Elio gets another job creation deadline extension

CEO Paul Elio met with Caddo Parish Commissioners in May to address concerns about the company's future. (Source: KSLA News 12)
CEO Paul Elio met with Caddo Parish Commissioners in May to address concerns about the company's future. (Source: KSLA News 12)
Targeting a retail cost of $6,800, the company will position the Elio vehicle as a cost-effective alternative to four-wheeled autos. (Source: KSLA News 12)
Targeting a retail cost of $6,800, the company will position the Elio vehicle as a cost-effective alternative to four-wheeled autos. (Source: KSLA News 12)

SHREVEPORT, LA (KSLA) - Elio Motors is getting still more time to start production on their 3-wheeled vehicle and create the 1,500 jobs promised as part of a $23 million loan agreement for the purchase of equipment at the former GM plant in Shreveport.

The original deal struck in 2013 with the RACER Trust required the startup automaker to start production and create 1,500 direct full-time jobs by the end of 2015 or face stiff penalties that included $5,000 for each promised job not created.

Elio initially planned for production to begin in July 2014, 6 months before the original deadline of February 2015 set in the agreement. At the beginning of January 2015, Elio announced the start of production had been pushed to the end of 2015.

By February 2015, there were still no cars coming off the line. RACER Trust redevelopment manager Bruce Rasher told KSLA News 12 that Elio wouldn't be penalized because they were working on an extension.

By September, Elio had pushed the start of production pushed back yet again, this time to early 2016.

The deadline was ultimately extended another year to February 28, 2016. When Elio Motors failed to meet that deadline, RACER Trust agreed to extend it to July 1, 2017.

When that deadline came and went with no new jobs or activity at the plant, the deadline was extended to July 2017. By January 2017, however, Elio had once again pushed back the time frame for production to begin from late 2017 to 2018.

Now, just weeks after Elio Motors CEO Paul Elio openly admitted that the company would not be meeting the July deadline, another extension has been granted.

According to documents filed with the SEC Wednesday, Elio Motors now has until February 1, 2019 to start production and until September 1, 2019 to create the jobs.

According to a statement released by the RACER Trust late Thursday, the decision to extend came after "a thorough review of the company's recently filed financial statements and current plans to raise the capital it needs using an experienced investment bank, and the recommendation of the Louisiana Economic Development."

The decision to extend Elio Motors' job-creation deadline has no material effect on the reuse potential of the former General Motors Shreveport Assembly Plant, imposes no risk on the citizens and taxpayers of Caddo Parish, and provides Elio Motors the best opportunity to reach its goals, fulfill its pledge to the citizens of Caddo Parish and Louisiana to bring up to 1,500 new jobs to the former GM plant, and meet its financial obligations to RACER Trust.

However, the statement continues, "If another prospect emerges to utilize the space currently reserved for Elio Motors, the building's primary lessee, Shreveport Business Park, has contractual flexibility to relocate Elio Motors to another facility in Caddo Parish."

In October, RACER Trust representative Rick Zablocki told state legislators the trust would consult with Caddo Commissioners before extending the jobs deadline again.

In Thursday's statement, RACER pointed to an April 28 letter from LED Secretary Don Pierson to Elio stating that an extension to September 2019 is "'in the best interest of the efforts of Elio Motors, the RACER Trust and the potential for future facility use'" and a follow up with Caddo Parish administrative staff after Elio himself briefed commissioners in late May as evidence that the trust's promise to consult with the state and the parish had been fulfilled.

Having evaluated the relevant factors - the lack of interference with prospective economic redevelopment opportunities at the Shreveport plant; no economic risk to Caddo Parish; Elio Motors' opportunity to make progress toward fulfilling its business goals nd job-creation pledge; and the LED's letter of support - RACER Trust has made what it considers to be the responsible decision to extend the job-creation deadline.

Elio is also getting more time to pay back their loan to RACER Trust. According to Wednesday's SEC filing, the company hasn't made any of their monthly $173,500 payments since October 2016.

Elio has failed to pay to RACER in full the October 2016, November 2016, December 2016, January 2017, February 2017, March 2017, April 2017, and May 2017 payments due under the Note, and Elio anticipates that it will fail to pay to RACER in full the June 2017 payment due under the Note.

As a result, Elio currently owes more than $1.7 million in back payments to RACER Trust. While the default interest rate of 18% will continue to add up until payments resume, the company now has another year to pay back the principal on the loan.

The extensions come just weeks after the company's May 2 filing with the Securities and Exchange Commission, which revealed concerns that Elio may be unable to survive another year without additional loans and stock offerings.

Copyright 2017 KSLA. All rights reserved.