V-Vehicle, the stealthy auto startup backed by T. Boone Pickens and Kleiner Perkins that aims to build low-cost, highly efficient, gasoline-powered cars, announced late Wednesday that it’s game over for the company’s bid to secure $321.1 million in federal loans. V-Vehicle had requested funds under the Department of Energy’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, including $79.9 million for engineering integration and $241.2 million to set up manufacturing at an old General Motors (s GM) plant in Monroe, Louisiana. And V-Vehicle says the DOE program office has informed the company that it “will not recommend approval” of the applications.
The rejection has caught V-Vehicle by surprise. Founder and CEO Frank Varasano (pictured), a former exec at Oracle and Booz Allen Hamilton, said in a statement, “We were extremely surprised and disappointed by this decision.” He said a year’s worth of discussions with the DOE had left the company feeling “confident and optimistic that the loan applications would be approved.”
V-Vehicle first requested the two loans back in March 2009, and it expected to win the final yea or nay by March 1 of this year. That was the deadline for V-Vehicle to raise $350 million in equity or loans (or else request an extension) in order to trigger most of a $82 million incentive package on offer from local governments. According to V-Vehicle’s Wednesday release, the company has been in negotiations with the DOE since January 2010, working out the “terms and conditions for the loans and finalizing a conditional commitment letter.”
Given the decision announced today, however, it’s payback time. Time for V-Vehicle to pay back the state of Louisiana, that is. The company says it will reimburse the state some $6.2 million in tax dollars by April 1, as required under its agreement for a $133 million incentive package announced in June of last year to support work on the old GM plant. V-Vehicle began work on that project last July and planned to complete renovations and expansion by the third quarter of 2011 — assuming funding came through.
V-Vehicle’s future is now more uncertain than ever. The company says it, “plans to meet with its board to assess the situation, evaluate funding and strategic alternatives and develop its plan for moving forward.” And while Varasano says in the company’s announcement that, “We still believe that VVC is the ideal applicant” for the ATVM loan program, the scant details that the startup has released about its design suggest investments in other ventures could yield more dramatic fuel and emission savings and prove to be tax dollars better spent.
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