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Story Archives: V-Vehicle misses deadline


V-Vehicle misses deadline
posted Sunday, February 28th, 2010 @ 6:08 pmE-mail Story E-mail Story | Print Story Print Story 
V-Vehicle Co. won't have $350 million on hand Monday, March 1, which the company was required to have to access millions of dollars in incentives that state and local governments extended to V-Vehicle to aid its efforts to establish an automobile manufacturing operation in Ouachita Parish.

In a telephone conference call with members of media Sunday afternoon, V-Vehicle officials including the company's founder, Frank Varasano, said V-Vehicle would not meet the March 1 deadline because V-Vehicle's application for a $320 million loan from the Department of Energy's Advanced Technology Vehicles Manufacturing program had not been approved.

Stephen Moret, secretary of Louisiana Economic Development Corp., participated in the conference call, too. He said the state would suspend its efforts to assist V-Vehicle financially until the company learns the fate of its loan application with the Department of Energy. He said an effort would be made to amend V-Vehicle's agreement with state and local governments to make available state incentives if V-Vehicle secures a loan from the Department of Energy at some point in the future.

Last year, the state pledged some $130 million in incentives to convince V-Vehicle to choose Louisiana as its home to manufacture fuel-efficient automobiles. V-Vehicle picked the former Guide head light plant off Interstate 20 in eastern Ouachita Parish.

Per a cooperative endeavor agreement V-Vehicle signed with state and local governments last year, V-Vehicle was required to have $350 million on hand by March 1 to access the bulk of state incentives as well as access a $15 million incentives package offered by Ouachita Parish governing bodies. Moret said he could only speak for the state's position on its incentives package. He said questions concerning the fate of the incentives package offered by Ouachita Parish entities should be answered by local officials.

Ouachita Parish Police Jury President Shane Smiley could not be reached for comment Sunday night. Smiley, though, told The Ouachita Citizen last week that the March 1 deadline V-Vehicle was required to meet to access the $15 million in local incentives was firm.

Meanwhile, Moret said the Department of Energy would do its best to make an announcement by the end of March concerning V-Vehicle's loan application. Varasano confirmed that remark.

If the Department of Energy does not approve V-Vehicle's loan application within the next couple of weeks, V-Vehicle will repay the state some $6.2 million on April 1, according to Moret. The $6.2 million repayment represents the amount of money the state has spent on V-Vehicle's behalf thus far in site work in rehabbing the former Guide plant in eastern Ouachita.

Yet, Varasano said he's optimistic the Department of Energy will approve V-Vehicle's application for a $320 million loan. He said the V-Vehicle project meets the necessary requirements to qualify for financing through the Department of Energy's ATVM program.

However, Varasano indicated there was no back-up plan for V-Vehicle to pursue to secure financing to underwrite its efforts to manufacture automobiles. In responding to questions concerning a back-up plan if the Department of Energy did not approve V-Vehicle's loan application, Varasano repeatedly stressed that he was confident V-Vehicle would secure the loan.

As of Sunday, V-Vehicle has raised some $86.5 million from private investors to help launch its automobile company, according to Varasano.

In the meantime, Moret said he would begin working on an amendment to the cooperative endeavor agreement V-Vehicle signed with state and local governments last year. The amendment would make available state incentives for V-Vehicle if the company secures a loan from the Department of Energy.

Moret would submit the proposed amendment to the state Legislature's Joint Committee on the Budget for approval if V-Vehicle secures a loan from the Department of Energy. Moret said he had spoken to a few members of the Joint Budget Committee about the proposed amendment, though he did not identify them. He said the committee members he spoke to were supportive of the proposed amendment.

Varasano took some time during the conference call with the media Sunday to defend V-Vehicle's decision not to unveil its product. He said keeping the automobile out of the public's eye was necessary because of the competitive nature of the automobile manufacturing business.

"We have a show car that some people have seen," Varasano said. "We have a number of test vehicles. We have a demonstration vehicle."

"No one wants to show off our car as much as I do," Varasano added.

Maintaining an optimistic tone, Varasano said V-Vehicle would begin production of its automobile at the former Guide plant in the fall of 2011. The automobiles would go on sale to the public in 2012.

When V-Vehicle announced its intention to locate in Louisiana, officials said the company's presence would create hundreds of construction jobs, some 1,400 permanent manufacturing jobs and another 1,800 indirect jobs.
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