Battery manufacturer investing $279 mil in Colleton County sues commercial real estate company

COLLETON COUNTY, S.C. (WCBD) — A battery manufacturing company making a multi-million dollar investment in Colleton County, is now suing the commercial real estate company that helped them set up shop in South Carolina.

Kontrolmatik Technologies, an engineering company based out of Turkey, formally announced plans to build a lithium-ion battery factory in Colleton County through its subsidiary, Pomega Energy Storage Technologies in Dec. 2022.

The $279 million investment promises to create nearly 600 new jobs and was touted by both state and local leaders. In Feb. 2023, Gov. Henry McMaster visited the site of the facility outside of Walterboro when construction began on the project.

However, before the company decided to put down roots in South Carolina, it was working with a Chicago-based commercial real estate group, Jones Lang LaSalle Americas (JLL) to help them find a location in the U.S. and assist with negotiating economic development incentives.

According to court filings from attorneys for Kontrolmatik, “in May 2022, Kontrolmatik and JLL executed a non-binding Memorandum of Understanding that provided JLL would be compensated on a contingency fee basis for its procurement of business and economic incentives on behalf of Kontrolmatik.”

The document called for JLL to receive a 10% fee of business and economic incentives or five million dollars — based on whichever was less.

Ultimately, based on the scope of its investment, Kontrolmatik was awarded over $127 million in incentives from the state and Colleton County.

JLL then asked Kontrolmatik to pay them five million dollars for their help. “JLL has demanded that Plaintiffs pay a fee of $5,000,000 for the incentives offered by South Carolina and Colleton County,” the lawsuit reads.

However, attorneys for Kontrolmatik are now fighting back on what is actually owed.

The lawsuit filed on April 24 in Colleton County court claims the Memorandum of Understanding was not binding, and attorneys argue that the contingency fee outlined in the memorandum violated South Carolina law under S.C. Code Ann. Section 12-60-90.

Incentives offered vary from state to state, and Kontrolmatik’s attorneys argue that once they chose South Carolina for the facility, the memorandum with JLL was never updated to reflect South Carolina’s laws.

Additionally, attorneys argue that payment for the incentives JLL helped secure does not equal five million dollars.

“Most of the incentives included in the incentive package, however, were not identified or negotiated by JLL. For example, Plaintiffs were awarded corporate tax credits and sales exemptions based solely upon statutory formulas — not JLL’s efforts,” the lawsuit reads.

Attorneys add that Kontrolmatik/Pomega paid JLL $750,000 for its work, and that JLL has “demanded that Plaintiffs pay additional funds and has threatened litigation.”

The case has been moved to federal district court at the request of JLL.

Kontrolmatik is asking a judge to declare that the Memorandum of Understanding is not legally binding, that JLL is not entitled to receive any fees for economic incentives it did not play a part in, and that JLL is not entitled to any fees based on the economic incentives because it violates the law.

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Author: Erin Morgan