Sinopoly Battery Ltd., a Hong Kong battery producer, has agreed to invest $42 million in Smith Electric Vehicles Corp. and take an equity stake in the struggling electric truck manufacturer.
Sinopoly will also become Smith’s exclusive battery supplier, the Kansas City-based truck company said Monday in a statement. The companies didn’t specify the size of the equity stake.
Production at Smith’s factory near Kansas City International Airport was halted near the end of last year because of what the company said were efforts to incorporate cost-saving changes. The plant is expected to resume business around midyear, the company said.
The company, which got a $32 million Department of Energy grant in 2010, had about 125 employees here at the time it halted production.
Smith said it had received $2 million from Sinopoly and would get the remaining funds in two phases as milestones were met over the next few months. The company makes medium-size trucks for commercial customers and in the U.S. has had orders from companies including Staples, Coca-Cola and Frito-Lay.
“Demand for all-electric commercial vehicles is rapidly increasing in China,” Smith’s chief executive officer, Bryan Hansel, said in the statement. “This investment provides both companies with the opportunity to leverage the synergies between our operations.”
But there were questions Monday about whether the financing agreement, which also requires that Smith be listed on a U.S. stock exchange, will be completed as announced.
Tanfield Group, a British company that is an investor in Smith Electric, said part of the process requires the approval of current investors who would see their holdings devalued in a restructuring.
“The board of Tanfield believes there is still a very high level of risk that the planned listing process outlined by the Smith management will not be successful,” it said in a statement.
Meanwhile, Kansas City Aviation Department officials said Smith Electric has indicated it will start paying the lease payment it owes the city for office and production facilities.
The last payment received was in November. The company is supposed to make a payment covering two months, plus staying current on future payments. All past due amounts are to be paid by the end of September.Bloomberg News contributed to this report.