Diné Poultry in $1.2M hole
Native American Bank of Denver calls loan

Copyright © 2008
Gallup Independent
By Kathy Helms
Diné Bureau

WINDOW ROCK — Native American Bank of Denver is calling the loan of $1.2 million on the Diné Poultry Products Inc. project, according to Navajo Nation Controller Mark Grant and Budget and Finance Committee Chairman LoRenzo Bates.

“They’re delinquent 55 days,” Grant said Tuesday, “so the bank is getting nervous about it and called the collateral.”

According to Navajo Nation President Joe Shirley Jr.’s April 2006 address to the 20th Navajo Nation Council, the Budget and Finance Committee approved $3 million from the Navajo Dam Escrow Account to be used as collateral for the proposed project in Nageezi and Huerfano chapters.

The three-phase project was expected to initially produce 145 million marketable table eggs for distribution in New Mexico, Arizona, Nevada, Colorado and parts of California, with a majority of the market from federal government entities such as the U.S. military, hospitals, schools and U.S. Department of Agriculture programs.

Shirley said the project already had secured a loan guarantee from the Bureau of Indian Affairs and had obtained a grant from the New Mexico Department of Economic Development to cover development costs.

The Navajo Nation is still paying the interest on a $2.2 million loan issued in August 2006 to Biochemical Decontamination Systems Manufacturing Inc., a now defunct business located in Shiprock. The Nation became 51 percent owner in the company after paying more than $300,000 in exchange for 25,500 shares of BCDS stock.

“The Navajo Dam Escrow will go down by $1.2 million and then if the BCDS loan gets called, that’s another $2.2 million, but we don’t know that yet,” Grant said. The Nation cannot pay the interest on the Diné Poultry loan to keep it from going into default, as it has done with BCDS.

“The difference is that BCDS is a tribally owned organization and the egg farm is not,” he said.

“This is a private company. It’s not an enterprise. They’re not tied to the Nation in any way,” Bates added. “The poultry project came the same way as the BCDS deal. It came as asking the former B&F Committee to approve putting up $3 million as collateral so they could go and get a line of credit.

“They’re behind 55 days to the tune of $16,000. Because they haven’t made any payments of any sort, Native American Bank is calling the loan. The collateral for the loan (Navajo Dam Escrow) is sitting in Wells Fargo Bank,” he said.

“Right now the Controller’s Office is in crisis management trying to figure out how we can prevent losing another million dollars. Right now, the $2.2 million is looking pretty dim — the BCDS deal — and you add this into it, another $1.2 million, and you’re up to $3.4 million.” He estimated the escrow account at approximately $6 million.

When a loan is called, the entity is provided a time line to try to work out something, Bates said. “Maybe the folks can come up with the $16,000. Maybe that will satisfy Native American Bank — don’t know. These are the details the Controller’s Office is working on.

“Worst case, if they’re not able to come to any compromise on it, then they can call it. It’s at that point that the Nation needs to seriously, seriously take a look at how much jeopardy the remaining balance is in.”

Budget and Finance has sent a letter to the project’s owners requesting they appear before the committee Dec. 2. “We’re not interested in any proposal. We want to know how they’re going to pay back this money. In the meantime, we’re looking into putting a hold on any and all transactions. There will be no movement of any funds until we get the story, they come with a plan, and we accept that plan.”

He said another concern is that the business also received an award of $400,000 from the Tribal Infrastructure Fund.

“What they’re supposed to be doing is developing an egg farm. They don’t have any eggs to sell, they don’t have any chickens, they don’t have any houses. They came before Budget and Finance so many months back and B&F, at the end, said, ‘Keep us informed of any changes, anything that puts in jeopardy this collateral.’ Well, they didn’t, and we had to find it out by the way we did — when Native American Bank called Wells Fargo and Wells Fargo called Mark.”

Both Grant and Bates agreed that it is a good, viable project. “It’s just not being pursued the way it needs to be,” Bates said.