Atlas Carbon, which has struggled for about a decade to build a commercial enterprise in Gillette, Wyoming, turning coal into activated carbon for filters needed to strip contaminants from water and air, just had its financial lifeline cut short.
The Gillette-based company had tried to line up financing to expand in Wyoming’s coal heartland with state and private equity money and had pinned its hopes on such a strategy by renegotiating the terms of an outstanding $15 million loan with the State Loan and Investment Board.
Despite an appeal from Atlas Carbon CEO Reza Hashampour to give his company a respite, the five-member board ruled Thursday that Atlas Carbon had failed to fulfill its obligation to fully repay the $15 million in debt.
“Atlas is a Wyoming story. Atlas is a Wyoming company. Atlas employs Wyoming people and uses Wyoming coal as a main feedstock,” said Hashampour in arguing his point for wiggle room on repayment. “While much of the country has an allergy to coal, Atlas Carbon represents a new frontier for this critical industry.”
The state rejected Hasampour’s argument, placing Atlas Carbon in default on the terms of the loan.
The ruling effectively gives the state the power to send auditors to Gillette to review the books of the Powder River Basin operation to “protect the state’s interests” and seize assets.
Still Plans To Expand
Hashampour told Cowboy State Daily on Monday that he’s confident that his company can successfully negotiate with the state to lift the default ruling and move forward with plans to expand his operation in Gillette.
“We are very confident of the outcome and not worried,” Hashempour said. “The default will be rectified. We are going to work it out with the state.”
Hashempour also said that the default ruling would not derail its business plans.
“The lights are on. Trucks are delivering, and employees are getting paid,” he said. “Sometimes in business, you have a pause or burp and make adjustments and move forward.”
The state loan and investment board is made up of Wyoming’s top five elected officials: Gov. Mark Gordon, Superintendent of Public Instruction Megan Degenfelder, Secretary of State Chuck Gray, State Auditor Kristi Racines and State Treasurer Curt Meier.
Before the board ruled on the loan, Hashampour argued that his company had made progress growing revenue to nearly $6 million in the past two years and was generally on the cusp of going from a research and development company to a commercial one.
“We need your help to continue this journey. In fact, you hold the key to Atlas’ future,” he told the board. “Atlas must grow, expand it facilities and produce new products that will address an emerging market for activated carbon and attract additional investments.
“All Atlas needs is a little bit of time. Atlas is not asking to expand the amount of the loan or change the security that protects the state’s interest, or otherwise puts the state at risk.”
Last month, Hashampour told Cowboy State Daily in a telephone conversation from his Kentucky home that Atlas Carbon was nearing a deal with Wyoming and private equity investors to expand commercial production in Gillette.
The company had plans on the drawing board to add a second manufacturing facility at a cost of $23 million on its Gillette land that could churn out 23 million pounds of activated carbon, according to Hashampour.
At the time, Hashampour said that the expansion was dependent on another cash infusion from the state and private equity backers.
No Bad Investments
One such investor in the company, Harold Callais II, managing partner and chief investment officer of Callais Capital Management LLC in Thibodaux, Louisiana, told the SLIB members last week that the financial performance at Atlas Carbon has improved, but that some of the overhang in uncertainty with the $15 million loan needs to be cleared up.
“We are not in the business of making bad investments. That’s not what we do,” Callais said. “Atlas has a direct path to break even this year. With short-term funding they can achieve that and continue to invest in the future.”
In 2018, the state of Wyoming, a big supporter of the coal industry and other energy sectors, loaned Atlas Carbon roughly $15 million to advance its research.
Atlas was the first recipient of a loan from the Economic Development Large Project Program, which began in 2014.
As a research and development company, making the transition to commercialization was tough.
In July 2019, Virginia Beach, Virginia-based management firm Polaris Asset Corp. was hired to bring Atlas Carbon to its next stage of growth.
Then two years ago, Polaris Chairman and CEO Hashampour stepped into the position as CEO of Atlas Carbon when the founder and principal backer of Atlas Carbon — former CEO Frank Levy — stepped aside to spend more time with his family.
Levy remains chairman of Atlas, but stepped back from his day-to-day duties.
Since then, Hashampour said that he had advanced the company along on many fronts. It has more than 40 clients to sell its products and has had conversations with international prospects from Poland to Colombia.
“We simply need time,” he said. “With that time Atlas can continue its existing operation and begin expanding our facilities on the existing infrastructure and expand its product and customer base.”
Pat Maio can be reached at email@example.com.