Braidy raising funds for mill

September 23, 2018 GMT

ASHLAND — Braidy Industries Inc. is seeking new investors, loans and credits to help it complete construction of its planned $1.68 billion aluminum mill in northeastern Kentucky.

Documents filed this week with the U.S. Securities and Exchange Commission indicate that Braidy is looking to raise more than $400 million through a common stock offering.

“Braidy Industries launched its common stock offering, signaling it’s on the road to becoming a public company,” the company said in a news release announcing the public offering.

The public offering is primarily directed at institutional investors, the company said, but a portion of the offering has been reserved for Main Street investors under the SEC’s crowdfunding (CF) rules adopted under the JOBS Act.

In connection with the offering, Braidy will launch its investor “road show” for “accredited” investors on Tuesday, Sept. 25, in New York, the company said in the release.

The offering provides interested parties the opportunity to purchase Braidy Industries common stock for $18 per share.

Braidy is offering $1,070,000 in common stock, the maximum allowed under a Regulation CF offering, and $400 million in common stock in its parallel Rule 506(c) offering available to accredited investors only, according to the filing.

The offering is expected to be held open for a six-week period.

In the filing, the company said after raising the over $400 million in funding, it could then borrow the remaining $1 billion from the federal government under a Department of Energy program that supports the manufacturing of “advanced technology vehicles” and their components.

The documents also show Braidy Industries is looking at a $500 million credit guarantee from the German government under an export support program, which the company would use to finance the purchase of equipment for the mill.

“The German government provides a loan program with favorable rates and terms for purchases of German manufacturing equipment, amongst other goods for export out of Germany,” the company said. “In our case, one of the leading aluminum rolling mill equipment makers happens to be a company based in Germany but that has U.S. offices and a U.S. subsidiary. As detailed in our publicly available information, this is just one option of many options for a portion of the debt portion of our total project budget.”

Without the loan and credit guarantee, which has not been secured, Braidy Industries would face higher borrowing costs, the company said in the filing.

“Our financing efforts have been consistent as a largely private sector effort,” the company said. “As detailed in the offering statement, the ATVM loan is one option among many other options for the debt portion of our project budget. The ATVM loan just has a lower interest rate than other options, which makes it more favorable as an option.”

According to the filing, if it can’t raise the over $400 million in new investment, Braidy Industries could be forced to sell a stake in the mill to a third party, which would dilute Braidy Industries investors’ stake in the project.

In June, Braidy Industries hosted a groundbreaking ceremony for its planned aluminum mill at the EastPark Industrial Center near Ashland, despite not having all the funding in place for the project. Since the ceremonial groundbreaking, no work has started on the massive project.

Kentucky Gov. Matt Bevin said at that time the state’s $15 million investment in Braidy Industries required that construction of the mill begin by June 30 or the state could have forced the company to repay the money.

At the groundbreaking, Bevin said Braidy’s new mill is a monumental project in eastern Kentucky.

“This is one of the most substantial investments ever made in our state, and the additional opportunities unleashed by the arrival of Braidy Industries have extraordinary potential,” Bevin said.

Braidy CEO Craig Bouchard has previously said the facility would open in 2020 and employ 600 workers from the region. He was not available for comment and messages left with other officials in the company seeking additional comment about the project were not immediately returned Friday.

Meanwhile, Braidy also announced this week its acquisition of materials research and technology company NanoAl, a world leader in the science of nanocrystalline strengthening technology applied to sheet aluminum, as a third wholly owned subsidiary.

NanoAl will join the Braidy Atlas aluminum rolling mill and Veloxint in the Braidy Industries company portfolio of holdings, the company said in a separate news release.

“NanoAl was founded out of the Department of Materials Science at Northwestern University to commercialize the science of developing stronger aluminum alloys through control of key structural features at the nanoscale,” the release said. “Braidy believes the technology has the potential to significantly enhance the specific strength of aluminum to be produced by its Braidy Atlas mill, creating a competitive advantage within the automotive and aerospace OEM marketplace.”

“We believe NanoAl’s innovative approach will enable sheet aluminum 20 percent stronger than conventional grades, while maintaining lower cost. The technology also applies to powder metallurgy, including 3D printing applications, allowing additional synergies between the Braidy Atlas mill and Veloxint,” Veloxint chief executive and chief technology officer of Braidy, Dr. Alan Lund, said in the release. “This is another exciting step toward our goal of rebuilding Appalachia with cutting-edge technology focused on lightweighting solutions.”