Startup automaker addresses viability concerns

By ALAN SAYRE

NEW ORLEANS

An application for $321.1 million in federal loans to start production of a fuel-efficient vehicle in Louisiana was rejected because the financial viability of V-Vehicle Co. was questioned, a company spokesman said Monday.

Spokesman Joseph Fisher said he could not provide details of why the U.S. Energy Department rejected its application. He said the San Diego-based company is studying its options to keep the project going.

"We are working hard to understand the concerns that were raised," Fisher said. "We believe timing is of the essence."

Energy Department spokeswoman Ebony Meeks said the agency could not comment. Specific reasons given to V-Vehicle for the rejection would have to come from the company, she said.

In a decision that stunned the company and state economic development officials, the Energy Department rejected the loan application March 24. V-Vehicle had sought $241.2 million to revamp the closed Guide Corp. headlight plant in Monroe to manufacture the vehicle and $79.9 million to coordinate engineering with its 30 suppliers.

The federal money had been vital to start production. The company, headed by its founder and former Oracle Corp. executive Frank Varasano, has said it raised $86.5 million in private investment.

V-Vehicle's plan, which had been backed by $67 million in state incentives, called for the eventual employment of 1,400 people. The company had been aiming to have its vehicle -- most details of which have been kept secret -- on showroom floors by late 2011.

Both company officials and state economic development chief Stephen Moret had said they were confident the loans -- part of a federal program to encourage development of new automobile technology -- would be approved.

Last week, V-Vehicle returned $6.2 million it had received from the incentive package to the state. Voters in Ouachita Parish also approved a property tax increase to fund $12.5 million of a $15 million local incentive for the company, which has been canceled by the loan rejection.