Handy Hardware, a Texas-based hardware store cooperative, plans to close its 2-year-old Meridian, Miss., warehouse on Dec. 31, laying off 109 workers.
Mississippi Development Authority spokesman Dan Turner says the state contributed a $3.6 million grant to Handy and plans to demand the money's return.
Handy Hardware CEO Ken White says he hasn't heard from the state.
White says Handy plans to give the 460,000-square-foot warehouse back to lender Capital One Financial Corp. in exchange for wiping out its debt on the $20 million building.
State and local governments contributed at least $5 million in grants, tax breaks and loans toward the distribution center, built in 2010 along Interstate 20 on the east side of Meridian.
Handy Hardware is a 1,300-store cooperative. It built the warehouse with the aim of expanding eastward.