Braidy Industries breaks silence to name investors in state-subsidized company

by Morgan Watkins, Louisville Courier Journal –

Braidy Industries Inc., which plans to build a state-subsidized $1.3 billion aluminum rolling mill near Ashland, on Monday publicly named several shareholders, including a Chicago lawyer’s trust and a Swedish national.

To help lure Braidy Industries to the commonwealth, the state made an unusual $15 million direct investment in the company, which is expected to create over 550 permanent positions and approximately 1,000 construction jobs. The deal, which made the commonwealth a 20-percent owner earlier this year, was backed by Gov. Matt Bevin, who considers it a major achievement of his administration.

Courier Journal and other news organizations have for months sought access to state records that identify the owners of the company.

While private companies are not legally required to divulge their investors and few do so, Attorney General Andy Beshear ruled in October that the Kentucky Cabinet for Economic Development violated the state’s open records law by denying Courier Journal’s request for shareholder-related documents. A cabinet appeal of that finding is pending, and a cabinet spokesman has said forcing the state to reveal investors in a private business could hinder efforts to attract other companies to the commonwealth.

Braidy Industries CEO Craig T. Bouchard, who is personally invested in the company, has said that Braidy Industries maintains shareholder confidentiality as a formal policy.

But Bouchard in October identified Braidy board member Charles Price, CEO of  Louisville-based Charah LLC, as an investor. Price, whose company provides coal ash management services, sponsored a September fundraiser for Bevin, bringing in $68,000 in campaign donations.

In a column carried by Kentucky Today, a Bevin-friendly online publication of the Kentucky Baptist Convention, Bouchard stressed that Price was the only Kentuckian among his investors.

“This is a pointless exercise — a waste of resources on political fluff,” Bouchard said at the time. “This would never be tolerated in the world of private enterprise.”

On Christmas Day, Bouchard again addressed concerns about his company’s shareholders in a news release announcing a scholarship fund the shareholders have established for high school students in Boyd and Greenup counties.

“This puts to rest the question of who our shareholders are,” Bouchard said in the release, which was not sent to Courier Journal until Tuesday. “The shareholders below represent 100% participation of our company ownership.”

The newly identified investors include:

► The Robert Stucker Trust. Robert Stucker is chairman emeritus of the Chicago-based law firm Vedder Price. He advises businesses and financial institutions on matters such as mergers and acquisitions and is internationally known as an expert in negotiating executive compensation packages.

► Carl Westin, described only as a Swedish national in the news release. Online directories list Carl Westin Ltd., a holding company with varied investments, based in Lund, Sweden.

Braidy Industries board members who were previously known, but now are identified as investors, are:

► Michael Porter, a noted economist who teaches at Harvard Business School and founder of Harvard’s Institute for Strategy and Competitiveness, a nonprofit research and education organization.

► Norton Schwartz, a retired U.S. Air Force general.

► Christopher Schuh, who serves as head of the Massachusetts Institute of Technology’s Department of Materials Science and Engineering and whose research has centered on metallurgy and structural materials.

► John Preston, a past MIT director of technology development (and licensing) who focused on commercializing technologies developed at that world-renowned school. He is also founder of an investment firm, TEM Capital.

Bouchard gave no details about the size or timing of the shareholders’ respective investments, nor did he say why the company is now naming investors. He declined comment through a Braidy Industries executive Tuesday.

The lack of public information about Braidy Industries’ shareholders has recently been questioned by multiple news organizations around the state and by some of the state lawmakers who approved the $15 million appropriation last March.

After several Kentucky legislators expressed concerns about the Braidy Industries investment in an article published by Courier Journal earlier this month, The Lexington Herald-Leader and The Morehead News both published editorials calling for more transparency.

State Sen. Tom Buford, R-Nicholasville, who has expressed misgivings about direct state investment in private companies, said Tuesday that Braidy Industries’ disclosure helps assuage his concerns.

“I think full disclosure of the names is appropriate, especially to the public,” he said, noting that Kentuckians have a financial interest in this company.

State Sen. Morgan McGarvey, D-Louisville, praised Braidy Industries’ decision to release the names of more of its stockholders.

“I’m happy with the recent transparency from Braidy Industries because the reality is the taxpayers of the commonwealth of Kentucky … have a right to know who their fellow shareholders are,” he said. “Government spending requires transparency.”

Jim Waters, president and CEO of the Bluegrass Institute for Public Policy Solutions, a Lexington-based free-market think tank, also commended Braidy Industries for naming its shareholders but cautioned against future state investment in private companies.

“This company is going to hire a lot of people. … We don’t want to discourage that, but we want it done the right way,” he said. “We don’t need to invest public dollars into private companies in order to grow our economy.”

Braidy Industries’ decision to release information about its shareholders is an important step toward alleviating concerns about issues like conflicts of interest, Waters said, but he doesn’t think it removes concerns about a lack of transparency on the part of the state government itself regarding these kinds of economic development deals.

Although Braidy Industries identified additional shareholders this week, the legal case regarding Courier Journal’s request for public records is ongoing.

“We welcome the latest release of information about shareholders. It’s the right thing to do,” said Joel Christopher, Courier Journal executive editor. “We will continue to pursue our right to know about investors in a company substantially supported by taxpayer dollars.”

Braidy Industries plans to break ground for the aluminum mill in April. This month, it purchased 204 acres at EastPark, an industrial center near Ashland chosen after its initial site near the Ohio River was found to be unsuitable.

Nickie Smith, chairperson of the Northeast Kentucky Regional Industrial Park Authority, which oversees EastPark, said Braidy Industries paid nearly $1 million for the land and a vacant 110,000-square-foot building.

“With this development, I think we are going to see EastPark do what it was developed to do to start with, and that’s bring businesses to Eastern Kentucky,” she said. “It’s very exciting.”

Morgan Watkins: 502-582-4502; [email protected]; Twitter: @morganwatkins26. Support strong local journalism by subscribing today: www.courier-journal.com/morganw.