Under an agreement, Harlow Fastech will postpone paying back a $630,000 loan from the Virginia Tobacco Commission by two years.
The loan from the commission was made Sept. 17, 2019, to the Danville-Pittsylvania Regional Industrial Facility Authority, which administered the money to UK-based Harlow Fastech LLC.
Harlow requested the postponement because the company has been negatively affected by the COVID-19 pandemic, which caused a delay in the delivery and installation of a Gefertec 605 three-dimensional metal printing machine, according to the resolution approved by the RIFA board by a 3-1 vote Monday.
The loan was used to buy the machine for use at the company’s Cyber Park facility, said Danville Economic Development Director Corrie T. Bobe.
The shipment of the metal printing machine was delayed since April 2020 due to the COVID-19 lockdown, Bobe said. In addition, workers from Germany who were needed to install the equipment and train Fastech’s employees were unable to enter the United States until recently.
“Fastech was relying on this piece of equipment to fulfill customer orders and generate revenue,” Bobe said.
Founded in 1975 and based in Harlow, U.K., the company offers services ranging from product design to production of sheet metal products. Its customers include GE, Pitney Bowes, Raytheon, Sony, BF Goodrich and Lotus.
Harlow Fastech was to make its first installment to repay the loan on Feb. 1, 2022, but under a forbearance agreement approved by the RIFA board Monday, that first payment does not have to be made until Feb. 1, 2024.
The agreement is among the Danville, Pittsylvania County, Harlow Fastech and the Virginia Tobacco Commission.
RIFA board member Bob Warren, who chairs the Pittsylvania County Board of Supervisors, voted against the agreement because he does not want to extend the liability to the county’s government and its citizens.
“I believe that any company that enters into an agreement with RIFA, and thus Pittsylvania County and the City of Danville, should honor those agreements, just as RIFA will follow through with its end of the deal,” Warren said in a prepared statement. “I do not agree with granting the company an extra two years without reducing the county’s financial exposure.
According to the resolution, the forbearance would reduce the value of RIFA’s collateral securing the company’s performance under the loan.
“The collateral is specialized equipment with a limited resale market,” the resolution states.
It’s depreciation would be about $250,000, according to the resolution.
“It does not make sense to renegotiate a deal that was already in place when that change does not include extra protection for the citizens of Pittsylvania County because the equipment will depreciate over the two years,” Warren said.
RIFA board member and Danville City Councilman Lee Vogler voted in favor of the resolution.
“The tobacco commission requested that we approve it,” Vogler said. “They thought it was the best course of action. The pandemic affected many companies adversely over the last year, so they’re working through some things. We want to try to help them be successful during their time here.”
The company promised to repay the commission the $630,000 in six semi-annual payments of $105,000 each, due on the first days of February and August, respectively.
The United Kingdom-based manufacturer announced in November 2018 that it would invest $8 million to build its first U.S. manufacturing plant in the Cyber Park and bring 49 jobs to the Dan River Region over five years.
The forbearance agreement will not affect the deadline Fastech must meet to meet its performance obligations, Bobe said. That deadline is Sept. 30, 2023.