NEW: Capco Steel Facing Financial Problems

NEW: Capco Steel Facing Financial Problems

The Providence constriction company that received a $5 million taxpayer-funded loan guarantee in 2010 still owes the state $4.6 million and is facing financial difficulties, according to a statement released by the Economic Development Corporation (EDC).

Capco Steel, whose owner has said lost $85 million in contracts since the beginning of the recession, will attempt to operate at a “much smaller level,” according to the statement.

“The Industrial-Recreational Building Authority (IRBA) in partnership with Webster Bank provided a $5 million loan guarantee in March 2010 to Capco Steel,” the statement said. “In February 2012, IRBA began making payments against the guarantee when the company began experiencing financial difficulty in loan repayments to Webster. Currently the outstanding IRBA guarantee is $4.6 million as of June 30, 2012.

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“IRBA has been working diligently with Capco and Webster to find solutions to navigate through the downturn in the construction industry, including a plan to keep the company operating at a much smaller level. The state is working to ensure that the employees are provided with assistance during this challenging time and taxpayers are protected by recouping value against the building and equipment, which IRBA has a secured first position.”