Business Subsidies 101: Take The Money and Run
A blog post by Mark Price, originally published at Third and State.
The Allentown Morning Call reports that a plant operated by International Battery in the Lehigh Valley has closed its doors. The facility opened in 2008 with $4 million in incentives from the commonwealth.
- Spencer Soper, The Morning Call — International Battery abruptly closes: Officials surprised by loss of high-tech manufacturer:
International Battery, which opened an Upper Macungie plant in 2008 that was expected to create hundreds of jobs, has abruptly closed without explanation, workers said, surprising local officials who worked for years to attract the company to the Valley…
Phone messages left with various company representatives were not immediately returned. A message left with Wexford Capital, a Greenwich, Conn., hedge fund that invested $35 million in International Battery in 2010, was not immediately returned.
International Battery, which makes rechargeable lithium-ion cells and batteries for the military and industrial uses, was seen as a recruiting win in 2008 when it decided to invest millions of dollars in the Lehigh Valley and create manufacturing jobs.
Philadelphia City Paper reviews the effort to sell the Philadelphia Gas Works.
- Daniel Denvir, Philadelphia City Paper — Utility Players: A consultant (and potential bidder) has advised the city to sell off PGW. It could be a perilous gamble:
In 2007, the massive Texas utility company TXU was sold to a private-equity firm, on the advice of George Bilicic of mega-firm Lazard. It was the biggest leveraged buyout in history. Lazard made a tidy $13.5 million fee; Bilicic went on to work for the bankers who bought the utility. As for the utility itself? Energy Future Holdings (as TXU is now called) is now spiraling into debt so deep that Warren Buffett recently apologized for investing in it.
Now the same consultant (Bilicic) at the same company (Lazard) is advising Mayor Michael Nutter on a plan for a similar sale, this time of Philadelphia Gas Works (PGW), the city-owned utility. Potential conflicts of interest aside, consumer advocates contend a sale could hurt ratepayers and the 109,000 poor and elderly that rely on subsidized gas heat. But Nutter, citing a report by Lazard, says it could free the city from major financial liabilities, including costly pensions.
Since it is Friday, I will leave you with the Steve Miller Band.