Bartlesville startup Westwin Elements backs out of Siemens building purchase deal

Bartlesville startup Westwin Elements backed out of a $2.4 million deal last week to purchase the Siemens building, citing a failed roof inspection and a higher-than-expected price tag.

The company is planning to build the only cobalt and nickel refinery in the United States and had initially signed a contract with the Bartlesville Development Authority for the Siemens building in May.

The BDA approved the sales contract during its May 24 meeting. The building initially was listed for $3.7 million, but the price was discounted to $2.4 million based on Westwin bringing in 85 jobs to Bartlesville at a $15,000 city incentive fee per position.

The BDA purchased the building in 2020 for $1.7 million and expected to net a $700,000 profit, said Chris Batchelder, BDA vice president of business development.

More: BDA approves sale of Siemens building to Bartlesville startup

He said Westwin informed the BDA of the contract cancellation on June 28, the last day of the 33-day due diligence period and without penalty.

But Batchelder said the BDA was blindsided when Westwin CEO KaLeigh Long later sent an email that day to local and state elected officials providing details of their cancellation of the contract as well as a counteroffer for the building.

"No employee of the BDA was copied on that email, but we did have several concerned parties reach out and make sure we had a copy of it," he said.

Batchelder said he was disappointed by the cancellation and wished Westwin had asked for a 30- to 60-day extension on the due diligence period to clear up the issues.

"This was exciting for Bartlesville and we were eager to see this close," he said.

Westwin CEO says deal terms 'aren't tenable'

In the letter, Long asked lawmakers for help, noting the terms of the canceled deal "aren't tenable."

She cited factors such as the roof failing its inspection in conjunction with the fact the sale price is $700,000 more than the BDA originally purchased the building for in 2020.

Westwin received estimates to replace the roof at $1.5 million to $2.6 million, Long said.

In the letter, Long says that Westwin was only presented with two options to move forward with the deal. One is that Westwin "buys the facility in its existing compromised condition for $2.45 million or there is no 'deal' in Bartlesville − no other available facilities and no support on these repairs or reduction in price."

The other option, she wrote in the letter, is that "pending [BDA] Board approval, a $700,000 credit (would go) towards the $1.6 million roof repair costs after closing if we buy the facility at $2.45 million, (and) if we sign over $200,000 in earnest money, not to be refunded, prior to Board approval."

More: Former Boeing CEO is "all in" on Bartlesville start up

Long countered those offers with a "simple ask" in her letter to elected city and state officials, most of whom were previously unaware of negotiation details.

"If the following can be achieved, then we can move forward and realize this internationally recognized project − both patriotic and profitable," Long wrote, calling the Siemens facility "strategic for Westwin, the State of Oklahoma, and our American national security interests."

Long asked the BDA to:

• Provide 30 days to do a "full building inspection"

• Drop any penalties if the inspection results "do not satisfy Westwin"

• Lower the purchase price to $1.7 million, which is the price BDA purchased the building for three years ago

• And trade the original $1.2 million job incentive package for $850,000 to split the roof replacement costs.

"That's a very reasonable ask; the BDA will have to replace that roof, and if they don't sell it to us for what they paid for it and don't allow us to pay half the cost [for the roof], they're gonna have to shoulder the entire cost to replace that roof," Long said. "To me, it makes economic sense."

BDA provided strong incentives package

Batchelder said he feels the BDA provided a strong incentives package to Westwin for the purchase of the building.

"We are told by companies that we interact with that our incentive programs are really good, and what we were offering to Westwin was an extremely robust incentive package totaling over $1 million," he said.

For the BDA, the building is still for sale and all options are on the table.

"We would be happy to visit with anybody interested in the building at this point. That could be Westwin Elements," Batchelder said. "If somebody wanted to visit with us about purchasing that building and giving us a new contract, we'd be happy to start that process over."

But for Westwin, it might be too late to get a deal done. Westwin has to make a decision on whether to look to other places in Oklahoma or other states like Texas and Missouri by July 15 in order to meet their goals. But none of those options are ideal compared to Bartlesville, according to Long.

"Unless I hear something, and I haven't, we're planning on exiting Bartlesville," Long said. "I'm not going to buy a broken building for more than what BDA paid for it two years ago."

Dangers of nickel refinement

Westwin never publicly disclosed the use of the building. Still, their email to lawmakers implied that the Siemens building was the only option in Oklahoma that fit their specifications for the pilot plant.

Westwin is looking for an existing industrial facility with a minimum 7,000-square-foot, 25-foot height clearance, preferred open space with a radius of 500 meters, and access to water, electric and gas utilities.

According to Westwin's request for proposal, the pilot plant will only be refining nickel and not cobalt. Their commercial site in Lawton will house nickel and cobalt refinement facilities.

"Westwin will concurrently test feedstock samples as well as design, build, and commission a pilot plant for nickel carbonyl refining in Bartlesville, Oklahoma," according to Westwin documents.

Purifying nickel using carbonyl refining or the Mond process comes with its own challenges and hazards compared to the more popular electrolysis method, according to the National Research Council Committee on Acute Exposure.

Nickel carbonyl is "generally considered to be one of the most toxic industrial chemicals" due to its extreme volatility, high toxicity and carcinogenic properties, the council said. It is easily and quickly absorbed into the skin and symptoms of exposure are only noticed after 12 to 48 hours.

Long said she understands the potential risks of nickel carbonyl but says the alternative is worse environmentally.

The electrolysis method has serious waste byproducts in the form of sodium sulfate, which has to be stored, while their closed-loop carbonyl refining method has zero waste byproducts, uses less energy and produces a superior product, according to Long.

"[Carbonyl refining] process has been around a long time," Long said. "Our technical team is up to almost 300 years of collective experience of dealing with nickel carbonyl on a commercial level, and there are significant safety measures that are put in around containment."

This article originally appeared on Bartlesville Examiner-Enterprise: Bartlesville startup Westwin Elements backs out of Siemens building purchase deal