“EDC recommends breaks for Xun Energy”
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Brevard County commissioners today approved $1.04 million in tax incentives for startup energy firm Xun Energy Inc.
The Portland, Ore.-based company would receive the tax breaks only if it meets its goals of creating 308 jobs in Melbourne at an average wage of $82,750, as well as making a $22 million capital investment.
The County Commission vote was 3-1, with Commissioner Trudie Infantini voting no. Infantini was concerned about the company’s financial losses and its status a a publicly traded “penny stock.”
Commission Chairman Andy Anderson did not vote because a real estate company he has affiliations with has an interest in the property at 425 North Drive where Xun is considering locating.
County commissioners today are scheduled to vote on more than $1 million in tax incentives for Xun Energy Inc., following the release of new information highlighting the company’s finanaces.
Documents filed this month with the U.S. Securities and Exchange Commission show that the company had no revenue, is continuing to lose money and is considering financing its proposed expansion through the company’s stock that traded Monday for less than one-10th of a cent a share.
Xun (pronounced Sun) is seeking a total of $1.04 million worth of county tax incentives over a 10-year period as part of the company’s proposal to expand in Melbourne. Xun hopes to move to a facility at 425 North Drive, create 308 jobs from 2014 through 2017 paying an average of $82,750 a year, and make a $22 million capital investment. Under the tax break proposal, the county still would receive $1.54 million in new taxes from Xun during that time span.
The company could generate enough revenue from its new oil-drilling operations to not need the outside financing, Xun, Chief Executive Officer Jerry Mikolajczyk said Monday.
In the past two years, Xun stock has traded from as high as 14 cents a share and as low as 0.07 of a cent a share. In recent weeks, more than 20 million shares have changed hands on some days. The filing indicated that Mikolajczyk owned nearly 49 percent of the company’s stock, or more than 188 million shares, as of May 31.
The Economic Development Commission of Florida’s Space Coast Ad Valorem Tax Abatement Council on Sept. 5 unanimously recommended Xun for the county tax break, spread over a 10-year period.
But Greg Weiner, the EDC’s senior director of business development, in a Sept. 5 letter to County Manager Howard Tipton, cautioned that “in the EDC’s background review of this applicant … the EDC indicated that the company did not have adequate finances to move the project forward. Accordingly, we note again that the ability of this project to move forward is completely dependent on the ability of the company to obtain adequate financing.”
Brevard County Commissioner Trudie Infantini has expressed concern about Xun’s financial track record and its status as a penny stock. She voted against qualifying Xun for tax breaks during a preliminary vote last month.
“I think Commissioner Infantini is doing her job, and I commend her for that,” said Mikolajczyk, who plans to be at today’s meeting to answer questions.
EDC President and Chief Executive Officer Lynda Weatherman said the Tax Abatement Council “understands that Xun Energy must raise capital to move forward with its growth plans. The company is working to do that, and its executives will choose their preferred methods for doing so. As always, any tax reduction Brevard County may approve will be tied to the company’s job creation and capital investment,” so if the company doesn’t meet its targets, it won’t get the tax break.