Consultants back loan for ex-Maumee Stamping

6/19/2008

Plans to turn the closed Ford Motor Co. Maumee Stamping Plant into a new venture have been bolstered by state-hired consultants who recommend an Ohio loan for the financing.

That could mean Maumee Authority Stamping Inc. could reopen the factory at 920 Illinois Ave. by next month with 250 workers who will be part owners of the business.

Keith Obey, chief executive of Maumee Authority, said he has $80 million in customer orders and is ready to move once $16 million in financing is in place. About $4.8 million will come from the employees.

"We're pulling together the sales, deciding who our funding sources will be, and will go to Ford at the end of July for the transaction," he said.

He said in May he needed to have the state funding in place this month, but later indicated the project would work if the money came a few weeks later.

He was concerned about his agreement with Ford for purchase of the factory expiring at the end of this month and about customers canceling orders because they needed the parts sooner.

The consultant's report, by Scott Smith of York, Pa., cited several concerns, such as raising capital, gathering of sufficient start-up sales orders, and hiring and retaining employees.

It suggested having more certainty on customer orders and on financing to help through the start-up, a time of hefty "cash burn."

It acknowledged that the factory would rely on orders from a nationally slumping automotive industry.

Still, the consultant said the project is "worth the risks," implying that the state should approve the requested $5 million Ohio Department of Development loan.

The stamping plant once had 1,200 employees, each paid about $25 an hour to make metal components like bumpers and body panels for Ford vehicles.

The 800,000-square-foot factory was closed as part of the automaker's restructuring, but Mr. Obey said he thought he could make it work as an employee-owned business.

Members of the development department's Strategic Business Investment Division will discuss the consultant's report and the project in the next week and make a determination later, said state spokesman Kelly Schlissberg.

The state Controlling Board probably would make the final decision in July.

Lt. Gov. Lee Fisher, who oversees the development department, has said the project is important and the state would act quickly once it had the consultant's report.

Mr. Obey accused the state in May of taking too long to act on

his request for funding, thereby jeopardizing the project.

Even though receipt of the consultant's report is critical to the state's action, Mr. Obey said he had not read it a day after he received it.

But he told The Blade that he had secured over $80 million in letters of intent from undisclosed clients for start-up orders.

His business and financing plan has projected $45 million to $100 million in first-year orders from auto manufacturers and a producer of prefabricated housing.

The company is seeking customers in automotive, construction equipment, recreational vehicle, appliance, home building, yard products, and other industries, possible including wind turbines.

The business initially is to pay $14 an hour, and it projects it could have up to 400 employees within three years and 850 within five years.

Mr. Obey said he would have a nine-member supervisory board as advised by the report.

He disputed the report's findings that his leadership team lacks experience in starting or turning around a business.

As for the funding, he said the state money is no longer necessary to purchase the plant from Ford because other investors have recently come forward. The purchase price has not been disclosed.

The closing date on the deal has been delayed to July 14 from June 30, he said.

The consultant said the assets in the factory "provide a reasonable collateral cushion to debt holders or equity investors" based on the expected capital.

In all, the company's proposal calls for $16.3 million in financing, plus a line of credit. Half would come from public-sector sources.

The company's proposal calls for each of its 250 employees to chip in at least $16,000, for the state to provide $5 million, for the Toledo-Lucas County Port Authority to sell $3.5 million in bonds, and for National City Bank to lend $3 million and provide a $5 million line of credit.

Two unidentified investors have provided $500,000, the business plan states.

Mr. Obey, who has committed more than $380,000 to cover ongoing expenses, said he is close to gathering the funds and is confident that in a month the facility will be his.

Contact Ted Fackler at:

tfackler@theblade.com

or 419-724-6199.