EJM Aerospace, a tenant at the South Alabama Regional Airport since 2007, has broken its five-year contract, vacated its two hangars and left owing the Airport Authority more than $700,000 on its lease.

The company, according to its Web site, provides engineering design, manufacturing and logistics support to military and civilian customers and is based out of Crestview, Fla.

Jed Blackwell, SARA administrator, said Wednesday when the company left at the end of October, it presented a “huge debt” to the airport authority.

“When EJM signed their lease in December 2006, it included an option to build a second hangar,” Blackwell said. “EJM had a co-tenant, Sierra Nevada Corporation, move in with them in their first hangar and elected to build the second hangar.

“The first hangar was paid for using a 2005 bond measure and the second hangar’s construction was financed through a local bank,” he said.

That 2005 bond measure, which was backed by Andalusia, Opp and the county, allowed for a 2.5-cent on the dollar match for a Federal Aviation Administration for upgrades at the airport. The cost of that match was rolled into the total bond measure, and the monies the three entities contribute each month goes to make that portion bond payment, not for the debt service on the hangars, Blackwell said.

Cost for the two facilities combined was $8.6 million. Under the terms of EJM’s lease, which would have come to term in Dec. 2011, the company was required to pay the $27,512 monthly debt service on the building –– plus a $3,106 “land payment,” Blackwell said.

“So (the Airport Authority) actually made a little money off the deal each month,” he said. “Now, with them leaving, it will require the Airport Authority to make those payments each month, and that’s a huge debt.

“The intent in 2005 was for us to have as many high-skilled, highly-paying jobs as we could,” he said. “This situation just shows that everything is not rosy all the time. When the economy hit like it did, it hurt.”

And that is the exact reason EJM officials gave for breaking the lease agreement. In a letter sent to the Airport Authority, it cited that the company had neared completion on its current contracts and it “did not have any available work scheduled to maintain productive use of the leased premise.”

At its peak, the EJM employed approximately 50 people; at its closing, 15, Blackwell said.

Now, the Covington County Economic Development Commission (CCEDC) is tasked with finding a new company to occupy the hangars, and a new tenant could be on the horizon, Blackwell said.

“The CCEDC is responsible for marketing the hangars, and they’re working hard to find a tenant,” he said. “I know we’ve had contact with three or four companies who’ve shown interest in (the hangars).

“We’re all going to work together to find a solution,” he said. “I feel positive that in the long term we’ll see great benefits (from the hangers), but there’s bound to be lows before the highs. This is just one of those low times.”

Blackwell said airport authority can make the payments on the property until “at a minimum January 2012;” however, board members met Monday and agreed to begin the refinancing process in an effort to lower the monthly payment due on the buildings.

“I’d say there’s a high probability that we’ll refinance if it makes financial sense,” he said.

CCEDC president Tucson Roberts said he feels positive a new tenant will be in the buildings “within several months.”

“These are unique hangars,” Roberts said. “There’s not anything like them anywhere else in Alabama except at the military bases. They have all the fire suppression systems the Air Force requires. They’re well-made buildings. There’s an administrative complex and all sorts of workspace adjacent to the buildings.

“It’s a package any prospect would want,” he said. “It’s a very desirable space you rarely find in one complex. That gives us an advantage of attracting business.”