Small Business Administration.

The lawsuits also seek attorney fees and the SBA lawsuit seeks interests of $29.89 per day since July 1.

The third lawsuit, filed by John Bean Technologies Corp., a Delaware corporation operating out of Illinois, seeks $605,059 for an unpaid loan taken out to purchase food processing equipment from JBT FoodTech.

Singleteary, a Miami businessman now operating out of Mankato, declined to provide any comment on the lawsuits.

However, he said he is vigorously pursuing options for generating enough funds to re-buy the plant and continue the project. He said the project ran into issues because costs exceeded estimates for the project. He said he was unable to generate enough new funds to prevent the foreclosure but he is still working on the project.

“We’re still here. We didn’t want the foreclosure to happen. And we’re still focused on bringing jobs to the area,” Singleteary said.

The three lawsuits were drawn up last July but were only filed recently in Faribault County District Court. Singleteary and his company have not yet filed a response in the cases.

Unmet opportunity

Residents of Wells, a town of about 2,300 people, previously said they felt the town suffered a major setback when Singleteary failed to open the plant.

Singleteary promised to generate 200 jobs for the city, including 53 initial jobs at $10 to $12 per hour. His proposal ended up costing the city and local business who took actions in anticipation of the plant’s opening.

The city of Wells helped finish utilities and built two new roads near the plant.

Ben Musser, owner of Wildcats Bar and Grill, said in a prior interview he moved his bar to a new downtown location to take advantage of increased traffic. He said the business is still running but the move was an unnecessary expense.

Ultimately, the plant was only open for about one month in 2010 with 20 employees working a single line. The plant later closed again and did not re-open before the foreclosure.

Singleteary said he understands the frustration. He said he also lost out in the situation and that a significant chunk of the more than $11 million spent improving the plan came from his personal finances.

Singleteary obtained over $8 million in various forms of public funding or public-backed loans, often with the city and the county vouching for him, to finance the project, including:

• $100,000 from the Region 9 Development Agency.

• $200,000 from the Southern Minnesota Initiative Foundation.

• $250,000 combined from the city of Wells and Faribault County in forgivable loans.

• $500,000 from a state Department of Employment and Economic Development grant, which was turned into a loan from the city.

• $3.67 million loan secured by the state Small Business Administration.

• More than $4 million in loans secured by the USDA Rural Development office, which was enabled through funding from the 2009 stimulus legislation. At the time Singleteary started the project, he was expected to be the second largest job creator in the country under the program.

He also took out over $4.3 million in mortgages with Pioneer Bank from 2010 to 2011. An over $41,000 state Small Small Cities Development Program grant was provided to help with the project.

The key to Singleteary’s ability to obtain the extensive array of loans and funding sources was his strong background in the field.

He previously led 16 Burger King restaurants across four states in the 1990s, which were reportedly later sold for about $1.9 million. He also drew national articles when he started his Virginia-based food-processing company Diversity Food Processing, which supplied ground beef products across the country. It entered a joint venture with Burger King Corp., Hudson Foods and SBS Processing.

Singleteary said the Wells plant had been selected by his company after an extensive nationwide search because it could be acquired, it had an ideal location and it had strong, available field of workers in the region. He said the project was started with the intentions of finishing it.

He said the issue that halted the plant was cost overruns in nearly all aspects of the project. He said the building improvements alone exceeded initial estimates by $3.6 million.

Going forward

Wells City Administrator Robin Leslie said the city and the county don’t expect to recover their $250,000 in loans because their debt is “low on the totem pole.” She also said Singleteary could hypothetically claim he met the loan’s vaguely worded requirements during the brief time the plant was running.

However, she said the city will keep open its $500,000 DEED loan claim against Singleteary. She said the city doesn’t have the legal leverage Pioneer Bank has, but the debt will pop up with his name if he pursues new projects in Minnesota.

Singleteary declined to comment on how he plans to address the ongoing debts in his efforts to re-buy the plant.

Leslie said the city’s last contact from Singleteary was an e-mail he sent to the state DEED office seeking a release from the debt, which was forwarded to the city. She said the city sent him an offer to settle the debt by simply paying the $500,000 original balance. She said he never sent a response to the city.

A silver lining for the city was Pioneer Bank taking ownership with the foreclosure, which saved the city from the approximately $1 million demolition cost.

Leslie said Pioneer Bank attempted to auction the plant this summer but no one offered the $3.5 million minimum bid.

The Pioneer Bank lawsuits have a motion hearing scheduled for Dec. 16. The John Bean lawsuit has a motion summary judgment hearing scheduled for Jan. 15.