Kestrel Aircraft remains behind on Brunswick Landing rent
BRUNSWICK — Kestrel Aircraft Co., a major tenant of the former naval air station, remains several months behind in lease payments to the Midcoast Regional Redevelopment Authority.
The aviation startup has been waiting for financing to continue toward its goal of manufacturing a new turboprop single-engine plane.
Steve Levesque, MRRA's executive director, confirmed on Tuesday that Kestrel hasn't paid rent for "several months," but could not provide more specifics, citing a need to protect the company's financial information.
He said there is a month-to-month arrangement in place to defer Kestrel's payments.
"We have agreed to defer their rent, but it involves discussion and constant evaluation," he said. "... We're confident that they will be able to secure the funding to pay off the rent and grow the company. If I didn't have that confidence we would have said, 'no, you ought to give up your lease.'"
John Peters, chairman of the MRRA board of trustees, echoed Levesque's remarks.
"Like any business, we're trying to work with this tenant and be patient, let them get new capital in place, hope for the best," Peters said, adding that his board is aware of the situation. "... They're a big tenant for us, so we're hoping soon they'll get their capital in place and get current."
Kestrel's rent is about $13,000 a month for nearly 84,000 square feet of administrative and workshop space at Brunswick Landing's Hangar 6.
The aviation company's 20-year lease from MRRA, the quasi-municipal organization charged with redeveloping the base, began in April 2011.
Kestrel's financial woes were first reported by the Bangor Daily News in September, when Chief Executive Officer Alan Klapmeier confirmed the company was having "cash flow issues."
At the time, Klapmeier said although Kestrel was current with payroll, some employees had been furloughed or place on reduced work or pay. He also said that completion of a prototype plane was a year behind schedule.
In addition, Klapmeier said he was expecting a significant source of funding to come through to finance "essentially the majority of the project."
On Wednesday, Kestrel spokeswomen Kate Dougherty confirmed that the company has arranged with MRRA to defer rent payments, but declined to comment on other financial details.
She said she also couldn't comment on the progress for financing.
"Alan Klapmeier is relentless in his capital investment campaign," Dougherty said. "He absolutely continues to pursue capital financing."
Alluding to how some successful companies once struggled as startups, Dougherty said, "we're Apple in the garage and not (General Electric.)" She also said "tremendous work" is already being done, including the beginning of the company's Federal Aviation Administration certification process.
Kestrel, which employs about 40 people at Brunswick Landing, originally set its sights on the former naval air station for its headquarters, with an announcement in July 2010. At the time, Klapmeier said he hoped to create 300 jobs.
But more than a year later, after the company was courted by Maine and two other states, Kestrel's CEO announced the company would move its manufacturing operations to Superior, Wis., where the company received a better financial package. A smaller workforce remained in Brunswick to create composite components of the plane, while a majority of workers – about 60 – are in Superior.
Levesque said it's not unusual for a developer like MRRA to give a business experiencing financial difficulty some time to sort things out, especially if they're willing to keep communications open.
"We'd hate to have all these people laid off just so (Kestrel) could pay their rent," he said, noting that such a scenario would be regretted if the company ended up with financing only weeks later.
He said two other tenants at Brunswick Landing have had similar difficulties, but he would not disclose which ones.
But Levesque did identify two businesses whose leases were canceled because of funding problems.
"Integrated Marine Systems and Resilient Communications aren't here anymore because they couldn't afford it," he said, adding that decisions to end their leases were mutual. "The key is to maintain constant communication with our tenants."