Yarnells owings put into millions

Of state loans, about half paid

MICHAEL LIPKIN
ARKANSAS DEMOCRAT-GAZETTE

Yarnells Ice Cream Co., which ended operations Thursday, owes up to $3.53 million in state and federal loans and may not have enough assets to pay them in full, officials say. Officials at the Arkansas Development Finance Authority and the Arkansas Economic Development Commission say they guaranteed $7 million in bonds and loans to the Searcybased company over the past 17 years but have only received about half that amount. Gene Eagle, finance authority spokesman, said a conservative estimate of real estate and equipment Yarnells put up as collateral is $1 million. We may find someone who wants the facility and recoup everything, or we may put it up for auction and not get much, he said. Thats our best guess, but we just dont know. The White County assessor estimates Yarnells land, equipment and vehicles are worth a little more than $2.2 million. Even that estimate puts Yarnells eventual debt at more than $1 million. A Yarnells spokesman said Thursday that Yarnells was not planning to declare bankruptcy but declined to
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comment further. Eagle said Yarnells paid about $145,000 into a reserve fund meant to cover the states losses when debtors default. That fund has about $18.3 million, Eagle said. Joe Holmes, a commission spokesman, said his agency intended to get back as much money as possible from Yarnells property and equipment. We will be involved in trying to recoup our losses,

he said. This could go on for a very long time. Yarnells first government loan was in 1994, when Searcy issued $4.6 million in bonds to the company, guaranteed by a national bank and the commission. That bank asked the Arkansas Development Finance Authority to be a substitute guarantor in 2000, according to Eagle, who declined to name the bank. Eagle said he did not know why the bank no longer wanted to guarantee the bond. Eagle said Yarnells would have closed a decade ago if

his agency hadnt stepped in for the bank. Yarnells would have defaulted, he said. Thats what we do here try to help our existing industry and restore their ability to compete. Of the $2 million from the 1994 deal, Yarnells still owes the commission $123,000, Holmes said. Yarnells owed the authority $1.7 million in 2006, but refinanced and now owes $1.96 million. The ice cream company also took out a community de-

velopment block grant from Searcy in 2001 for $1.5 million. Even though the commission guaranteed the loan, the remaining $1.45 million is owed to the federal government.

Getting it straight
The Democrat-Gazette wants its news reports to be fair and accurate. We correct all errors of fact. If you know of an error, write: Frank Fellone Deputy Editor P.O. Box 2221 Little Rock, Ark. 72203