ReadyAir's loan default baffles commissioner

A committee had many questions, several reviews and first denied the loan.
By ED RUNYAN
VINDICATOR TRUMBULL STAFF
WARREN -- A Trumbull County commissioner said he doesn't understand why a company that borrowed $200,000 from the county would fail to make its second and ensuing payments.
"I can't imagine how that would have happened," Commissioner Paul Heltzel said of ReadyAir, the fuel handler and service provider at Youngstown-Warren Regional Airport, which received a loan from the revolving loan fund in the fall.
Money to start this fund came from federal Community Development Block Grant funds channeled through the state. It's also used on local projects, such as sewer or waterline construction.
"To not make the second payment right after you've received the loan doesn't make any sense. Something's wrong," Heltzel said. ReadyAir had to make a payment of less than $2,000 only a few months later.
Commissioners approved the loan in September, and ReadyAir made its first payment in November. It failed to make payments of a little less than $2,000 in December, January or February, said Alan Knapp, Trumbull County Planning Commission director.
ReadyAir representative Chad Quinn said the economic decline at the airport is a factor in the payments -- adding that he's surprised the payments are an issue.
Four payments behind
On Monday, Quinn said Bob Moosally, owner of ReadyAir, had directed his staff to make two of the payments right away. But the company was four payments behind as of Wednesday, Knapp said.
The loan is for 3 percent interest over 10 years. The loan was OK'd so ReadyAir could make renovations to Hangar 2. ReadyAir was to create 18 jobs within three years by expanding its business and making improvements.
Quinn said ReadyAir is waiting for good weather to begin the renovations.
Minutes from the county's Revolving Loan Fund Review Committee show that ReadyAir first applied for a $300,000 loan before the company had started its airport operation.
Minutes from the Feb. 3, 2004, meeting said ReadyAir sought the loan to install equipment used to fuel aircraft. The loan represented half of the estimated cost for the fuel equipment and for renovations at the hangar it was planning to lease from the Western Reserve Port Authority, which oversees the airport.
Knapp explained that revolving loan fund money must be no more than 50 percent of a total loan package. The other 50 percent can come from a variety of sources.
The minutes state reasons that the committee refused to recommend the loan: "First the company did not provide to the county any firm financial commitments from the proposed sources other than the county's revolving loan fund. The supplemental information did not even identify the private lender. The second threshold issue was the identification of company officers."
The committee reviewed ReadyAir's loan request two more times in 2004: April 6 and June 1. In April, ReadyAir gave the committee a letter from Top Flight LLC for a loan of up to $195,000, but ReadyAir didn't provide enough information about Top Flight and still did not identify ReadyAir's officers.
Application pulled
At the June meeting, the committee reviewed a letter from ReadyAir stating that instead of Top Flight, the loan would now come from an owner's relative. The committee expressed concern with that arrangement and asked ReadyAir for more information. After that, the application was withdrawn, Knapp said.
ReadyAir reapplied in August 2005. This time, Quinn told the panel that ReadyAir had a $400,000 loan through Sky Bank and the Small Business Administration and $180,000 in cash equity. ReadyAir was offering second security position on all equipment at its site and a personal guarantee of loan repayment from the company's owner, identified as Moosally.
Knapp said committee member Lewis Kostoff, a former pilot, visited ReadyAir and described the loan as a "good proposal."
Committee member John Mahan made a motion, seconded by Richard Musick, to recommend the loan to county commissioners. The committee members -- Kostoff, Mahan, Musick, Mike Robinson and Bill Cummings -- unanimously approved. Commissioners approved the loan in September.
Knapp said the loan committee has made five loans in about the past six years, and only one of them has had trouble repaying the money besides ReadyAir.
Superior Printing of Warren, which received loans of $400,000 in 1993 and $200,000 in 1998, did not pay all of its loan back. Superior Printing filed for bankruptcy in 1998-1999, Knapp said, and left an unpaid balance from its loans of around $300,000.
Superior Printing, which paid the county $400,000 in principal and interest over 11 years, was a good company, Knapp said. The loans kept people working there, he said.
Loans that have worked out well, he said, are:
$400,000 loan to Brainard Rivet in Girard in 1999; created jobs and paid the loan back early.
$100,000 to Star Fabricating in Vienna in November 2005; making its payments on time.
$300,000 to Timken Latrobe Steel Distribution Center in Vienna in 2000; making its payments on time.