Congressional Democrats want a publicly traded offshore oil services company to repay a $ 10 million federal small business loan that has helped boost profits and keep workers in southern Louisiana employed.
Gulf Island Manufacturing, a Houston-based company that is one of Houma’s largest employers, said in tax returns this week that it got the $ 10 million maximum from the federal check protection program. payroll, a stimulus effort designed to support small businesses crippled by closures during the coronavirus.
Democratic members of a House committee overseeing federal spending during the coronavirus pandemic sent letters Friday to Gulf Island Manufacturing and four other publicly traded companies demanding they immediately return the millions of dollars in loans funded by the taxpayers they received under the stimulus loan program.
“Since your company is a public entity with a substantial investor base and access to capital markets, we ask that you return these funds immediately,” the letter to Gulf Island CEO Richard Heo reads. “The return of these funds will allow genuine small businesses – which do not have access to other sources of capital – to get the emergency loans they need to avoid layoffs, stay in business and weather disruption.” economic effects caused by the coronavirus crisis. “
Congress approved $ 659 billion for the program in two separate aid programs aimed at helping the country weather the coronavirus pandemic. The money can be repaid at 1% interest over two years. The federal government will cancel all or part of the loan if it is used to cover payroll and other specified costs necessary to keep the business in operation during the pandemic.
The first slice of money ran out in 13 days, prompting complaints from small businesses, members of Congress and others who claim that the large publicly traded companies ousted the smaller ones the loans were intended for.
Democrats’ call on Gulf Island and other corporations to return the federal loan money drew quick criticism from Republican U.S. Rep. Steve Scalise of Metairie, the Republican ranked on the House subcommittee on coronavirus crisis, of which the Congress district includes the south of Terrebonne and the parishes of Lafourche.
“It is scandalous and revealing that the first action committee the Democrats have taken is to blindly send letters of harassment to individual companies who have followed the law to keep their workers on the payroll – a law for which each of their committee members voted – rather than using their power to work together on a bipartisan basis to help families return to work safely and begin to hold China accountable for the havoc it has wreaked on the world. American people, ”said Scalise, the House majority whip, in a written statement.
Scalise noted that US Treasury Secretary Steven Mnuchin has previously said his department reviews all companies that have received loans under the PPP program.
On Tuesday, the Treasury Department asked publicly traded companies to return the loan money by May 14 under threat of sanctions. Some companies have contested this, saying the original rules made them eligible for loans.
“With a full scale audit underway, this action by Democrats represents dangerous government intimidation that could lead to more widespread layoffs at a time when we should be trying to keep American workers on the payroll,” Scalise said. “We hope the Democrats change course and spend as much time targeting, humiliating and investigating China as they do attacking American workers and job creators.”
Gulf Island discussed the loan during a conference call Wednesday with investors as part of its first quarter earnings report. Heo also discussed the loan in a press release on the earnings report.
Gulf Island, which builds ships, oil rigs and other industrial structures, employed 944 people as of Dec.31, according to an annual report filed with the U.S. Securities and Exchange Commission. Most of the employees work in the company’s shipyard and manufacturing facilities in Houma, making Gulf Island one of Houma-Thibodaux’s largest employers.
The company on Wednesday reported net income of $ 5.9 million for the first three months of the year. The performance was bolstered by a one-time injection of $ 10 million from the settlement of a contractual dispute for an already completed project and cuts to executive pay amid the crisis, the company reported.
“The impact of COVID-19 on the global economy and our industry along with the related drop in oil prices has created significant uncertainty for our business and operations,” Heo said in the statement.
“In these difficult and uncertain times, the PPP loan proceeds provide the liquidity necessary to cover salary costs and benefits, including maximizing our ability to retain our workforce, fulfill our current backlog and compete for new projects, ”Heo said. “We have already used some of the borrowed funds to return a number of employees that we put on leave at the start of the pandemic and we have retained additional employees that we would have had to put on leave or lay off without those funds.”
Gulf Island got its loan from Hancock Whitney Bank on April 17, before the SBA released the guidance, according to an SEC filing. Six days later, the U.S. Small Business Administration, which administers PPP loans, issued guidelines to prevent publicly traded companies from receiving loan money.
Democrats on the oversight committee note that each of the five companies they are seeking reimbursement from has market caps, total market values, of $ 25 million or more. Each also has at least $ 6 million and received the maximum loan of $ 10 million under the program.
At the end of trading on Friday, Gulf Island’s market cap was over $ 46 million.
The CARES Act, Congress’ first stimulus package, required money to go to businesses with 500 or fewer people in one location. But the law includes exemptions for several categories of industries, including oil and gas, allowing them to have up to 1,000 workers at a single site.
In their letters, Democrats ask Gulf Island and other companies to indicate by Monday whether they plan to return the money. Otherwise, lawmakers have said they will request a list of business loan documents by Friday.
The other companies are EVO Transportation & Energy Services, the MiMedx group, Quantum Corp and Universal Stainless & Alloy Products.
The letters were signed by the chairman of the committee, US Representative James Clyburn of South Carolina, and US Representatives Maxine Waters of California, Carolyn Maloney and Nydia M. Velázquez of New York, Bill Foster of Illinois, Jamie Raskin from Maryland and Andy Kim from New Jersey.
Keith Magill can be reached at 857-2201 or [email protected]