MANKATO — A court-appointed receiver is asking to sell Jordan Sands quarry property for $8 million to help settle the company’s default on a $22 million loan.
Early last year a St. Cloud bank sued Jordan Sands and the Coughlan family after it says they defaulted on the loan. Stearns Bank said they were still owed $18.5 million.
Recently the receiver asked the court to allow it to sell the property, saying that despite efforts to attract bids, it could find no buyers willing to pay a higher price.
The $8 million offer was made jointly by Holtmeier Construction, Kasota Stone Fabricators and Pentagon Materials, all based in Mankato. The firms made the offer last April, not long after the bank foreclosed.
The receiver, Cordes & Company, said that since then it did its due diligence in trying to get more value by advertising the property to a variety of companies that might be interested and by offering to divide the property into different parcels and selling them individually.
Jordan Sands, which has its office in North Mankato, has mined silica sand just north of Mankato since getting a permit approval for the mine in 2013. In early 2016 the company got the $20 million loan from Stearns and pledged security on the loan that includes land and a long list of personal property including money, investment property and equipment.
The lawsuit says the Coughlans also assigned the bank additional assurance of repayment by James Coughlan, the James Coughlan Trust, Robert Coughlan and the Robert Coughlan Trust.
The receiver said several companies were very interested in buying the properties until they learned there was a relatively low amount of limestone reserve remaining. They said potential buyers also found the sand and limestone would not be suitable for use in road construction.
The receiver said James Coughlan offered to buy the property for $4 million, plus non-guaranteed payments over five years. Stearns Bank would have had to restructure the loan and was not willing to accept Coughlan’s offer.
Judge Gregory Anderson is taking the receiver’s request under advisement. Anderson is assistant chief judge for the 5th Judicial District and is chambered in Blue Earth County.
Karl Friedrichs, Lime Township chair, said the board had some concerns about the Jordan Sands quarries because the company had not put up enough of a bond to cover reclamation work that needs to be done as parts of the property are mined out.
The board had been considering whether to implement a mining moratorium.
Jordan Sands had put up a $200,000 bond and Friedrichs said Holtmeier and the other prospective buyers recently put up an additional $1 million in reclamation bonds.
“The potential buyers have posted the amount of bond required by the township,” Friedrichs said. “The board decided there was no need to do a mining moratorium.”
He said the board has built a good relationship with the Holtmeier group. “They’ve been very good to work with.”
Holtmeier and the other two companies have already been working the area in recent years, under an agreement with Jordan Sands, Friedrichs said. Holtmeier takes the gravel off the top and Kasota Stone Fabricators then cuts and removes some dimensional stone before Jordan Sands mined the silica below.
Friedrichs said the prospective buyers intend to continue taking gravel and dimensional stone down to a depth of about 35 feet.
The Jefferson Quarry is among the land Jordan Sands owns. The quarry is in the city of Mankato, stretching for more than a mile from Highway 14 to Riverfront Drive just north of Old Town. The quarry was depleted and hasn’t been mined since 2017.
A few years ago the Coughlans proposed marketing the Jefferson Quarry for potential development such as housing or commercial uses. The city of Mankato was also interested in having parts of the quarry developed as park/recreation land.
In court documents the receiver said they considered selling Jefferson Quarry separately, with the three companies that bid on Jordan Sands’ property getting the rest of the active mine holdings for $7 million. But the receiver said it was unlikely the 54-acre Jefferson Quarry would sell for $1 million or more, therefore falling short of the original $8 million offer. Jefferson Quarry has a tax value of about $716,000 and the quarry would have to go through extensive reclamation before any development could be done.
Silica sand bust
Silica sand was for years a hot commodity, used in fracking in the oil and natural gas industry.
But demand for silica collapsed and oil companies still fracking are using silica located closer to their wells.
Another area silica mining operation, Covia, formerly Unimin, announced in late 2019 that it was closing its Kasota silica mining operation after more than 30 years because of the depressed frack sand market.