It was billed as reverse-NAFTA - a Mexico company opening a $9 million factory in northwest Ohio. But the plant may be on hold after financing plans fell through this month.
SANLUIS Rassini International, Inc., must find another way to pay for equipment or it won't be able to open the 77-person factory in Montpelier.
Company officials did not return calls for comment but issued a statement that said the firm plans to “move forward” with the project. It provided no timetable. Regional economic-development officials said they are hopeful Rassini can find alternate financing.
Sean Rupp, owner of the 100,000-square-foot building Rassini was to occupy in Montpelier Industrial Park, said Rassini has equipment in the building. “They're paying their [rent], and as far as I'm concerned, they're here,” he said, adding he had not talked to Rassini recently.
Six months ago, the factory, with average pay of $18 an hour, appeared to be a done deal. The Mexico City auto parts supplier secured a $1.5 million loan and $100,000 grant from the state.
It also closed a $6 million loan through the Toledo-Lucas County Port Authority's Northwestern Ohio Bond Fund. The fund acts as a middleman between investors looking to buy bonds and companies like Rassini looking for cash.
Rassini immediately drew $230,000 to cover the closing costs and financing fees - $50,000 of which went to the port authority.
The $522 million company, providing the first known investment in Ohio from a Mexican firm, proposed making coil springs for vehicle suspensions at the Williams County plant.
The company has spent more than $1 million of its own money to buy equipment for the plant and hoped to use part of the bond loan to reimburse itself, said the port authority's financing head, Jerry Arkebauer.
But the bondholders' trustee discovered that the company failed to properly make payments to European bondholders as part of a separate, unrelated deal. So the trustee didn't release the rest of the cash. Rassini was unable to clear up the problem by early March, so the trustee, port authority, and Rassini decided to kill the deal, Mr. Arkebauer said.
Neither the port authority nor the bondholders lost money because Rassini had to submit a $602,500 letter of credit to get the bond loan.
Besides offsetting the closing costs, the cash will be invested, along with the rest of the untapped principal, to pay off the bondholders.
The state loan of $1.5 million, at 2 percent interest, had not been released to the company.
The original incentive package also included job credits, a $69,000 training grant, a 100 percent tax abatement for the building, and a partial tax abatement for equipment.
Out of 40 deals in 14 years, this is the first in which a loan through the bond fund has come so close to default, he said.
Blade senior business writer Homer Brickey contributed to this story.