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City may sell back stock of software company

A local software company may buy back stock that has been on the city of Grand Forks' books for almost 25 years. Grand Forks-based Aatrix Software received a $100,000 loan from the Grand Forks Growth Fund in 1988. But four years later, the city a...

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A local software company may buy back stock that has been on the city of Grand Forks' books for almost 25 years.

Grand Forks-based Aatrix Software received a $100,000 loan from the Grand Forks Growth Fund in 1988. But four years later, the city agreed to swap that debt for stock in the company, according to Herald archives.

That stock has been carried on the Grand Forks Jobs Development Authority's books as an asset valued at $100,000 since 1992, but Aatrix "has proposed reverting back to a loan and starting repayment," Meredith Richards, deputy director of the city's Planning and Community Development Department, wrote in an email.

Richards expects that proposal to come up during next month's Growth Fund meeting, assuming Aatrix provides financial information.

"If the stock is worth more than $100,000, then they have a different decision to make," Jon Ramsey, a member of the Growth Fund Committee, said during Monday's meeting. "But we do need to verify that."

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The North Dakota Department of Economic Development and Finance also agreed to give Aatrix $300,000 in exchange for stock in the business, according to a 1992 Herald story. Ramsey said the state has already been paid back.

"It was at a discount, but basically what we're talking about here would be a full payment," he said.

Steve Lunseth, president and CEO of Aatrix, did not return a message seeking comment Tuesday. Aatrix is a privately held company, according to its LinkedIn page.

The city doesn't own stock in any other company, and Richards is not aware of any profit it has realized from the Aatrix stock, she said. She added that she's not sure what form the "restructuring" may take until the company submits a specific proposal.

'Win-win'

Aatrix, located at 2100 Library Circle, was founded in 1986 to develop Macintosh accounting and payroll applications, according to its website. It now works with both Mac and Windows platforms.

In 1988, the company came to the city seeking financial assistance. Lunseth said in October of that year that it would be difficult for Aatrix to continue operating without the Growth Fund loan, as fledgling software firms struggled to secure loans through banks, which require hard assets as collateral.

In 1992, Lunseth said he planned to use some of the state's $300,000 to improve packaging and place ads in national computer industry publications in order to spread the word about Aatrix products, according to Herald archives. The city and state would own 40 percent of Aatrix after the city agreed to swap its debt for stock in the company, according to a 1992 Herald story.

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Dean Reese, CEO of the North Dakota Development Fund, said Tuesday that Aatrix made its final payment last year, and the state ended up getting roughly $161,000 back. He said the state was a "patient investor" with Aatrix.

"I guess in my eyes, I see that as a win-win," Reese said, citing the jobs Aatrix created and the challenges created by the 1997 Red River flood. "By hanging in there this long, we got a pretty good return rather than just writing it all off."

This post has been updated. 

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