Proterra, venture capital fund ink term sheet putting Greenville startup on firmer footing

By Ben Szobody
STAFF WRITER
bszobody@greenvilleonline.com
The Greenville News
4/22/2011

Electric bus maker Proterra said Thursday it has a signed termsheet for $30 million in new investment that would put the high-profile Greenville startup back on track to paying its suppli­ers and returning local employ­ment to about 120 people from about 85 now.

The new funding is scheduled to flow in about 45 days, presi­dent and CEO Jeff Granato said. It would also put Proterra among the growing number of clean technology companies to secure funding in an uneven economy.

Venture capitalists plowed about $1 billion into the clean technology sector in the first quarter of the year, one of the highest quarterly totals and com­parable to the amounts invested in software and Internet compa­nies, according to Pricewater­houseCoopers and the National Venture Capital Association.

Proterra’s unnamed investor, which Granato described as a well-known venture fund com­mitted to multiple rounds of fund­ing, could end up boosting Pro­terra’s probability of success and expansion because of its status as a leader in clean technology.

“They’re the type of in­vestor that takes you all the way to liquidity,” Granato said.

Mayor Knox White said the news is “very encou­raging” and a vote of confi­dence in the company by an independent group of sophisticated investors.

Proterra has said it could eventually employ 1,300 people, and business lead­ers have said it could play a central role in the develop­ment of automotive tech­nology at the International Center for Automotive Re­search.

The city has committed more than $270,000 to lease temporary space for Proterra for a year.

State incentives include $3 million for plant infra­structure and site prepara­tion.

The county has agreed to charge Proterra a flat 6 percent fee instead of the 10.5 percent tax rate on its industrial property over 20 years and to credit the first four years’ payments to­ward equipment and infra­structure costs.

The county also agreed to issue nearly $15 million in tax- exempt bonds for the company, though taxpay­ers aren’t on the hook for the bonds.

Company officials had been waiting on approval from a receiver in the feder­al count case of an earlier Proterra nvestor who had provided $20 million, or more than half of Proter­ra’s total funding to date, according to court docu­ments and company offi­cials.

Court documents allege that hedge fund adviser Francisco Illarramendi was trying to produce gains that would conceal earlier fraudulent activity as part of a huge “Ponzi scheme.”

The 42- year- old former adviser to Venezuela’s na­tional oil company man­aged hedge funds in which 90 percent of the money in­vested came from a pen­sion fund, court docu­ments show.

Court documents and Proter­ra officials identify the source of the pension money as the Venezuelan oil company, Petroleos de Venezuela SA, or PDVSA. Illarramendi pleaded guilty last month to two counts of wire fraud and one count each of securi­ties fraud, investment ad­viser fraud and conspiracy to obstruct justice, accord­ing to court documents.

Proterra’s general coun­sel, Marc Gottschalk, has said the pending $30 mil­lion investment would in­clude a settlement of the re­ceiver’s interest in Proter­ra.

Granato said Thursday he couldn’t discuss terms of the deal, but all parties involved have now signed the term sheet, and that it commits the receiver to the buyout.

He said once the agree­ment is complete, the in­vestor will be named pub­licly and Proterra will re­view its plans, which have included a permanent plant at ICAR.

Institutional lenders re­quire the equity invest­ment to be complete before Proterra can negotiate the lending terms for new con­struction, he said.