NuScale Power's funding in jeopardy
By Erik Siemers , Business Journal Staff Writer
Business Journal Staff Writer
NuScale Power on Thursday said it is putting a halt to most of its operations after its primary investor was hit with a lawsuit by the U.S. Securities and Exchange Commission, putting its main funding source in jeopardy.
The news has suddenly turned a promising and seemingly well-capitalized Oregon energy startup into one in immediate need of new financing.
“This was a curve ball to us,” said Bruce Landrey, a spokesman for the Corvallis-based company, which is developing modular reactors for nuclear power plants.
In a news release Thursday, NuScale said the SEC has filed a civil action against its primary investor, the Michael Kenwood Group LLC, which could prevent the firm from meeting its funding obligations to NuScale.
The SEC complaint centers on the activities of Francisco Illarramendi, the majority owner of the Stamford, Conn.-based Michael Kenwood Group.
The SEC claims Illarramendi misappropriated some $53 million from a pair of hedge funds controlled by the Kenwood Group into bank accounts he personally controlled and then made unauthorized investments in long-term private equity deals.
Founded in 2007 out of Oregon State University, privately held NuScale has raised $35 million in venture capital. It has identified the Michael Kenwood Group as its primary investor since early 2010.
Though NuScale isn’t mentioned by name, the complaint said Illarramendi invested $23 million in an unnamed West Coast-based nuclear energy company that is due a $5 million cash infusion this month to cover operational expenses.
In its own news release, NuScale said Kenwood funds were expected to finance the company's operations at least through March.
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