Global Fashion, Solo Cup property deal stalled
by Julia M. Dendinger | Mar 25, 2015
A project promising hundreds of jobs for Valencia County has come to an end before it even got started due to a lack of financing.
Last fall, Global Fashion Technologies announced plans to purchase the vacant Solo Cup plant in the Rio Grande Industrial Park south of Rio Communities to bring a fabric manufacturing facility to the county.
However, after months of trying, Global has not been able to fulfill the terms of its purchase agreement for the building and the contract has been terminated, city of Belen’s economic development planner Steve Tomita said Monday.
“There are other partners of Global who are trying to reestablish that purchase agreement,” Tomita said. “It’s the same type of business and I understand they are trying to negotiate for the building with Herman Tabet (the owner of the Solo cup building.)”
While Tomita couldn’t verify who that partner is, according to a news release put out in October by GlobalNewswire and NASDAQ OMX, a new distribution service specializing in business and corporate communications, Global was partnering with Pure Systems International to create and operate what was being called a textile fiber rejuvenation plant in Belen.
Pure Systems CEO Joy Nunn announced last fall that the company expected to begin shipping finished goods this spring, and expected to hire more than 300 people when the plant got to full production.
When asked for comment on the status of the project via email, Global CEO Tom Witthuhn replied the project was “off schedule on what has proven to be a very aggressive plan. What may be less obvious is that we still have keen interest in pursuing entry into the New Mexico market and to bring our technologies and business strategies to your great state.”
He continued, writing that the project has been a complicated effort involving two distinct business entities.
“Unfortunately several unanticipated structural and legal issues derailed our project for a period of time,” Witthuhn wrote on Tuesday. “I cannot go into confidential aspects of those situations but I can tell you that we have been working diligently to rectify them. I can also tell you that both entities are fully committed to this project and we expect to be back on track very soon.”
Witthuhn went on to say that Global and its partners “know the core business model is rock solid and we know the model has not fundamentally changed through these months. We may have been forced to slow things down a little bit but our resolve is still just as strong.”
Tabet, who bought the Solo Cup facility in 2009, said he offered Global “everything in the world” to get the deal to work.
“We offered to finance it with just a little down,” Tabet said. “I was really interested in this project; it offered a lot of jobs.”
While he hasn’t heard directly from Global’s partner about continuing the project, Tabet said the realtor who handled the transaction, Nino Trujillo, told him the partner was interested in leasing the building. Tabet said he wasn’t interested in a lease, firmly stating the building was for sale.
“It kind of leaves a bad taste in my mouth, since (the partner) was involved,” he said. “The governor was going to give them $2 million, we invested $508,000 in a new roof that could have been just repaired. I really thought they were going in.
“I guess we will just go on to the next step and get somebody in here. We had a couple of others who were interested before Global.”
Belen Mayor Jerah Cordova said while Global is “fading away” from the venture, the project itself isn’t 100 percent done.
“One partner has picked up the project and is continuing to carry it forward,” Cordova said. “They believe they have the financing to carry this forward. They are putting together a readjusted proposal to acquire the facility, a plan to get the equipment installed and begin operations. The No. 1 outcome of this is the delay.
“The company had been expected here in the spring and now that certainly has been pushed back. The new partner remains as ambitious as Global and will make every stride to continue. Obviously, it’s been a little rough, and it may continue to be rough.”
The mayor said the city will work with the new partner to bring the project to fruition. He continued, saying the business market in New Mexico as a whole has been running pretty slim.
“One thing we hope to see out of the legislative session is to have more robust funding for the state economic development division to work for all the communities. That is going to be in everyone’s favor to move projects like this forward,” Cordova said.
A possible silver lining of the Global project has been the attention it focused on Valencia County, the mayor said.
“What Global did for us more than anything else is connect us with state economic development groups and Albuquerque regional economic development groups to continue to promote Valencia County as a whole and southern Valencia County specifically,” he said. “I think those connections will help in the near future to attract projects. Companies looking to expand don’t always really look at Valencia County first and it’s up to us to make sure economic development organizations remember we are not that far from Albuquerque and have a lot of assets to offer.”
The $2 million in state economic development funds for the business are still earmarked for a Belen project, Tomita said.
“In the finalizing of the LEDA (local economic development act) funds, (Global) had to put together their financing information and we had not received that,” Tomita said.
If the project had continued, the city would have acted as the fiscal agent for the money, releasing it as the plans proceeded.
“The state is holding the LEDA funding. They haven’t given up yet,” Tomita said.
In September, the city council approved a resolution for up to $45 million in industrial revenue bonds as an incentive for the manufacturing company. The bonds, if they had been approved by an ordinance, would be paid back by the revenues of the company, not the city. The city didn’t experience any financial loss due to the cancellation of the purchase contract, Tomita said.
Valencia County Commission Chairman Charles Eaton said he was disappointed to see the project come apart.
“I know there has been some discussion about proceeding in a different fashion, so hopefully something will still come into play,” Eaton said. “It’s tough in today’s economy, there are still a lot of large corporations pursing financing who are having just as tough a time as the working American individual. We were hoping this would be a real job creator for the whole county.”
Eaton said he had spoken with Belen city officials, who are hopeful about alternative plans.
“Hopefully something else will develop soon. I know Mr. Tabet has done some investment to the building, improvements to market the facility,” the chairman said. “We will continue to help the city and Mr. Tabet to market that facility. It has a lot of potential.”
