LaGrange Development Authority on Monday approved going forward with agreements to issue more than $176 million in new bonds to two Kia suppliers planning to expand in the wake of similar plans from Kia Motors Manufacturing Georgia.
Sewon America Inc., which provides metal stamping for Kia, and Hanil E-Hwa, an interior trim manufacturer, plan to expand their buildings and machinery and equipment at their LaGrange-based sites, said development authority executive director Bobby Carmichael. Each company will pay an issuance fee for the bonds and annual fee to the Troup County Tax Assessors Office to help fund a position responsible for keeping up with the equipment and property expansion at Kia and its suppliers.
Sewon, located in the Callaway South Industrial Park, is proposed to receive a $150 million bond to be paid off over 12 years. It plans to spend $140,750,961 on machinery and equipment and $7,507,100 on building expansions. The company already has a 12-year, $170 million bond issued about five years ago, whose terms will not be affected by the new bond.
The company could add 200 jobs with the improvements, giving it a total 900 employees. It would pay an abated property tax schedule on the bond-made improvements, paying 50 percent the first year, 30 percent the following two years and 50 percent the last nine years of the bond, Carmichael said. Estimated taxes paid on the bond improvements to the county and school board are $3,219,672 during the 12 years.
Sewon also is expected to pay a $162,500 issuance fee for the bonds, with $62,500 covering legal fees. The company would pay $13,500 annually to the tax assessors office for the new position.
Hanil E-Hwa is proposed to receive a $26.55 million new bond over a five- and seven-year schedule. The company plans to add 50 jobs to the current 173. It plans to invest $20,948,000 in new equipment and machinery and $5,602,000 in a 100,000 square-foot building expansion, Carmichael said.
The new bond would fit in a current $8.45 million bond the authority issued to company to renovate the building it currently operates in at 104 Wiley Road. The company would pay $3,150 annually to the Troup County Tax Assessors Office and estimated taxes generated during the bond are $1,026,076. The company will pay the legal fees for the bond and a $43,750 issuance fee to the authority.
“This is a direct result of Kia’s new initiative,” Carmichael said of the expansion. “They think, based on comments, that there are more models coming. If Kia wasn’t looking at their projections of what’s coming, (Sewon and Hanil E-Hwa) would not be doing this.”
Kia, county and West Point officials recently signed off on a memorandum of understanding to issue the car manufacturer $1.6 billion in bonds from the Troup County and West Point development authorities to invest in expansions, and machine and technology upgrades. According to reports, Kia plans to make 55 model changes to its vehicles over the next four years, which would require large changes in inventory.
Carmichael said the agreements with Sewon and Hanil E-Hwa were not final, but the LaGrange Development Authority authorized executing the final agreements. The group needs to issue the bonds by the end of the year, which requires they publicly advertise them by Friday.