Chesapeake Biological hires developer for proposed facility

March 18, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

Chesapeake Biological Laboratories Inc. has hired a developer for its planned headquarters and manufacturing facility in Baltimore, the latest step in making the $10 million project a reality.

But even company officials concede that the selection of The Svatos Co. represents a relatively small piece in the overall scheme to develop the planned 70,000-square-foot facility in the city-owned Seton Business Park.

"We still have a lot of different things to do before we can turn this project from something other than merely a dream," said Jack Janssen, the company's chief financial officer. "We're optimistic, but there's no guarantee that we can pull it off. All the pieces have to fit into place."

Chief among those many pieces is financing for the project, compounded by the fact that developing biotechnology facilities can run twice as high as new office buildings be

cause of the industry's specialized equipment and laboratories.

Under its current plan, Chesapeake Biological will raise roughly $5.1 million through either new debt or equity to finance construction of the building's interior. The space is expected to include offices and laboratories as well as warehouse and manufacturing space, said Robert J. Aumiller, the MacKenzie/O'Conor, Piper & Flynn executive vice president who advised Chesapeake Biological on the Svatos selection.

Svatos, which will own the building, is likely to borrow from General Motors Corp.'s pension fund to finance its exterior, the same institution that provided funding for the Hanover developer's 1991 purchase of the Parkway Cos. for $52 million.

"This project will be financed by a pension fund," said David R. Paulson, a Svatos vice president. "But the terms and conditions of both the financing and the lease are still being negotiated."

Chesapeake Biological and Svatos are believed to be negotiating a lease for 20 years, valued at roughly $9.8 million, sources familiar with the project said. Construction is slated to begin this fall, with completion scheduled for June 1996.

If the project reaches fruition, it would provide a much-needed boost to the city's efforts to attract and retain emerging biotechnology firms, which in recent years has become a major economic development push.

The project would also increase the city's job base. Chesapeake Biological intends to move operations now in Owings Mills to Seton and plans to hire new workers. In all, the company currently employs 60, Mr. Janssen said.

But because many lenders are cautious about biotechnology firms' lack of a long track record, it is expected that Chesapeake Biological -- an industry standout with an impressive 15-year history and more than $5 million in annual sales -- will ask the city to guarantee the lease payments.

"We're more than happy to engage in those discussions," said Robert Hannon, an executive vice president of Baltimore Development Corp., the city's economic development arm. "Chesapeake Biological is home-grown, and we'll do things that we think are appropriate to help them take root."

BDC also is expected to negotiate the city's sale of 5.1 acres in Seton for the facility, adjacent to the company's current quarters in the former Jiffy Lube International building at 6000 Metro Drive.

"We simply need more capacity," Mr. Janssen said. "We're currently split into two locations, and we prefer and need to be under one roof."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.