Taxpayer Money Shuts Off at V-Vehicle

Work has all but come to a halt at the V-Vehicle project at the old Monroe Guide Plant. About the only activity seen in the last month is dirt work to relocate Bennett Bayou. Last month we had reported on a California company hauling off broken concrete for disposal. They haven’t been seen since and the pile of rubble still remains at the plant site.

What has happened is the flow of cash from the Taxpayers of Louisiana has been shut off. Here is why: Failure to commence Phase III of the project by October 1, 2009 results in suspension of grant money.

Section 4.03 Phase III – Facility Completion
(E) Failure to Commence Phase III
If Phase III has not commenced by October 1, 2009, grant payments under Sections 4.01 and 4.02 shall be suspended until Phase III has commenced. If Phase III has not commenced by March 1, 2010, the parties are relieved of further obligations hereunder, except Guideco’s obligations under Section 4.05(B), and the Company’s obligations under Sections 4.06(G), 4.07 and this paragraph. In this event, by April 1, 2010 the Company shall reimburse the State Investment.

Last month we tabulated that at least $6.2 million has been supplied to the company from the state through early October. This represents about half of the money allocated per Phase I and Phase II of the Cooperative Endeavor Agreement. Note in Exhibit E (project budget) the anticipated schedule of expenditures and how far behind is the project.

The problem is the Department of Energy’s Advanced Technology Vehicle Manufacturing (ATVM) Loan Program hasn’t come across with the applied-for loan. The company must scrape together $350 million in capital in order to satisfy the requirements of Phase III of the contract and gain use of the balance of the state money.

Section 4.03 Phase III – Facility Completion
(A) Commencement.
Phase III shall commence upon the State and Local Entities receiving written confirmation from the Company’s Board of Directors and reasonable evidence verifying the availability of cumulative equity funds and debt financing adequate for production launch and break-even Operation, which shall be a minimum of $350 Million (exclusive of State Investment and Local Entity Investment), or such lower amount as indicated by the Company and agreed by the State (which agreement will not be unreasonably withheld) is sufficient to achieve production launch and break-even Operation. This amount shall include all previous equity raised by the Company.

According to Securities and Exchange Commission documents, V-Vehicle has raised about $62 million in equity and about $3.4 million in debt, considerably less than that required by the agreement.

Presumably, the company can attempt to raise more capital in the private sector if the ATVM loan doesn’t materialize. However, if public stock offering is contemplated, much more extensive disclosure from the company will be required than has so far been shown.

Lincoln Parish News Online has reported extensively on the controversial company and the Monroe project. Archived stories can be found here. We will continue to report on this ongoing story.

6 Responses to “Taxpayer Money Shuts Off at V-Vehicle”

  1. So How Much “Delay” We Talking About? « Lincoln Parish News Online Says:

    […] Parish News Online reported that the controversial V-Vehicle Company’s construction project had been delayed due to financial problems. This past Saturday, The (Baton Rouge) Advocate had a story reporting the […]

  2. But That’s Not What They Said Last Year « Lincoln Parish News Online Says:

    […] LPNO had reported that fact last December. […]

  3. Fisker Gets ATVM Money « Lincoln Parish News Online Says:

    […] in debt. As of now, construction at the old Guide Plant is at a virtual standstill, as state tax grants have stopped until the company can raise $350 million in […]

  4. Moret: “It Depends on the Terms” of Conditional Approval for ATVM Loan for V-Vehicle « Lincoln Parish News Online Says:

    […] on the terms from DOE” whether Phase III state taxpayer funding would be triggered for the stalled V-Vehicle project in Monroe. The controversial company has applied for a Department of Energy ATVM […]

  5. March 1, 2010 Deadline Looms for V-Vehicle – ATVM Environmental Assessment Not Complete « Lincoln Parish News Online Says:

    […] assembly plant at the old GM Guide Plant in Monroe. Work had begun last summer on the project, but stalled last fall after state taxpayer funds were halted because of the loan approval […]

  6. V-Vehicle Deadline Extension from LED « Lincoln Parish News Online Says:

    […] and categorically denied any plans to extend the project’s deadlines. The project has been stalled since last fall after the company missed an October 1 deadline for […]

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